AGC's Insights - Cloud Infrastructure: FinOps

As part of our series of reports on Cloud Infrastructure, we highlight FinOps in this edition. For many enterprises, the cloud is their fastest growing expense and is of sufficient size that it must be understood, managed, and predicted (as far as possible).

We covered the FinOps sector before it was even called FinOps. AGC sold CloudCruiser to HPE in 2017 when the effort was called Cloud Cost Management. AGC then sold Embotics, which was a multi-cloud management platform with cost management as one of several capabilities, to Snow Software in 2020. Fast forward to today, and now FinOps is a $1.8B market that has come into its own. IBM's $4.6B acquisition of Apptio in 2023 raised the sector's profile, and now FinOps has its own industry conference and Foundation to promote best practices.

FinOps has evolved from basic tagging and cost tracking to a more mature focus on actionable optimization that drives efficiency in cloud spend. However, the market cannot sustain ~70 FinOps vendors and so we are now seeing companies try to carve out their own product-market fit strategies. FinOps is evolving beyond these first two phases into broader AI-driven and governance-focused initiatives across IT. FinOps solutions have become part of end-to-end platforms integrated with the software development lifecycle and consolidating toolsets. Cloud purchasing decisions are tied to business value now and FinOps has emerged as a governance discipline.

FinOps has evolved since our work with Cloud Cruiser in 2017 but what has not changed is the need to save money on dynamic compute needs. As a result, FinOps capital markets activity has surged amid a perfect storm of drivers:

- Cloud spending has noticeable impact on bottom line; FinOps provides a very defined ROI in an enterprise environment driven by the CFO

- Hyperscalers are increasing efforts with native tooling

- ISVs, SIs, and ITAM have entered the space to address cloud spend monitoring

- Product positioning is broad and varies by cloud supported, by persona addressed (e.g., finance, DevOps, engineering), by technique used (e.g., arbitrage, tagging, anomaly detection), and by environment (e.g., Kubernetes resource optimization)

Looking ahead, the FinOps sector is poised for continued expansion as multi-cloud complexity, AI-driven workloads, and CFO-led cost governance drive further adoption. The market's shift from standalone cost monitoring to integrated, automated platforms underscore its growing maturity, with M&A and private investment fueling innovation. As enterprises navigate multi-cloud environments and AI-driven infrastructure, the ability to optimize spending in real-time will be paramount. We expect the next phase of FinOps to center on deeper automation; AI-powered cost intelligence; broadened capabilities across discovery, anomaly detection, and remediation over and above only cloud spend; and seamless integration across the software development lifecycle.