Businesses can overspend on Microsoft 365 services by up to 25% due to lack of visibility and control. As digital transformation continues to rise, managing costs effectively becomes crucial. Microsoft 365, a cornerstone for productivity and collaboration, offers a range of services that can quickly add up in costs if not managed properly. That’s where we introduce FinOps. FinOps combines financial management with operational and technical expertise to optimize cloud spending.
Optimizing Microsoft 365 Licensing
Microsoft 365 offers a range of tools and services, including Office applications, cloud storage, and collaboration tools like Teams. Managing Microsoft 365 costs and all of its apps requires a comprehensive approach. One of the first steps in implementing FinOps for Microsoft 365 is to optimize licensing. Licensing costs can quickly escalate if not managed effectively. Organizations should regularly review their licensing agreements to ensure they are not over-provisioning or underutilizing licenses.
Leveraging Usage Analytics
Usage analytics is another critical component of FinOps for Microsoft 365. Organizations need to gain insights into how different services are being used. This data can help identify underutilized services that can be scaled back or eliminated, leading to cost savings. For instance, if certain collaboration tools are not being used to their full potential, it may be more cost-effective to consolidate services or provide additional training to increase adoption.
Implementing Cost Allocation
Cost allocation is essential for attributing Microsoft 365 expenses to the appropriate departments or projects. This practice promotes accountability and encourages departments to manage their usage more effectively. Implementing cost allocation involves smart tagging resources and services to specific business units. Chargebacks, where costs are billed back to the respective departments, can further enhance accountability and drive cost-conscious behavior. Consider using cost allocation smart tags to categorize expenses and implement chargeback reports to promote accountability.
Managing Security and Compliance Costs
Security and compliance are critical considerations in managing Microsoft 365 costs. Ensuring that your organization meets regulatory requirements can be expensive, but it is necessary to avoid potential fines and security breaches. Leveraging compliance tools can help organizations manage their compliance obligations cost-effectively. By using these tools, organizations can identify areas where they can streamline compliance processes and reduce associated costs. Visual aids like screenshots or diagrams can illustrate how to use compliance tools effectively.
Establishing a Dedicated FinOps Team
A dedicated FinOps team is essential for managing Microsoft 365 costs effectively. This team typically includes members from various departments, each bringing their expertise to the table. Key stakeholders include:
- Finance Team: Provides insights into budgeting, forecasting, and financial reporting. Their involvement ensures that spending on Microsoft 365 aligns with the overall financial strategy and helps in setting financial goals and tracking performance against budgets.
- IT and Operations Teams: Manage the deployment, maintenance, and technical aspects of Microsoft 365 services. They ensure that cost optimization strategies are technically feasible and do not compromise performance or service quality.
- Business Unit Leaders: Oversee specific departments or projects within the organization. They need visibility into their respective Microsoft 365 costs and usage to drive accountability and optimize resource utilization within their units.
- Procurement Team: Handles vendor relationships, contract negotiations, and purchasing decisions. They play a crucial role in securing cost-effective Microsoft 365 services, managing licenses, and negotiating favorable terms with Microsoft.
- Security and Compliance Teams: Ensure that Microsoft 365 services meet regulatory requirements and organizational security standards. They help manage the costs associated with compliance and security measures, ensuring that cost-saving strategies do not compromise security.
- Executive Leadership: Provides strategic direction and oversight for the organization. Their support ensures that FinOps initiatives align with the organization’s broader strategic goals and that there is executive buy-in for cost optimization efforts.
- Project Managers: Oversee specific projects that utilize Microsoft 365 resources. They ensure that project budgets are adhered to and that Microsoft 365 resources are used efficiently to meet project goals.
- Data Analytics Team: Analyzes usage data for Microsoft 365 applications to identify trends and opportunities for optimization. They provide valuable insights that inform cost-saving strategies and help track the effectiveness of FinOps initiatives.
- Human Resources (HR): Manages employee access and usage of Microsoft 365 applications. They ensure that licenses are allocated based on actual need and usage, helping to avoid over-provisioning and underutilization.
- Training and Development Teams: Provide training and support for employees using Microsoft 365 applications. They ensure that employees are effectively using the tools available to them, maximizing the value derived from Microsoft 365 investments.
Collaboration with these stakeholders ensures a comprehensive approach to managing Microsoft 365 costs, driving efficiency, and accountability across the organization. This collaboration helps in aligning financial and operational goals, optimizing resource usage, and achieving significant cost savings.
Real-World Success with FinOps in Microsoft 365
Contoso, a large enterprise, implemented FinOps practices and achieved a 15% reduction in their Microsoft 365 spending within six months by tracking license usage, optimizing their licensing agreements, and implementing cost allocation and chargebacks. Datum Corporation, a mid-sized business, identified underutilized services and streamlined their collaboration tools, resulting in a 10% cost reduction. These are only a couple of examples where companies have largely benefited from implementing a FinOps structure into their business.
For businesses ready to take FinOps to the next level, Surveil offers specialized cloud optimization solutions that work alongside FinOps practices to drive even deeper insights and cost efficiency. Our tools empower your teams to visualize spending, manage resources, and proactively identify opportunities for savings across Microsoft 365. Get in touch with us at Surveil to see how our cloud optimization solutions can support your FinOps initiatives and help you achieve financial efficiency with Microsoft 365.
Read more in this FinOps blog series:
Azure FinOps Mastery: Unlocking Cost Efficiency and Accountability
Microsoft 365 FinOps: Boosting Efficiency and Cutting Costs
Multi-cloud FinOps: Best Practices for Seamless Cost Management
Securing the Cloud: FinOps Strategies for Cost-Effective Security
FinOps for AI: Strategies for Cost-Effective AI Deployments
FinOps in the Hybrid Work Era: Achieving Cost Efficiency and Accountability
FinOps for Partners: Driving Customer Success
The Future of FinOps: Trends, Innovations, and Best Practices