Understanding FinOps—and how to make it work for you
Bringing financial accountability to the cloud
It seems like there’s always another “ops” on the way; in fact, it’s common slang among techies to use “YA” (yet another) in front of the latest and greatest industry acronym.
From the early days of the union of cloud computing and the agile development methodology we were introduced to the concept of DevOps. Then the evolution of security tools and automation gave rise to SecOps. If you include developer responsibility and participation in the security mix, you get the mouthful of DevSecOps. And of course, the maturation of artificial intelligence and machine learning tools introduced us to AIOps.
Now we have FinOps. It’s large enough to have an entire foundation dedicated to it, but what exactly is FinOps?
It starts with visibility
FinOps is all about good cloud financial hygiene, and the aggregation and integration of all the entities involved. This includes everything involved with tracking, analyzing and optimizing the costs incurred with cloud usage. The FinOps Foundation has identified three phases of the FinOps journey: inform, optimize and operate.
Cloud financial management begins with visibility. To determine where and what you’re spending in the cloud—and therefore where you can optimize—you must first be informed with a comprehensive view of all the assets in your multi-cloud estate. Your organization needs to have tools and processes in place to give all relevant stakeholders this comprehensive view.
Data-driven insights fuel optimization
Armed with the information gathered in the inform phase, you can begin to optimize cloud spend. With full visibility into your multi-cloud infrastructure, you can identify areas of wasted spend and potential optimization. According to Flexera’s 2023 State of the Cloud Report, organizations self-estimate they’re wasting 28 percent of their cloud spend. That’s a lot of waste—and it’s expected to increase.
We all know knowledge is power. Giving users the knowledge of their consumed resources empowers them to identify and address areas of waste. Cloud optimization also includes usage of provider discounts to achieve cost savings, such as Reserved Instances, Savings Plans, and Committed Use Discounts. Non-production resources can be amenable to scheduling, so they aren’t running during off-hours when they’re not needed. But unless you have the visualization acquired in the inform phase, you can’t take advantage of these savings opportunities.
Leverage technology in the operate phase
Technology comes into play in the operate phase of your FinOps journey. By leveraging lessons learned in the inform and optimize phases, you can identify and track metrics that indicate adherence to, or deviation from, your FinOps goals.
The complexity of the variety of public cloud services, the numerous and complex billing models of these resources and services, and sifting through the noise of all the data generated by these resources combine to present a monumental task. The use of technology and automation is essential to the success of your FinOps goals. The days in which usage data could be downloaded into Excel spreadsheets, and accountants well-versed in pivot tables could manually address the cloud cost optimization requirements of an organization, are long behind us.
The power of FinOps
FinOps is not a one-and-done scenario, but rather an ongoing process that requires monitoring and fine-tuning over time as cloud providers offer additional services, billing constructs and discounting mechanisms. FinOps is about making money: according to the foundation, cloud spend can drive more revenue, signal customer base growth, enable product and feature release velocity or even help shut down a data center. It can remove blockers; empower engineering teams to deliver better features, apps and migrations faster; and inform cross-functional conversation about where to invest and when.
Up next in our FinOps blog series, Flexera’s Director of FinOps, Doug Johnson, will discuss effective FinOps techniques he has developed and areas in which the FinOps ecosystem can be improved. Check it out.