Mastering Cloud Costs: FinOps Strategies for Startup Growth

At TechSparks 2024 in Bengaluru, a masterclass on ‘Leveraging FinOps for Success: A Guide for Startups and VCs’ shed light on a crucial yet often overlooked aspect of startup operations. Led by Satyam Santosh, Startup Program Lead – APAC at OVHcloud, and DVS Shiv Kumar, Solutions Architect at OVHcloud, the session provided invaluable insights into managing cloud costs effectively.

The importance of FinOps for startups cannot be overstated. As Santosh pointed out, "Startups really need to understand, especially early-stage startups when you have a dearth of money in your bank account. You need to look at cloud costs and understand how you should be able to control the costs that you're incurring on your infrastructure."

The masterclass began with a startling revelation: companies often overspend on their cloud budgets by 26%. This statistic underscores the critical need for startups to adopt FinOps strategies from the outset. FinOps, or Financial Operations, involves understanding and optimising cloud costs to ensure financial efficiency and accountability.

Kumar explained the core of FinOps: "The first step in FinOps is to identify and understand all cloud costs and services being consumed. Are these services that I am consuming really needed for my application, or can I optimise it further?"

Common pitfalls for startups

Both Santosh and Kumar highlighted several key pitfalls that startups often encounter:

• Hidden Costs: While direct costs like subscription fees and implementation are obvious, hidden costs such as bandwidth, data transfer, and vendor lock-in can significantly impact a startup's budget.
• Data Transfer Costs: These can escalate quickly, especially for startups dealing with large amounts of data. The speakers recommended using tools like Cloud Easier to estimate these costs before deployment.
• Storage Costs: With the increasing amount of data being stored, any operation performed on this data can significantly affect cloud costs. Tools were suggested to help startups estimate and optimise storage costs.
• Vendor Lock-in: This was emphasised as a major concern. Santosh shared a cautionary tale: "We have a fantastic example from one of our startups from the France ecosystem. It was an edtech company... It actually lost the deal with the French government because the kind of code and architecture it had was so deeply ingrained in the cloud service provider it was using."

Strategies for success

To avoid these pitfalls, the masterclass offered several key strategies. First, startups should integrate FinOps responsibilities into existing teams rather than creating a separate department, ensuring a more holistic approach to cost management. Simultaneously, creating a culture of cost awareness is crucial, with employees trained to be accountable for the services they use.

The speakers emphasised the importance of adopting cost optimisation tools like Cloud Easier, Cloud Mercato, and Harley to compare providers and optimise costs effectively. They also stressed the need to optimise cloud usage by right-sizing instances and leveraging reserved instances to mitigate high computing costs.

Finally, implementing chargeback processes to map cloud bills to different departments was recommended to ensure financial accountability across the organisation.

Leveraging cloud provider benefits

The speakers also emphasised the importance of avoiding over-reliance on managed services and adopting open standards to maintain flexibility and avoid vendor lock-in.

Interestingly, the masterclass highlighted how some cloud providers, like OVHcloud, offer free bandwidth, which can significantly reduce monthly costs. "There are very few cloud services in the market that actually give you totally free bandwidth," Santosh noted, emphasising how this can lead to more predictable monthly bills.

The session concluded with advice for startups to leverage the benefits available through cloud service provider startup programs. These programs often provide credits, technical support, and even access to funding opportunities, which can be crucial for early-stage startups managing cloud costs.

In an era where cloud services are integral to most startups, mastering FinOps is no longer optional—it's a necessity. As this masterclass at TechSparks 2024 demonstrated, understanding and implementing FinOps strategies can be the difference between a startup that struggles with unexpected costs and one that scales efficiently and attracts investment. For founders and VCs alike, the message is clear: FinOps is a critical component of startup success in the cloud-first world.

Watch the full video here.