As businesses look to manage their costs, management of cloud costs is essential. Even cloud infrastructure providers advocate for cost optimization, recognizing its long-term benefits in enhancing customer satisfaction and loyalty. For example, Amazon Web Services (AWS) has dedicated customer success teams and a robust marketplace partner ecosystem to guide customers through the intricacies of managing cloud spend to maximize their investment. Google and Microsoft have similar efforts. The importance of controlling cloud spend has only increased in the recent recessionary environment.
In the startup ecosystem, many players have emerged to capitalize on this opportunity with tools to help enterprises and startups alike optimize their cloud bill. While many startups struggle to surpass the $10 million annual recurring revenue (ARR) mark, some, like Zesty, have achieved remarkable growth. Other promising players, including Prosper Ops, Vega Cloud, Ternary, and Vantage, are emerging as contenders in this competitive market.
There are three main ways to save on cloud costs:
• Resource autoscaling: Autoscaling entails adjusting resources dynamically versus the traditional planning and estimating process. Autoscaling attempts to optimize the specific cloud resources with more specific and timely demand.
a. Startups who fall into this bucket are Zesty, Prosper Ops, Cast.ai, Yotascale, CloudNatix.
• Dashboarding & analytics: Dashboarding takes a more hands-off approach and seeks to offer unique insights to the user on where optimizations may lie. Based on my research, this is what enterprises mostly want as a solution.
a. Startups who fall into this bucket are Vega Cloud, Ternary, PointFive, Finout.
• Guardrails: Guardrails establish rules for what users can and can’t do with regards to managing the company’s cloud, similar to roles-based access control. As an example, you don’t want your intern accidentally turning on 100 GPUs in AWS… that would be expensive.
a. Some startups that fall into this bucket are Stacklet and Harness.
Some startups don’t fall precisely into one of these buckets. For example, Ternary offers a Confluence-like platform that allows finance and engineering to work together to solve FinOps issues. Vega Cloud offers a gamification approach which incentivizes cultural changes in the organization beyond just offering insights into spending. Vantage dips into the first two buckets. Many lean in on one approach or another, but by no means are these mutually exclusive paths.
While autoscaling represents a hands-off approach, analytics provide a more hands-on option, catering to diverse preferences. Enterprises, especially, prioritize analytics to gain insights into cloud spend, aiming to ultimately reduce costs. Even if they choose an autoscaling solution, an engineer’s boss won’t be able to answer a question about why the cost ran up on a certain service without an analytics solution. For larger enterprises, this is the necessary first step on the FinOps journey, however startups and SMBs appear more focused on resource autoscalers to realize more immediate savings. There is no strict preference for guardrails, but these startups appear able to break into both large and small customers alike.
It's not all rosy, though. Startups operate by accessing management resources and data feeds from public clouds and are therefore beholden to decisions made by the public clouds. While my research indicates that AWS is usually very supportive of these startups, as they tend to augment customer success/support functions along with their product, in 2023, AWS made changes to its terms of services that meaningfully affected many startups in the category forcing a few to pivot business models on the fly.
Understanding these strategies and trends is crucial for startups seeking to scale their FinOps solutions with customers and for VCs alike. By adapting to the evolving needs of enterprises, startups, and SMBs, businesses can position themselves as leaders in this dynamic and essential aspect of modern business operations.
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