The Licensing and Pricing Model Associated with FinOps Tools

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Cloud cost management tools help organizations get better value from their cloud investments by reducing wasted cloud spend.

Cloud cost management tools can broadly be categorized into two types:

1. Native Cloud Cost Management and Optimization (CCMO) tools:

Cost Management and Optimization tools provided by Cloud Service Providers (CSPs) like AWS, Azure, GCP, and Oracle Cloud Infra (OCI) are typically leveraged by organizations that leverage services from a single cloud provider. These are popularly known as native cost management and optimization tools, and their support is limited to the specific cloud platform. Ex: AWS Cost Explorer supports only AWS and doesn’t support Azure, GCP, Oracle Cloud, IBM Cloud, etc.

2. Independent CCMO tools, popularly known as FinOps tools:

Many organizations using multi-cloud leverage third party tools – popularly known by many names, including FinOps tools, Cloud Management Platforms (CMPs), Independent CCMO tools, etc. These tools offer many advanced features and functionalities compared to native CCMO tools. Popular 3rd party FinOps tools include Apptio Cloudability, Centilytics, CloudBolt, Corestack, Hystax OptScale, NetApp CloudCheckr + Spot, and VMware CloudHealth.

Pricing Model of native CCMO tools

Native CCMO tools are typically available free of charge as part of a cloud subscription. For example, AWS Cost Explorer is free with an AWS cloud subscription; Azure Cost Analysis and Azure Budgets are free with an Azure cloud subscription; and billing is included with a GCP subscription. It’s important to note that compared to FinOps tools, only limited features are available in native cost management tools and their support is limited to the allied cloud.

Licensing & Pricing Model of FinOps tools:

Popular licensing models available with respect to FinOps tools are:

1. Fixed price based on cloud consumption

In this model, a monthly fixed price is charged based on total monthly cloud consumption. Typically, FinOps tool vendors charge a small percentage of total cloud consumption costs incurred by the customer as a licensing fee. This typically varies from 1.25 to 3%.

Illustration:

  • Total cloud consumption per month of company ABC that is managing it’s cloud consumptions via FinOps tool XYZ = 15,000 USD.
  • Agreed licensing fee with FinOps tool vendor XYZ = 2% of total cloud consumption managed via FinOps tool
  • FinOps tool license fee to be paid by company ABC to FinOps tool vendor XYZ per month = 300 USD

2. Fixed price per cloud account

In this model, a monthly fixed price is charged per cloud account or Kubernetes cluster. Typically, FinOps tool vendors fix this charge and provide monthly or annual payment term options.

Illustration:

  • Agreed licensing fee with FinOps tool vendor XYZ = 40 USD per cloud account or Kubernetes cluster
  • FinOps tool license fee to be paid by company ABC to FinOps tool vendor XYZ per month = 40 USD

3. Fixed amount licensing model related to cloud consumption bracket

In this model, a monthly fixed price is charged based on the total monthly cloud consumption bracket of the customer. The monthly cloud consumption bracket with an allied fixed fee is defined by the respective FinOps tool vendor.

Illustration:

  • FinOps tool vendor XYZ defined Monthly cloud consumption bracket with related fixed fee:
Monthly cloud consumption bracketMonthly fixed price
Up to $ 25000$ 400
$25,000 – $50,000$1,000
$50,000 – $100,000$1,500
$100,000 – $200,000$2,500
$200,000 – $300,000$3,500
$300,000 – $400,000$4,600
$400,000 – $500,000$5600
  • Total cloud consumption per month of company ABC that is managing it’s cloud consumptions via FinOps tool XYZ = 85,000 USD
  • FinOps tool license fee to be paid by company ABC to FinOps tool vendor XYZ per month = 1500 USD

4. Subscription based model available in Annual/Quarterly/ Monthly basis

This is a subscription based model wherein client will make an annual commitment of the overall cloud consumption in advance to the tool vendor. FinOps tool vendor will charge a percentage of the committed annual cloud consumption as a licensing fee.

Illustration:

  • Total cloud consumption per month of company ABC that is managing it’s cloud consumptions via FinOps tool XYZ = 50,000 USD.
  • Agreed licensing fee with FinOps tool vendor XYZ = 2% of total cloud consumption managed via FinOps tool
  • FinOps tool license fee to be paid by company ABC to FinOps tool vendor XYZ = 1000 USD

Conclusion

In addition to the above, many FinOps tool vendors offer customized enterprise licensing models tailored to the needs of the organization based on multiple factors that suit the customer – fixed amount, consumption bracket based, subscription based model, etc.

Before finalizing the tool and licensing model, Cigniti encourages clients to leverage the free of charge basic/entry level model provided by the majority of the tool vendors for a limited period to get a better understanding of the impact and ROI of the licensing model in their working environment.

Based on the cloud consumption pattern and FinOps maturity level, Cigniti can help our clients choose the best-fit licensing model that will help to derive maximum value from their cloud investments. Cigniti’s partnership/connect with many leading FinOps tool vendors can be leveraged by our customers to get a quick and better ROI from their FinOps tool investments.

Need help? Get in touch with our BFSI Testing experts and Financial Services team to learn more about the licensing and pricing model associated with FinOps tools.

Author

  • Vijayaraghavan has 17+ years of progressive IT experience in multiple technologies and Verticals. He has largely been associated with emerging technologies including Cloud, DevOps, Packaged Applications (ERP,CRM and E-commerce), E2E Testing and Application Security during his stint in various Tier I IT companies. His key expertise includes: Consulting, Presales, Solution Architecture, New Offerings Management, Partnership & Alliance Management and Partner led Solutioning.

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