Today, CFOs, CIOs, and CTOs are at a crossroads with each other. The reason? Rising software development costs, the constant struggle to find the source of value creation, and drive business agility. The struggle is obvious as software development costs make up 63% of a project’s budget.
Most engineering leaders face a common dilemma- shoot budgets through the roof or compromise on quality at lesser costs. The line of thought has had some anecdotal evidence from the past where developer innovation was bludgeoned in the name of optimizing software costs. This common misconception has driven many towards fiscal drag, product failures, and forgettable customer experience.
Today, C-sec executives across all verticals are frantically trying to find a single source of truth to understand and optimize engineering spending, while fostering financial accountability.
It's where DevFinOps steps in as the game-changer.
What’s DevFinOps?
DevFinOps is a blend of Development, Operations, and Finance, all rolled into one powerful box.
It wouldn't be wrong to call DevFinOps as the ‘Henry Ford’ moment of engineering. Just like Ford introduced automation to accelerate production, and curtail costs; engineering teams must manage engineering costs.
The idea is to align development efforts with financial goals, so teams create the most value out of every engineering investment made and there is more dollar generated in turn for every dollar spent on the software development.
Traditional software development has followed the ‘build now, cost later’ approach where cost optimization takes backseat initially, and later comes to haunt C-secs for blindly offering finance buy-ins.
With DevFinOps in their arsenal, engineering teams now build products while being mindful about development costs. It also translates to building strategic assets that can be capitalized, rather than expensed, and subsume any financial burden.
DevFinOps is a natural evolution from FinOps, and expands financial prudence beyond the cloud, and across all engineering verticals- cloud, to issue trackers, maintenance costs, software licenses, training and development, prototyping, and VCS. Basically, getting at the core of development.
The Need For DevFinOps
#1 reason for this cultural shift– skyrocketing IT spending. In 2022 alone, enterprises dished out $783 billion, and will soon reach an estimated $1 trillion at a 10% CAGR– all the amount spent on IT alone.
Amid economic uncertainties, high fees, upcharges, and IT prices can cause dismay, even putting higher pressure on engineering teams, already strained with high toil and uneven engineering demands.
The other reasons for engineering teams to shift towards DevFinOps:
- DevFinOps helps engineering teams imbibe strategic vision, and data-driven insights into streamlining SaaS, IaaS, and PaaS spending.
- The cultural approach empowers engineering teams to reduce resource wastage, and unsustainable spending, in an era where tool sprawl and unproductive cloud spending have plagued most engineering organizations.
- Frugality is a super power, and most engineering teams secretly wish for it and still largely fail at it. And DevFinOps is here at the rescue! Even Mckinsey notes how incorporating financial practices into SDLC can save up to 30% of IT costs.
- The combination of financial strategy with DevOps pipeline helps teams maintain business alignment and ongoing improvement. For instance, the hybrid work shift accelerated by the pandemic has rendered many telecom services, and network infrastructure unusable, and inoperable. DevFinOps brings back these lost costs through routine inspections.
- DevFinOps’ true value comes in capitalizing software costs, by turning expenses into assets and creating healthy balance sheets.
The DevFinOps principles are white-hot today, even adopted by some of the leading global organizations. Shopify’s legacy in adopting DevFinOps is an inspiration for many. The eCom giant reduced 10% of their infrastructure costs through cloud migration, adopting Kubernetes, and mapping engineering efforts with every dollar spent (thanks to data-driven culture at Shopify).
Despite all the benefits that DevFinOps offers; its implementation remains scarce and sluggish. Why?
The Bumpy Road To DevFinOps
Gartner recently surveyed global C-suite execs on adopting new approaches to their development cycle. The results were staggering. Even though 52% of CEOs aim to optimize their cost-to-growth ratio, they struggle to fully capitalize on their implemented strategies. The other 59% are in dismay because these cultural shifts take too long to reap their benefits. DevFinOps adoption too has a similar story to tell.
In engineering organizations, DevFinOps cannot scale in manual environments dominated by the Excel sheet culture. A visibility driven by constant badgering to know about current engineering efforts can rebound, and harm an organization, rather than doing any good. A lack of data-led culture can also snowball into team friction, and frustrated employees, followed by resignations from both sides- be it engineering or finance. These issues have roots in a lack of access to historical data that might have helped teams forecast cost dynamics beforehand.
Another issue is complex engineering workflows. Constant juggling between development to testing, and deployment introduces its own set of financial considerations. Determining the cost implications of every action can feel like untangling a web of complexity.
Moreover, introducing DevFinops means tweaking your reporting, and project management operations to incorporate new practices. Any change, especially in already burdened engineering teams, comes at its own cost. This change is often met with resistance. Getting buy-in from almost everyone in the team is a tough nut to crack.
Convincing teams to adopt a new DevFinOps approach might be like herding cats. Devs and managers are comfortable with familiar routines, and altering these routines comes with new learning curves that need time (something engineering teams never have), diverted developer attention, and even quality compromises.
This resistance often stems from knowledge divide, a myopic view of engineering activities, and lack of team enrollment across all levels. The development team might excel in writing codes, but when it comes to understanding financial jargon, things get lost in translation. Bridging the gap between tech brilliance and financial wisdom is easier said than done!
All this leads to degradation of work ethos for the development team, and a dent on developer productivity. Cloudzero’s recent survey reveals the implications of burning software costs on engineering productivity – 41% of devs face higher interruptions, even lasting till next sprint, all because of internal cost problems.
Overcoming these challenges demands a mindset shift, a learning curve, and a hearty dose of collaboration.
Engineering Analytics: Answering The DevFinOps Challenges
It’s an old saying in engineering- you need to measure it before you improve it. The same goes for adopting DevFinOps in your organization. A core reason behind limited success of DevFinOps is limited visibility. It’s simple as basic math- The more visibility teams have into their workflows, the more the collaboration, and a better pulse of engineering processes.
Engineering analytics make that happen, by offering end-to-end visibility, real-time actionable insights, and team updates- all on a single pane. Visibility, backed by contextual data into engineering spending removes blindspots between engineering, and finance teams, and helps teams to realize shared goals while answering tough questions like:
- How much does a product cost?
- The viability of existing resources in maintaining IT infrastructure
- Should we outsource or build in-house?
- Where each, and every dollar is being spent
- How can we break even software costs?
- The miscellaneous software spending
- Revenue Impact from individual projects
- Are these costs capitalizable? If yes, then how to categorize these costs?
With real-time data on development progress and costs, the two teams can collaboratively decide on all hot topics- the underutilized resources, or whether to accelerate timelines or allocate additional resources.
Another use-case of engineering analytics in DevFinOps is finding the balance between OpEx, and CapEx costs. With the help of actionable data, teams can automate cost capitalization without much human intervention, and even keep a check on operating expenses every time they breach the team threshold.
In a nutshell, data is not just the new oil, but also the key to unlocking DevFinOps at your organization!
Bottom Line: Bringing Financial Clarity to Your DevOps Pipeline
Working out a DevFinOps strategy comes with its own eureka moments- only having visibility into your engineering workflows isn’t enough. It’s a continuous exercise requiring regular support from both ends of the spectrum- the finance, and engineering teams.
Capping software budgets to optimize costs is a narrow approach. And what DevFinOps brings is a new outlook of how non-tech business teams see engineering efforts, and even offers a new code of conduct for how engineering teams operate, and spend.
DevFinOps today stand at the intersection of cost excellence, and engineering success. The spirit of continuous improvement thrives with data-driven teams. DevFinOps is a path worth taking – a path that aligns development, finance, and operations to create a seamless, cost-efficient, and value-driven process.
