How FinOps Can Help Manufacturers Thrive in a Recession

Manufacturers today must use FinOps practices to drive financial accountability and cloud success … especially amidst economic recession.

By Sean Donaldson, Chief Technology Officer at Protera

Manufacturing leaders are no stranger to the cloud. In fact, multiple studies over the last few years — including from the likes of McKinsey — have found that manufacturing companies are further along in cloud adoption than other industries.

But moving to the cloud is just the first piece of the digital transformation puzzle. Fully embracing it and ensuring you get maximum value from it is an entirely different ballgame.  In this uncertain economic climate, it’s imperative that manufacturers extract everything they can from their cloud investments. Let’s be clear, though: This doesn’t necessarily mean spending the least money; it means managing cost most effectively.

That’s where a FinOps strategy comes in — and where it can ultimately make all the difference.

The Rise of FinOps

FinOps is far more than a strategic approach to cloud spending. FinOps — a portmanteau of “Finance” and “DevOps” — is a total mindset shift and an all-encompassing cultural practice. And it is the future of IT cost management for modern businesses.

At its core, FinOps is focused on improving communication and collaboration between the business and engineering teams in an organization. Enacted effectively, it ensures they can each manage cloud costs by taking ownership of their cloud usage. That ownership — not to mention discipline — is vital to maximizing the value of digital technology.

Many manufacturers embraced cloud technology during COVID-19 pandemic because it was simply necessary. Continuing to run without it would have been impossible. Today, however, in anticipation of tightening financial purse strings, the value part of the equation stands larger than ever. Cost will be top of mind in 2023, and for those who want clear and transparent insight into where money is being spent and what they’re getting out of it, nothing can make as big of a difference as a cogent FinOps approach.

The Fertile Soil of Manufacturing

The manufacturing industry is poised to serve as particularly fertile ground for the growth of FinOps. Why? Its different elements — whether it be warehouse management, machine maintenance or efficiency tracking — are ideal for experimentation. Because the cloud allows for a more modular approach to innovation, manufacturers can trial-and-error IoT technologies and innovations, ensuring money spent on the cloud will achieve its maximum value.

Think of some of the benefits manufacturing companies can see from using FinOps in the cloud:

Determining how resources are being used, by function, and uncovering the related costs to the organization.

Embracing data analytics and advanced reporting to better examine how to change and improve overall operational performance.

Measuring and analyzing budgets more efficiently and accurately, improving decision making by key stakeholders, including in areas like sustainability.

Iterating and testing advancements over time is a central part of success in the cloud. Rather than having to commit to one huge, on-prem decision like in the old days, companies can assess and adjust as they go along. It’s not like shooting an unmanned rocket at the moon and hoping it hits. It’s like piloting a ship that you’re in total control of.

Image: L.B. Foster Company

The Real-World Possibilities

In my work, I’ve seen this strategy pay off handsomely for several manufacturers, including L.B. Foster, a provider of manufactured solutions that are used to build and support infrastructure throughout the world. 

L.B. Foster Company was founded in 1902. With a rich history of success, many of its years were without technology as its backbone. Now, L.B. Foster is focusing on growing its business by using technology as a competitive advantage. The company embarked on its cloud journey, partnering with Protera, to develop solutions that directly impacted the bottom line through automation, elimination of waste and reduced complexity. L.B. Foster has focused on real-time transacting and getting the information in the hands of the end users when they need it most so that well-thought-out decisions can be backed by sound data at all levels of the organization.

More specifically, a FinOps strategy provided the blueprint for the company to evaluate, redesign and optimize manual processes from the shop floor to the end customer. There were several opportunities to automate processes and reduce waste in ways that directly impacted the bottom line, such as stenciling of products, automation through bar code transactions, and direct transaction processing through SAP. These projects were not overly expensive and created ROI in a matter of months.

FinOps provided the guardrails to ensure the right resources were deployed to provide the best outcome possible, using cutting-edge technology backed by Protera cloud services.

“Companies often consider information technology a cost center, but more and more, we see IT departments operating as valued assets to companies’ growth,” said Brendan Verni, VP of IT at L.B. Foster. “In fact, our technology department is partnering — and in some cases, leading — the effort to transform and grow our business via agile technology solutions. These positively impact not only our back-office operations but, ultimately, our customers.”

With FinOps in place, companies can drive organizational efficiencies while designing and maintaining unified IT governance in the cloud. They’ll also have a more holistic understanding of how investing in business processes and the cloud — especially in uncertain economic environments — can power their business strategy.

sean donaldson proteraSean Donaldson

As Protera’s Chief Technology Officer, Sean Donaldson is responsible for driving adoption of key services and technologies to enable the expansion of Protera’s service portfolio, with a deep focus on security and cloud governance. With over 20 years in IT Managed services, Sean has cultivated a mission of utilizing technology to drive meaningful business outcomes for the company and its clients. Prior to Protera, Sean held the position of CTO at Secure-24 and NTT Managed Services.

The post How FinOps Can Help Manufacturers Thrive in a Recession appeared first on Industry Today.

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