Omdia research highlights diverse vendor solutions constitutes $1.6bn FinOps market
LONDON, July 23, 2024 /PRNewswire/ — Recent Omdia research indicates that FinOps is a rapidly developing discipline that enterprises use to control, optimize, and manage their cloud spending. The market consists of established vendors from various management disciplines and new specialized start-ups.
The cloud has experienced significant growth in both scope and scale over recent years, with numerous organizations migrating to leverage its flexibility and operational expense model. This shift has set the stage for cloud computing to become the dominant technology for the next decade. The cloud market has reached a crucial turning point, with more than 50% of workloads now running on some form of public cloud, marking the late majority adoption stage, according to Omdia’s IT Enterprise Insights: IoT, Cloud, AI, 5G, and Sustainability – 2024 survey.
The rise of FinOps has addressed initial financial concerns regarding cloud computing by enhancing the understanding and optimization of cloud costs. These concerns stem from the fact that six cloud service providers (CSPs) dominate approximately 80% of the market as highlighted in the Omdia survey.
Omdia’s report further clarifies the FinOps sector by outlining the key characteristics of a solution. The current market reality is that the FinOps foundation is working to standardize cost and usage billing presentations, allowing organizations to implement consistent processes for data ingestion and analysis across various cloud providers. This standardization will enable organizations to compare cloud service costs across different platforms, although FinOps solutions address the other key capabilities in diverse ways. Despite these efforts, the market remains an emerging market consisting of native cost management from cloud providers, independent platforms, custom-built solutions (mostly XL spreadsheets), and specialized tools.
Figure 1 shows Omdia’s FinOps model, which we view as consisting of two primary areas: cost management and cost optimization. Cost management includes crucial capabilities such as data ingestion, budget and cost management, analysis and reporting, financial integration and automation, and data management. The cost optimization area encompasses key capabilities such as cost allocation and chargeback, forecasting, rate optimization, and usage optimization.
According to Omdia’s Chief Analyst Roy Illsley, “the FinOps market is still evolving, comprising new startups, large vendors developing FinOps capabilities, and established vendors acquiring them. Omdia estimates the market’s value at around $1.6bn. Although there is no current forecast for the FinOps market (expected in 2025), its growth is tied closely to cloud computing, projected to grow at a 14% CAGR from 2022 to 2027. Given that FinOps is still maturing, it is reasonable to assume that the FinOps market will grow faster than the cloud computing market.”
“FinOps vendors are developing solutions to autonomously manage usage and rate optimization in using cloud computing. Yet, the refinement of optimizing cloud-native Kubernetes deployments remains an ongoing challenge for many vendors,” concludes Illsley.
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SOURCE Omdia