Welcome, dear readers and listeners, to the maiden voyage of Lucidity's Cloud Storage Show! In this groundbreaking episode, we embark on a journey through the intricate realms of Enterprise and FinOps, guided by none other than our co-founder, Nitin, and the distinguished FinOps expert, Gerhard Behr.

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In the ever-evolving landscape of cloud storage, understanding the nuances of FinOps (Financial Operations) is pivotal for enterprises seeking not only efficiency but strategic excellence. This episode is not just a discussion; it's a deep dive into the dynamic interplay between industry progression, post-migration challenges, and the hurdles hindering FinOps adoption.

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Buckle up as we bring you some insightful excerpts from this episode, shedding light on the crucial insights shared by Gerhard Behr. This is not just a podcast; it's your ticket to understanding the intricate dance between Enterprise and FinOps in today's fast-paced digital landscape. Let's dive in!

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Nitin: “Is there any tipping point where enterprises start looking at cloud costs very actively? Generally, the first year is all about lift and shift and bringing stability to their infrastructure. Probably it's the second or third year when they start seeing those bills. And in your experience, when does  is become critical to start looking at cloud cost optimization very heavily?”

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Gerhard Behr: “I will say it's always a year after, after having done your migration project. It's after that year, they start comparing what they thought they paid and what they really pay. It's where they realize that something is wrong here.

With customers who ignore infrastructure as a service or platform and directly opt for software as a service, it takes longer. It is generally after two, three years because they have to make the decision to move into serverless things.

That's why we have two different streams. I will say the dominant stream is going classic move your infrastructure over and then the serverless infrastructure. And that comes in the second year.”

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Nitin: “Which stakeholder usually initiates the need of FinOps in the organization? Is it coming from the top level, like the CEOs or CIOs or they come more from mid-level management?”

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Gerhard Behr: “The major push is still from the middle management in the beginning because they're facing the issues, or lack the tools to handle the cloud properly. They don't make the decisions, but they ring the alarm bells. We cannot handle it anymore.

So they are the people who initiate it first, as the volunteers come in. These are the classical IT managers. And then the second boost comes from the architects.

Because on one hand, all companies are facing directives to decrease their IT spend. And the IT architects sitting there are struggling to deploy something in the cloud while also taking care of cost optimization.

 There is a need to do something. And these guys do whatever they can to convince senior management. In the end, it has to be the senior management who takes a lead on it because they actively make strategic decisions.

We want to be in the cloud. We want to be as efficient as possible in the cloud. And that has to come from senior management. And to be honest, when I look in the market, not all companies are  really doing it like that.

They still treat it  differently. I saw that from one guy from the FinOps Foundation, Ben Demora who had brought up as to why on earth is a FinOps person not supporting at the executive level? It's so important.”

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Nitin: “Looking at your customers, what progress do you see when it comes to completing the basic principles of cost optimization like idle volumes, the reserved instances, and similar tenets? What would be that percentage? Is it like 50% of companies have done it and the rest haven't even started even after COVID wave?”

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Gerhard Behr: “When we're talking about enterprise customers, I will say they all have done their job somehow to some degree. Apart from one customer I know, they all have implemented immediately, at least the low hanging fruits like reserved instances, savings plans. All of that stuff is somehow implemented.

The question is on which level. 100% of the enterprise customers have had cloud cost optimization in their target to keep the cost somehow under control. But when it comes to having a FinOps practice in place, that's maybe 50% of them who have started their FinOps journey in different stages.

So I think the major change, what we see now is because when I look backwards, two, three years ago, they were all in a crawl stage. Nobody was really there. But what I'm seeing right now is that all of these customers are now at the end of the crawl stage, going to walk now.

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They all are enterprise customers moving ahead. But it doesn't mean they're 100% optimized. The major job is done, and they may have achieved 50% of the savings. Now comes the painful part. Because low hanging fruits don't necessarily change your environment.

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Now it's time to change your environment to a cloud journey. Because that is the hard and painful part. That's where we go back to your discussion from before.

Buying your virtual machine for 50% cheaper, is a no brainer. But what if you have to change your virtual machine from a 4 core to a two core? It's the same discussion  going on in storage. For example, I buy a machine 500 gigabytes or one terabyte. Do I need it? No. 

Then that's why we see the utilization on storage maybe on 20-30%. In the cloud you pay what you subscribe for, not what you use. That's the biggest misunderstanding that I'm seeing there.

Customers think it's pay for use. It's not pay for use. It's pay for what I subscribe for. I must make sure that I just pay for use. And that is definitely a change in the environment.”

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Nitin: “Talking about all the niche tools and technology available in the FinOps world, where do you think this industry is going? There has been a lot of talk around AI but what do you think the future holds?”

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Gerhard Behr: “Yeah, there's an interesting thing to happen here. We have one part that is your general tools.They are coming from different vendors. And do the general cloud spend management with some optimization.And you have the vendors developing their own tools. You get it from AWS, you get it from Azure, and from GCP. 

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And what I'm seeing there is that there will be some potential AI play to get some anomaly detection and alerts back when something spikes.

That will be a combination. But the general tool will be there. And It will be cross platform. 

Now what I see here is when we look at these 300-400 different solutions in the market which is that special tool? The ones I call the Swiss Army knives. So these are specialized solutions focusing on storage, focusing on Kubernetes, focusing on Databricks, focusing on big data and so on.

These special guys are important too, because that's where then you can bring in optimization.

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I don't see anything doing everything right now on the market. But I expect that the shift in artificial intelligence gives us at least in that business, a massive change in consultancy workload because we have to scale in a different way and we can. So a lot of things will scale here just with AI power solutions.”

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If you would like to hear more on this insightful discussion, we urge you to check out the complete episode below. The full episode promises a treasure trove of knowledge, providing an in-depth exploration of industry progress, post-migration remediation challenges, and the obstacles on the FinOps adoption path. 

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