Metrics must align with cloud value or your business may be in trouble. Many people who run finops at global 2000 companies would agree with my opinion.
Definition of cloud unit
The cloud unit concept originated in the cloud finops area. Cloud units are designed to link cloud costs and resources into standardized units of business value, such as cost per user, transaction, or workload. The goal was to make the cloud economy relatable and actionable for business leaders. At first glance, it sounds like a great idea. At a time when CFOs are scratching their heads over rapidly changing AWS bills, attaching actual results to cloud spending provides clarity.
However, in reality, cloud units are an insufficient metric in real enterprise scenarios. This is because the complex and dynamic cloud ecosystem is reduced to overly simple metrics, failing to take into account the nuanced priorities, goals, and strategic performance unique to each business. What started out as a standard measure to better coordinate IT and the business often ends up becoming a hindrance or an unsuitable tool for the job.
A better approach is to measure cloud value with metrics that adapt to the specific needs of your business and evolve with you. For example, an e-commerce platform might measure the cost of completing a single order. This allows executives to better align cloud infrastructure costs and operational performance.
Cloud units that can be a bad indicator
The cloud unit’s one-size-fits-all approach can be helpful for teams just starting their cloud finops journey, but it rarely applies as you scale or your business environment becomes more complex (like every cloud project I’ve been involved in over the past seven years). It doesn’t work.
Cloud environments are inherently chaotic. Enterprises run thousands of workloads across hundreds of services, often across multiple regions or multiple clouds. Because of this complexity, it is nearly impossible to reduce the entire cloud ecosystem to a single price. Overly simplistic models often lead to confusion rather than clarity.
For example, let’s say a cloud unit represents the cost per transaction. What does it mean if these costs increase? Are inefficiencies causing the increase, or is it a sign of additional investment to expand infrastructure during a time of seasonal surges in demand? Cloud units do not provide this granularity. Instead, because it paints a broad picture, it is easy to misunderstand important strategic spending as waste.
Different cloud operations for each company
Some companies focus on customer experience. Some companies pour resources into creating innovative products. Many companies have business models that do not fit the standard framework. But cloud units are, by definition, one size fits all. They assume that all workloads must be mapped to the same basic deliverable: lowest cost per transaction, cost per gigabyte, or cost per instance.
For example, a healthcare organization trying to calculate the cost of safely storing patient records might not like being tied to a framework like a video streaming service that measures cost per viewer. Likewise, an AI startup training machine learning models will not find value in cost-per-user metrics because their business drivers are completely different.
What the cloud unit misses is the individuality and goals of the company. Instead of fitting metrics to the enterprise, the cloud unit forces the enterprise to fit the metrics. Therefore, cloud units are not suitable for companies that do not fit well with constraints.
The bigger obstacle for cloud units is that value isn’t always monetary. Reducing cost per unit is essential, but what about the strategic benefits? Companies expect outcomes from their cloud investments such as increased agility, innovation, or customer satisfaction. However, these benefits are difficult to quantify using standardized metrics such as cloud units.
Consider a company that invests heavily in real-time analytics. Immediate benefits may come at a relatively high cost, but there are also long-term competitive advantages, such as better decision-making or improved customer retention. The same goes for companies building cloud-based disaster recovery systems. The value is not in reducing cost per cloud unit, but in ensuring resilience. To ensure that companies do not lose sight of the bigger picture, they must have metrics that reflect these intangible benefits.
Why you need custom cloud metrics
Now that we’ve deconstructed the cloud unit debate, let’s look at what is more effective and custom metrics that mean metrics for each problem domain. Since finops experts will try to avoid customized indicators, there will be quite a few objections to my proposal.
Customized metrics reflect the needs of the company without imposing a general framework on all workloads or departments. Media companies can track cost per stream, retail operations, and cost per fulfillment. These metrics are much more relevant than fitting cloud spending into a generalized cloud unit framework.
Custom metrics can balance tangible costs and intangible benefits. Examples include improved time to market associated with cloud deployments, customer satisfaction resulting from reduced application latency, and revenue growth directly tied to AI-based innovation projects.
While cloud units smoothly consolidate details into one overarching value, custom metrics allow for deeper inspection. You can track individual workloads, application teams, or regions to identify areas for optimization without missing broader trends. This precision enhances data-driven decision making.
Something needs to be made clear. Using metrics to determine cloud value is essential. My concern is that the finops community is oversimplifying the complex and misunderstanding the value of cloud. A company with great cloud unit metrics can see business value draining away without even realizing it. This is real, and it’s not just a nuisance, it’s a problem that can lead finops to lead the cloud in the wrong direction.
As a cloud architect, I am focused on returning maximum value to the business through appropriate technology configuration. This is sometimes harder than many people realize, and you won’t get it done if you’re chasing the cloud unit metric in vain. Now is the time to rethink finops.
editor@itworld.co.kr
Source: www.itworld.co.kr
