Are telcos really in control of their cloud spend?
Insights from the first-ever FinOps report covering the telecom sector.
Whether private, public or hybrid, cloud uptake amongst CSPs has climbed significantly over the past few years – a trend that will only continue as demand for cloud-based FinOps services increases, driven by intense competition and the pressure to reduce costs.
While these challenges, together with the need to more rapidly bring offerings to market and improve the customer experience, are pushing organizations towards greater, more optimized cloud usage, it’s not the cloud that’s the main issue. Rather, it’s about finding ways to exploit the opportunity to derive real business benefit.
One option is to take an internal approach, which essentially means consuming the organization’s own increasingly scarce resources to exploit the cloud. The other – which CSPs are increasingly choosing to embrace – is to adopt an external managed services provider (MSP) model. This is because it offers them access to a wider skill set, control via SLAs and greater agility – all of which are key to FinOps.
A recent survey by Amdocs, The State of FinOps in Telecom 2022, highlights the major trends and challenges for the CSP community as it comes to grips with the need to fully exploit the cloud in the
race to build an efficient FinOps strategy. 50 senior decision makers, including CTOs, CIOs and heads of FinOps in Tier 1, Tier 2 and major MVNO CSPs across the globe were questioned about their cloud uptake, views and FinOps approaches.
Here are the key highlights:
- Who is running telco’s cloud FinOps? 46% of respondents are using external vendors and cloud MSPs (managed service providers) to manage their daily cloud FinOps operations.
- How much do CSPs spend on cloud? Investment levels in the sector are relatively high with an average estimated spend on cloud services and usage running at over $31m annually. 58% of respondents invested over $24m and 10% were spending more than $60m
- Is cloud spend expected to grow? Yes, results show that CSP cloud usage is set to grow greatly over the next two years, with 36% reporting significant (greater than 10%) growth and a further 42% suggesting growth will be moderate (1%-5%). Not a single CSP predicted a decline in cloud usage.
- Is this growth planned or supervised? Not really. 88% of respondents report that their annual spend is higher than they predicted
- Are FinOps tools helping telcos save on cloud costs? Yes. 68% of respondents have managed to optimize or reduce costs thanks to a FinOps tool
With consumer spending already showing signs of slowing due to increasing inflation, and as CSPs begin to feel increased pressures from competition, we expect that cloud-based FinOps will play a more prominent role in optimizing business operations. The benefits will be seen in greater cost reduction, freeing funds for further investment and enabling a better customer experience.