Committing to a cloud provider is a big decision that every founding team needs to make, so it’s important to keep in mind what to look for in the best provider before making your decision.
New report released by OVHcloud ‘How to succeed with FinOps: A guide for startups and VCs‘ We will explore this topic and discuss strategizing for cloud solutions, cloud pricing, and financial operations (FinOps).
The report acknowledges that startups are increasingly relying on cloud solutions for scalability and innovation, but the fast-moving nature of startups makes cloud costs difficult to manage, and overspending is an increasingly common issue.
“The challenge for startups is that they’re growing so fast,” says Philip Marais, global startup program lead for the OVHcloud startup program, “they have a shortage of resources in terms of time and money, and they have a lot of problems to solve.
“The startup ecosystem has a lot of attractive perks in terms of support, especially in the cloud space, like cloud credits.”
Marais said cloud credits are not only used by providers to support startups, but also to attract them to their respective clouds. This approach encourages founders to adopt certain technologies, but poor adoption can lock them in and become a burden in the long run.
“Startups need to start thinking about this early, getting metrics to track their cloud costs, being careful of common pitfalls when adopting cloud services, and understanding the fine print on pricing contracts, so they can move their data freely without the fear of exorbitant costs,” Marais says.
Sign up for what you want
The report noted that most cloud providers offer three basic cloud solutions: dedicated servers, hosted private cloud, and public cloud.
When adopting cloud infrastructure for a startup, leaders need to consider the needs of cost, performance, security, and scalability. For example, the report found that high-traffic websites and CPU-intensive workloads are more likely to require the performance of a dedicated server.
“The reason is [startups] “You have to be careful about the product you choose because the services they offer are different,” Marais says. “Many of them are proprietary, which often locks you in and reduces portability to other clouds.
“More and more businesses around the world are adopting a multi-cloud approach, which not only offers cost benefits but also improves data compliance by allowing them to choose a provider that meets the requirements of specific customers in specific geographies.
“There are all these benefits, including whether the cloud products you use are open source, portable and interoperable, as well as the cost, data compliance implications and redundancy implications of using one or more providers.”
In the context of cloud, redundancy refers to having multiple copies or backups of resources like servers and databases in different locations or regions.
fair price
The report identifies three key areas to consider in cloud pricing: data transfer, capacity and operations, and vendor lock-in. Let’s look at some noteworthy details about each.
- data transfer: The report said that transferring data into the cloud may incur inbound fees, while transferring data out of the cloud or to another geographic region may incur egress fees. Vendors also charge different rates depending on how often they expect certain data to be accessed.
- Capacity and Operation: The report points out that if you have a lot of data and require cloud instances in different geographic regions around the world, the cost of storage capacity can escalate quickly. Operations performed on that data also have a significant impact on your monthly bill, so it’s important that the storage and operations plan you choose correlates with your use case.
- Vendor Lock-in: OVHcloud’s advice is to avoid vendor lock-in by looking for cloud vendors that use open, portable and interoperable standards and initiatives such as CISPE, SWIPO Code of Conduct, the EU’s Gaia-X, etc. Stick to open source and standardized technologies where possible – this will go a long way to avoid being locked into a single provider.
Marais points out that VCs are stating how cloud costs are impacting public company valuations, which is why getting the price right in these three areas is so important.
Building a FinOps strategy
FinOps provides a framework for managing cloud costs, combining finance and DevOps practices to ensure cloud investments are aligned with business goals.
OVHcloud’s report lists six key ways to start implementing FinOps practices:
- Establishing a FinOps team
- Embrace a cost-conscious culture
- Adopt tools and technologies
- Optimize your cloud usage
- Financial Responsibility and Chargebacks
- Continuous learning and improvement
“You can’t do anything unless you’re aware of it, so being able to measure something is key for me,” Marais says.
“Do you know what your cloud costs are and how much they will increase as you grow? Is there something you can measure on a monthly, weekly, or daily basis so that you can take action if you see there’s an issue?”
Once you measure your cloud costs, Marais says you should look at ways to reduce them and optimize them for future growth. Startups want to partner with cloud providers that can also offer advice and support, he says.
““Startups only have a limited amount of time. You can’t just hire a DevOps expert and have them solve everything for you,” he adds. “This is a new responsibility for your team, so you need a cloud provider that gives you 1:1 time with engineers so you’re not dealing with problems completely on your own.
“The key action points are to start measuring, understanding future growth, how to optimize it and whether there is support from cloud providers to achieve this.”
download How to succeed with FinOps: A guide for startups and VCs now.
