Today, many organizations are adopting hybrid, multi-cloud approaches to enhance productivity and drive innovation. However, they are struggling to optimize value and control cloud spending.
FinOps can balance this act by providing organizations with efficient ways to improve cloud usage while delivering speed and agility.
What is FinOps?
FinOps, a short word for Financial Operations, is the combination of finance, technology, and business to increase the enterprise’s ability to understand cloud costs, make smart decisions, and take proper action to improve business value. A natural companion to DevOps, FinOps when done right, becomes part of the enterprise culture by breaking down functional barriers between development, finance, and commercial teams. It enables different teams to collectively rethink and reimagine how they work and collaborate, assigning appropriate accountability and metrics to each of them.
Why should your organization adopt FinOps?
FinOps may be a new word and a new practice for organizations, but it is not a new function as cloud migrations and cost management have already been taking place across enterprises for the past two decades. FinOps brings visibility and accountability to organizations struggling to optimize cloud spending and make proper decisions.
This approach inherently affects most areas of an organization, where everyone in the organization has a role to play in cost and value management.
Some of the challenges organizations face today include the inability to gain value from cloud utilization, slow optimization of cloud consumption from development and delivery teams and lost connections between cloud and enterprise strategy.
As per IDC Futurescape, by 2023, 80% of organizations using cloud services will establish a dedicated FinOps function to optimize cloud resources and maximize value.”
For successful completion of the FinOps program and to attain the necessary business value, the program should be coupled with two basic principles,
- Pain points to be addressed
- Tools, frameworks, approaches, and personnel required
The most common challenges faced by organizations when coming to the cloud include three main issues,
- Overspending on existing on-premises and off-premises hybrid cloud resources
- Lack of visibility into cloud resources and business value for leadership and senior executives
- Inability to connect public cloud strategy with overall technology strategy
How can your organization optimize costs and deliver value?
Cloud challenges come from the complexities of invoicing and billing when multiple cloud providers are used across different teams or departments, which requires teams to shift their ways of working and attitudes toward cloud consumption.
FinOps improves culture and management within an organization by creating visibility into where cloud utilization is occurring, who is involved in spending, and why the spending is happening.
Organizations that are able to establish these practices will infuse healthy cloud financial management skills into their people along with cultural shifts, resulting in collaborative data-driven decision-making between people from different departments.
A successful FinOps adoption should address the following,
- Outstanding IT-wide, cross-functional support
- Cloud decisions are driven by business objectives
- Individual accountability for cloud usage and spending
- Timely and accessible FinOps reports
- Actively managing the variable cost model of the cloud
The FinOps solution, when done right, brings cultural shifts and becomes part of the company’s DNA. In order to succeed, the solution needs to break functional barriers and bring collaboration between a wide range of stakeholders across the organization, from top to bottom and everywhere. From managers down to the newest engineer, FinOps requires everyone from the organization to take part in both strategic decision-making to practical action. By setting targeted metrics and allowing accountable parties to verify the cloud spend, FinOps delivers business value while cutting costs.