As economic pressures continue from 2023 and executives put cloud spending under the microscope, FinOps teams are prioritizing the reduction of waste and the efficient management of committed discounts, according to the FinOps Foundation’s fourth annual State of FinOps survey.

The FinOps Foundation, a nonprofit trade association within The Linux Foundation, reached 1,245 respondents at more than 1,000 companies to determine common priorities in terms of managing cloud spending and realizing value.

Reducing waste and unused resources is the top priority for FinOps practitioners, cited by more than 50% of respondents. “This may be influenced by macroeconomic trends, with businesses looking for ways to reduce spending without reducing the value they are getting from their cloud investments,” FinOps Foundation CTO Mike Fuller told SDxCentral.

Managing commitment-based discounts is another major priority for 43% of respondents, followed by accurate forecasting of cloud spend (41%), full allocation of cloud spending (38%), organizational adoption of FinOps (36%) and empowering engineers to take action (35%).

This data represents a shift from previous years. “Empowering engineers to take action has fallen from the top spot for the first time since the survey began in 2020,” Fuller said.

While this shift signals the current impetus on reducing cloud waste, “we believe FinOps practitioners still view empowering engineers as an important pathway to achieving cost efficiency, and it remains high on the list of key priorities,” he said.

Breaking the data down by amount of money spent in the cloud (more than $100 million, $15-100 million and less than $15 million), reducing waste and unused resources are top priorities for all spending tiers, but there are differences in the second-highest priorities.

Managing commitment-based discounts is the second priority for the top two categories of spenders. For lower spenders, the second priority is forecasting cloud spend, which shows “the need to understand the trajectory of spending before it gets out of hand,” Fuller said.

The survey also found that the costs of artificial intelligence (AI) and machine learning (ML) are rising concerns, especially for bigger companies. FinOps practitioners use AI/ML in two main ways: using AI/ML for the practice of FinOps itself – AI for FinOps – or managing AI/ML service costs – FinOps for AI.

While AI/ML has been injected into many organizations’ offerings, very few are doing FinOps on their AI/ML costs, according to the report. Just 31% of respondents said the costs of AI/ML are impacting their FinOps practice today, and the FinOps Foundation anticipates substantial opportunities for FinOps tools to demonstrate value from AI spending.

Large cloud spenders, however, are seeing more significant cost impacts from AI on their FinOps practice, with that figure rising to 45%. This aligns with the survey data on overall priorities – enterprises with a larger cloud budget see AI/ML as a growing source of variable costs that need to be managed.

“This period for AI is reminiscent of when cloud itself first hit the scene,” Fuller said. “Large amounts of unbounded experimentation was encouraged early on with little consideration to cost or governance, until the costs began crossing budget thresholds or were growing faster than expected. At that point, experimentation was slowed or stopped, and efforts were made to reduce costs.”

The FinOps Foundation recommends that any time an organization looks to adopt a new cloud technology, reporting, forecasting and basic guardrails need to be implemented early on to avoid major reworking and allow for experimentation within limits.

Fuller expects the defining trends around AI/ML will continue to take shape as 2024 continues.  “Will AI/ML become one of the biggest costs to manage across all levels of cloud spend, adding to the FinOps practitioner’s already full plate? Or will the technology be leveraged to make things easier for practitioners, unlocking more intelligent optimization and automation? The former is already happening for many, while the latter is still a hope,” he said.