FinOps is the cloud operation model that consolidates finance and IT, just like DevOps synergizes developers and operations. FinOps can revolutionize accounting in the cloud-age of business, by enabling enterprises to understand cloud costs, budgeting, and procurements from a technical perspective.
The main idea behind FinOps is to double the business value on the cloud through best practices for finance professionals in a technical environment and technical professionals in a financial ecosystem.
What is FinOps?
FinOps can be defined as the guide to a profitable cloud through processes and practices that harmonize business, engineering, and leadership teams. According to FinOps.Org, this operating model has three phases that include information, optimization, and operations.
Accountability and visibility
The information part of the FinOps lifecycle targets to create accountability through visibility and empowerment. Businesses can develop or adopt processes that help them see sources of cloud expenditure and how resources are spent. It is possible to leverage customized cloud pricing models to make efficient budgetary allocation and create expenditure projections based on cloud data usage stats.
- Some of the FinOps best practices in accountability include:
- Each team must take ownership of their cloud usage
- Each team must align their cloud usage to budget
- There must be tracking and visibility in spending
- Reports must be continuously generated and be fully accessible
The optimizations that follow are based on the visibility gained in the information part of the FinOps journey. By using the spend analysis, businesses can tune performance and spend money where a considerable return is guaranteed. FinOps cost optimization helps to minimize resource wastage through strategies such as reservation planning and Committed Use Discounts.
Further, FinOps optimization relies on measures such as:
- Centralizing the management of Reserved Instances, Saving plans and Committed Use Discounts and Volume with cloud providers
- Centralizing discount buying process
- Granular cost allocations to the teams and their direct cost centers
- Search for idle or underutilized resources and take action, This could result in significant savings.
FinOps is not complete without a multi-disciplinary approach to operations to set business objectives and evaluate cloud business performance based on those metrics for efficiency in resource usage. This task requires financial experts, developers, and management on board for a refined cloud resource balancing. Businesses can deploy automation that streamlines these processes for accuracy and time-saving.
The best FinOps operation structure in an organization is defined as one where:
- Finance works at the speed of IT
- Costs is one of the new metrics for the engineering team
- Efficiency and innovation are the primary goals of all cloud operations
- There are clear governance and controls for cloud usage
Sound FinOps needs a Cultural Shift
FinOps cloud operations rely on the successful merging of all teams that partake in cloud resources and expenses. When these teams come together, old accounting models are broken, giving rise to new cost optimization procedures that lead to operational control and financial gain.
Intensified collaboration and cultural shift was the critical message in the 2019 AWS FinOps summit in Sidney. The cloud provider believes that there is a need for distributed decision making along with empowering feature teams to manage their resource usage, budgeting, and accountability.
As cost becomes everyone's agenda, enterprises must also focus on cloud providers' availed opportunities for cost savings. These include the Azure FinOps components such as the Hybrid Benefit and Reserved Instances that help to make accurate calculations and flexibly control spending. FinOps Amazon cloud considerations for your teams include AWS Volume Discounts and EC2 Saving plans and Reserved Instances.
The FinOps foundation
FinOps is all about breaking down the silos between finance, development, and operations teams. The FinOps foundation is the non-profit organization set up to help companies develop, implement, and monitor best practices for cloud financial management.
According to a study by 451 research, “most enterprises that spend over $100,000 per month on cloud expenses remain unprepared to manage cloud spending.
Seeing as the vast majority of companies lack capacity and expertise for the proper financial management of cloud costs, the FinOps Foundation has defined a set of FinOps values and principles and offers certifications to individuals, helping to validate a person's FinOps knowledge after they have gone through the training course the organization provides.
The FinOps course is encouraged for your finance, IT, engineering, and management personnel, and relies on learning resources such as the O'Reilly cloud FinOps book to comprehensively define what FinOps entails for an organization.
While costs and efficiency are the key drivers for cloud adoption, these two can quickly become a problem for businesses. FinOps best practices are geared towards increasing financial visibility and optimization by aligning teams and operations.
At Cloudride, speed, cost, and agility are what define our cloud consultation services. Our teams will help you adopt cloud providers, infrastructures, by enabling solutions that deliver not only the best cost efficiency but also assured security and compliance.
Find out more.