As more and more companies turn to cloud-based services to automate tasks, streamline projects, and boost efficiency, the associated costs of these solutions are also on the rise. With cloud computing-based transformation of business operations, managing cloud-related expenses is now more important than ever before. Traditional procurement models just don’t cut it anymore, and organisations need to adapt to the ever-changing, flexible spending model of the cloud. That’s where FinOps steps in, guiding businesses through the maze of cloud financial management and helping them make well-informed decisions about their cloud service investments.
FinOps, a portmanteau of “Finance” and “DevOps,” refers to a collection of organisational practices designed to help businesses effectively optimise their costs associated with aforementioned cloud solutions. It promotes teamwork between business, finance, and engineering departments, ensuring financial accountability and cost control when acquiring cloud resources. In simpler words, FinOps is all about getting the most bang for your buck in cloud spending.
The goal of FinOps is to make sure that companies purchase cloud resources in the most cost-effective way possible. Adopting FinOps allows organisations to gain better financial control, improve transparency, and ultimately, develop a more optimised cloud spending strategy.
FinOps Challenges and Opportunities
One major hurdle when implementing FinOps is shifting procurement decision-making from traditional roles to engineers. In the age of cloud solutions, web engineers or IT personnel take on the responsibility of acquiring web resources, which is a departure from the conventional way that involves a dedicated staff. This change requires engineers to understand and manage costs, emphasising the need for FinOps to support this newfound decision-making role.
For engineers to make smart cloud spending choices, they need access to relevant data and insights. FinOps plays a vital role in supplying this information, enabling engineers to evaluate various factors like workload configurations, alternative cloud services, and performance requirements. Having this data at hand helps with better decision-making and allows companies to avoid unnecessary costs while maintaining optimal performance.
FinOps ensures that engineers, now in charge of cloud spending, have the data and insights to make cost-efficient procurement choices. FinOps also fosters collaboration between engineering, finance, and business teams, allowing organisations to find the right balance between speed, cost, and quality. Integrating FinOps into their cloud management strategy helps businesses optimise cloud spending, enhance financial predictability, and stimulate growth.
The FinOps Maturity Model
The FinOps maturity model follows a “Crawl, Walk, Run” strategy, enabling organisations to progressively develop and refine their practices. This approach lets businesses start small, focusing on the basics of FinOps, and gradually progress to more advanced levels as they gain insights, experience, and confidence in managing cloud costs.
Stage 1 – Predicting cloud solution costs: The initial stage of FinOps maturity involves forecasting cloud solution expenses. Engineers need accurate cost estimates for cloud resources to make informed procurement choices. Cloud providers offer cost calculators and prediction tools that help organisations achieve this level of maturity, laying a solid foundation for further growth.
Stage 2 – Tracking chargebacks: The second stage emphasises tracking chargebacks, allowing companies to allocate cloud spending to different departments. This requires detailed monitoring of cloud expenses and proper tagging or labelling of cloud resources to determine which teams or departments they belong to. Reaching this level of maturity gives organisations better visibility into their cloud spending habits.
Stage 3 – Cost optimisation: At this point, companies or businesses can identify and act on opportunities to optimise cloud expenses. This might involve migrating workloads to more cost-effective solutions or taking advantage of multiple cloud providers to find lower-cost services. Achieving this level of maturity demands the ability to analyse various factors and use automated, predictive analytics to provide executable, real-time cost insights.
Stage 4 – Optimising beyond cost: FinOps practices go beyond just cost optimisation, focusing on other organisational goals as well. For example, businesses may use FinOps tools and processes to identify opportunities for reducing energy consumption and supporting environmental, social, and governance (ESG) objectives. This level of maturity reflects a holistic approach to cloud management, emphasising continuous improvement and ongoing refinement of FinOps practices.
FinOps as a driver of revenue and growth
FinOps is more than a set of practices; it’s a cultural shift that encourages collaboration between business executives and engineering teams within the organisation. FinOps helps bridge the gap between financial management and technical decision-making by promoting open communication and shared responsibility. This collaborative approach ensures that everyone in the organisation is on the same page when it comes to cost optimisation and efficient cloud resource management.
By optimising cloud spending, FinOps enables businesses to invest more in innovation, product development, and expanding their customer base. It empowers engineering teams to deliver better features, apps, and migrations faster while fostering cross-functional discussions about where and when to invest resources.
FinOps is a continuous process of ongoing improvement in cloud cost optimisation. By embracing the FinOps culture, organisations can regularly reassess their cloud spending and identify new opportunities for cost savings or performance enhancements. This iterative approach allows businesses to adapt to changing market conditions, technology advancements, and evolving organisational objectives, ensuring they remain competitive and agile in the ever-changing cloud landscape.
Stakeholders in cloud financial management and integration within an organisation
Cloud Financial Management involves various stakeholders, each playing a unique role in the practice. Executives set the strategic direction; engineers make informed decisions on cloud resource procurement; FinOps practitioners support and enable cost optimisation; operations teams ensure smooth infrastructure management; finance professionals provide budgeting and financial analysis. Each stakeholder contributes to the overall success of the FinOps strategy.
To fully leverage the benefits of FinOps, it is essential to integrate the practice across the organisation. This involves establishing a culture of financial accountability, communication, and collaboration among all stakeholders. Regularly sharing data, insights, and best practices helps create a common understanding of cloud cost management objectives and fosters a proactive approach to cost optimisation. By integrating FinOps into the organisational fabric, businesses can achieve greater financial control, predictability, and agility in their cloud spending.
The ongoing journey towards better cloud cost management and financial accountability
FinOps has become an invaluable practice for organisations looking to manage and optimise their cloud spending effectively. By fostering a culture of collaboration and financial accountability, FinOps enables businesses to make data-driven decisions, reduce wastage, and achieve better control over their cloud costs. It encourages continuous improvement and adaptation.
The path toward better cloud cost management and financial accountability is an ongoing journey. As the cloud landscape evolves, so too must the FinOps practices that organisations employ. Embracing FinOps as a continuous process ensures that businesses are always seeking new ways to improve and optimise their cloud spending strategies. By committing to this journey, organisations can unlock the full potential of cloud computing while maintaining a strong focus on financial responsibility and sustainability.
Author- Rifat Ahmed
