Cultural shift to cloud savings: The Department for Work and Pension’s FinOps journey reduces costs and boosts citizen services

In today’s climate, there is a need for government entities to achieve cost optimization while maintaining high standards of service delivery and data security. The Department for Work and Pensions (DWP), the United Kingdom’s largest public service organization, implemented AWS Cloud Financial Management (FinOps) best practices, and reduced its cloud consumption costs by 23 percent in fiscal year 2023-24, resulting in annual savings of GBP £8.7 million.

Operating across 800 locations with 90,000 employees, DWP manages GBP £212 billion in annual payments for welfare, pensions, and child maintenance services. As a result, the organization faces the ongoing challenge of delivering enhanced citizen services while maintaining cost efficiency, given constant reductions in its Departmental Expenditure Limit (DEL).

To achieve cost savings, DWP successfully moved 70 percent of its services to the cloud, saving GBP £90 million in data center costs, while improving its digital services through innovative Cloud Financial Management strategies. This cloud migration supports the department’s goals of modernizing IT infrastructure, improving service delivery for its 22 million claimants, and driving innovation while maintaining cost efficiency with public funds. To make more impact, DWP Digital, the department’s service delivery arm, adopted AWS Cloud FinOps best practices, leveraging AWS support as well as and the FinOps Foundation Framework through DWP’s technology partner, Apptio. This transformation reflects a broader trend in public sector organizations: FinOps maturity models emphasize regulatory compliance and long-term budget planning.

Building a cost-aware culture by making data-driven decisions

To maximize value while minimizing spend, DWP Digital launched an ambitious cloud cost management initiative. With strong executive support and using Cloudability, provided by AWS Cloud Operations Competency Partner Apptio, the DWP FinOps team developed a comprehensive strategy to centralize cloud cost and data usage to prioritize optimization efforts. This approach extended beyond immediate cost savings to create lasting organizational change, helping digital teams move from on-premises habits like over-provisioning infrastructure with extra headroom or anticipated future growth. Through ongoing education, teams at DWP now leverage cloud resource flexibility to plan for innovative capabilities like artificial intelligence and machine learning (AI/ML) as needed, rather than provisioning resources in advance.

The transformation began with a detailed mapping of cloud usage across teams. By reorganizing AWS accounts to align with DWP’s functional areas and implementing a straightforward tagging system, teams gained visibility into their cloud spending, which didn’t previously exist. A simple tagging strategy allowed them to develop reporting and dashboards to provide succinct information for directors and teams to take control of their costs.

Interactive leaderboards and key performance metrics sparked healthy competition between teams, driving better resource management and eliminating waste. This transparency created a ripple effect, motivating teams to embrace FinOps principles and seek innovative ways to optimize their cloud operations.

Smart provisioning decreases data analytics costs and allows cultural change

DWP’s approach to cloud resource management yielded significant results across multiple AWS services. The implementation of AWS Savings Plans and Reserved Instances generated GBP £6.4 million in savings, achieving 89 percent coverage of compute usage and 99 percent savings plan utilization.

The transformation began with straightforward, yet powerful, changes. Implementing night and weekend shutdowns of non-production environments saved GBP £688,000. By optimizing data processing architecture, the team secured an additional GBP £794,000 in annual savings. Further improvements to compute storage efficiency contributed another GBP £873,000 in cost reductions.

Using Amazon S3 Storage Lens, DWP identified significant opportunities to optimize their storage costs. The team detected data that could be removed and uncovered unnecessary costly API operations on buckets containing millions of objects. By moving 600 TB of data to S3 Intelligent-Tiering to automate data life-cycling based on access patterns, and implementing these optimization strategies, DWP achieved GBP £790,000 in annual S3 storage savings. This data-driven approach to storage management exemplifies how visibility into cloud resource usage can drive substantial cost reductions.

As leaders in DWP Digital’s project review process, FinOps cloud knowledge now also provides accelerated approvals and keeps actual costs in line with forecasts. Project leaders have the tools to maximize resource usage and create powerful digital enablement. They report that the FinOps team has become a valuable resource to address the number one priority according to the 2023 FinOps Foundation Survey: “Empowering Engineers to Take Action.”

Beyond financial gains, DWP emerged as an industry leader in cloud sustainability reporting—a capability achieved by less than half of organizations in the FinOps Foundation’s State of FinOps Survey 2023. The initiative’s success stems from a deeper transformation: equipping digital teams with comprehensive knowledge of cloud economics and FinOps principles.

How FinOps can drive sustainable innovation

DWP is pioneering cost-efficient, environmentally conscious cloud computing by using the latest generation compute and database instances in AWS Graviton. FinOps teams are also using AWS Graviton for standard virtual machines to speed their widespread adoption. Finally, the team is also calculating unit costs for applications and improving forecasting to drive efficiency and continue building a culture of digital transformation with prudent, sustainable results.

Ready to start your own transformation? Get started today by contacting your account team for support, and download the ebook, AWS Cloud Financial Management Guide, to learn more about how to evolve your financial processes for cloud.