Battling Cloudflation with Innovation - Why We Invested in Ternary
We are delighted to share we led Ternary’s $12mm Series A fundraise. Ternary is a dedicated cloud financial intelligence platform, tailored especially for the seamless collaboration of engineering, finance, and FinOps teams.
To fully grasp our enthusiasm about Ternary, we should discuss the current state of the cloud - best described as “Cloudflation,” - a hot-button topic highlighting the steep rise in costs tied to cloud services.
In the past year, most organizations' cloud fiscal footprint has ballooned dramatically faster than they can keep up with. In fact, a staggering 94% of organizations incurred higher costs than anticipated in 2022. This overshoot largely stems from the complexity that makes cloud expenditure a difficult task to manage:
Cloud’s self-service, on-demand, and essentially limitless scaling ability. The largest source of unpredictability in cloud is the very thing that makes it so powerful to begin with. While on-prem compute was a predictable CapEx, purchased by a single team or manager as a fixed number of data racks upfront, cloud resources have become an OpEx with decentralized purchasing power. Developers can quickly spin up cloud workloads as-needed, making it incredibly easy to overspend budget, set and forget resources, and overprovision - aka, deploy and pay for resources that aren’t utilized.
Opaque and complex billing. Each cloud service provider (CSP) has their distinct pricing models across their hundreds of services with various configuration options. Consequently, prices morph into a hard-to-decipher combination of many factors, including data volume, network usage, instance types, and storage types, just to name a few.
Increased reliance on cloud-hosted workloads. As the digital transformation wave sweeps across industries, a significant portion is driven by cloud initiatives. It's projected that by 2025, 95% of workloads will reside in the cloud. Hardly surprising given the escalating data traffic within the cloud and the surge in applications delivered through it.
Higher adoption of multi-cloud environments. In response to the skyrocketing demands, many organizations are turning to multi-cloud approaches for performance optimization, risk management, cost efficiency, or to benefit from unique feature sets each CSP delivers.
All of these factors have led to the Cloudflation phenomenon and, even worse, cloud waste - an estimated 30-40% of expenditure goes unused. This is mainly because the legacy systems and processes for managing costs are not tenable in these increasingly complex cloud environments. Existing management tools revolve solely around technical users and lack the granularity and visibility needed for finance and engineering teams alike to make effective optimization decisions.
Unchecked cloud utilization can significantly impact all parts of an organization, pressuring operational efficiency, financial predictability, and even the ability to innovate - but organizations know it’s not going away.
Cloud spend is on track to reach $600bn this year. As a result, the conversation has shifted from simply mitigating the impact of Cloudflation to driving efficiencies that can free up resources for investment in innovation or growth. Organizations don’t want to reduce spending, but they want to get the most value out of it. In turn, cloud cost management is no longer just an operational concern under the sole responsibility of CISOs/CTOs, but rather a strategic imperative owned in equal part by finance and operation leaders. And this is where the FinOps opportunity comes in.
FinOps is an emerging discipline focused on bridging the gaps between cloud stakeholders, providing visibility and insight necessary for all parties to make relevant and proactive cloud spend decisions. Already proliferating organizations across the board, Fortune 100 and midmarket companies alike have begun creating entire teams dedicated to FinOps. In response, a new wave of startups has emerged to serve this new function and plug the gaps of their predecessors.
In that effort, Ternary rises above all others.
First, Ternary is deeply solving the multi-player game. The granularity of their data labeling, reporting, and insights allows any relevant stakeholder to extract the exact information they need, translated in a format that’s both specific and relevant for each user. Whether it be determining unit economics for a new feature, identifying your projected cloud utility over a specific time period, or detecting anomalies in your actual spend, Ternary has built-in use-case-specific workflows and simple UI for any important constituent to navigate.
Second, their product plugs into all major cloud providers, a number of ISVs, and offers a data ingestion API, enabling users to consolidate and normalize virtually any relevant cost source into the Ternary system. In this way, piece-meal approaches to cobbling together unit costs or asset utilization are no longer needed, finally allowing leaders to evaluate fragmented vendor spend on an apples-to-apples basis within a single pane of glass.
Third, the serverless, cloud-native, agentless architecture Ternary was built on allows them to scale as the cloud does - limitlessly - and effectively serve even the largest of spenders.
All of this has been made possible by the magic of the Ternary team. Sasha, Patrick, and Joshua are founders who felt this pain deeply as they led the massive migration to cloud at their previous organization. Being embedded in the trenches firsthand has given this founding team a distinctive ability to understand the problem set across multiple parties and translate that into a market-leading product.
This keen eye for innovation and appreciation for their customers’ needs has uniquely enabled them to attack the enterprise market, still shadowed by underdelivering legacy players.
If you, or anyone you know, is battling against rising cloud costs, reach out to me or the Ternary team - we can’t wait to see the difference they make across all enterprises and industries, large and small!