57% use native tools for FinOps but analysts say that’s a problem

In ancient times, tools were made from readily accessible natural materials — think stone axes, wrought iron nails, and grinding stones. Sure, these tools got the job done, but not without a lot of manual work.

Fast forward to today, and we find that the majority (57%) of companies are using native tools to power their cloud cost management programs or FinOps practices. A mere 21% percent say they use a FinOps-specific solution. These are the latest findings from the FinOps Foundation’s State of FinOps Report, a study of 1,245 FinOps practitioners.

Native tools refer to vendor-provided tools — the built-in dashboards and analytical tools found inside a cloud service provider’s portal. But are cloud service providers the best ones to help you achieve all that FinOps promises? Can they really help their clients reduce the rate they pay for their services and make the best use of their infrastructure and applications? If not, where does the native approach fail?

Here’s what the experts at Gartner have to say about it.

A FinOps warning from analysts: Beware of native tools

In late 2023, Gartner issued their own research on the maturity of FinOps programs at many companies, finding that cloud financial governance practices are largely immature. The cause? The tools they use.

“FinOps is a particular implementation of cloud financial management. It is often oriented toward what the vendor’s tools can do, rather than high-value best practices,” says Gartner.

In-house programs using native tools aren’t always adequate in achieving all that FinOps aims to be – a complete services management approach that lowers spending and improves cloud resource utilization.

Limitations can include:

• Narrowly focused features with capabilities for only a single cloud service from one provider – rather than a comprehensive solution addressing multi-cloud environments
• A lack of integrations into corporate financial management systems, allowing for customizable budgets and cost allocations or chargeback abilities
• Technical limitations including short utilization look-back periods that lack enough information to provide meaningful insight

Your FinOps practice will only go as far as your tools, and data collection and analysis are the highest concerns. We all know that garbage in equals garbage out, and Gartner finds that leaders fail at “regularly producing the basic deliverables for essential cloud financial management.” They fall flat at the first step, meaning they can’t get their FinOps programs off the ground.

Here are the reasons why.

FinOps practitioners face a data & analytics problem

Anyone who has studied the FinOps Framework and maturity model can appreciate the importance of data analytics in advancing through the “Crawl, Walk, Run” stages. Every FinOps practice begins with the “Inform” phase, which is founded on visibility. But achieving data observability is one of the primary challenges for any practitioner. That’s because:

• Data is Distributed: Critical information is distributed across the cloud — many providers and dashboards hinder centralization.
• Information is Complex: Cost and Usage Reports are massive data files with hundreds of thousands of lines to analyze. Without integration, automated data ingestion, and advanced analytics, finding insights is akin to building a boat using nothing more than a tomahawk and a tree trunk. 
• There’s No Standardization: From IaaS billing information to discounting models and service structures, cost and usage data is largely unstructured and needs to be normalized across each cloud service provider before any meaningful analysis can take place. Data normalization is one of the largest issues in solving the problems of cloud cost governance.

Untangling data, making it all “sing from the same songbook,” and putting it all into a usable structure are the first prerequisites for FinOps efficiency. Native tools and point solutions aren’t always designed to tackle this upfront, and trying to solve this issue with people and spreadsheets simply won’t work.

And this problem extends beyond the cloud.

A 2024 Vanson Bourne study confirms that companies using in-house programs and tools to manage their IT expenses struggle with data analytics and inventory management — more so than companies using third-party solutions. In fact, data shows 88% of those outsourcing their programs see faster time-to-insights and faster time-to-savings at a cost 5X less.

Don’t let native convenience get in the way of results

The heavy reliance on native tools for FinOps achievement is prevalent, as indicated by the latest findings from the FinOps Foundation’s research. However, the cautionary note from Gartner highlights their inherent drawbacks. While native tools offer the convenience of dashboards built into existing services, they often fall short of the analytical capabilities necessary for full optimization. Plus, they’re inadequate in customizing the presentation of data in ways that make it actionable. Information that can’t be personalized for stakeholder teams or tailored to corporate financial practices is unusable – it returns no value.

This is why IT and finance leaders rely on FinOps solutions including cloud expense management software and services.

As companies navigate cloud services management, it becomes increasingly evident that success requires purposeful tools that can provide centralized visibility, advanced analytics, standardized data structures across diverse cloud platforms, and personalized information. Only by addressing these foundational challenges can FinOps programs fully realize their potential — optimizing both costs and resource utilization in the cloud.

Ignite your FinOps strategy with a library of tips from Tangoe, the leader in AI-powered cloud cost optimization.