What is FinOps and how does it help you control your cloud costs?

The ongoing migration to cloud holds many benefits but also comes with complexities. One particular challenge is managing the financial implications of operating in the cloud.

Enter FinOps.

FinOps defined

As you scale your cloud infrastructure, controlling and optimizing the associated costs becomes increasingly challenging. This is where FinOps – a combination of “finance” and “DevOps” – can help.

FinOps is an operating model that stresses the need for cross-functional collaboration between your finance and IT engineering teams. By bridging the gap between technology and finance, it aims to bring about a cultural shift. With a FinOps model, all teams and resources involved in cloud operations should take ownership of their cloud usage and costs.

FinOps fosters collaboration, allows you to monitor your cloud expenditure more closely – which supports informed decision-making – and helps you optimize cloud resource allocation.

Why does FinOps matter?

FinOps plays a transformative role for organizations that want to modernize their IT and migrate to cloud.

Managing costs becomes paramount when you’re using cloud services from multiple providers, but variable expenses make the financial management of cloud resources a tricky affair.

Without proper governance and management, your costs can spiral out of control – but FinOps introduces discipline, transparency and accountability. By getting to grips with cloud economics through FinOps, you can maximize the return on your cloud investments.

The core benefits of FinOps

Adopting a FinOps strategy comes with a slew of benefits, particularly for organizations that are modernizing their IT infrastructure and starting their cloud journey:

• Cost control: FinOps makes costs more predictable. The pay-as-you-go pricing model of cloud services may seem appealing initially, but without effective management, the costs can escalate quickly. FinOps gives you a clear view of cloud usage and the associated costs, enabling predictability and better control over expenses.
• Spending forecasts: FinOps can help you forecast your cloud costs more accurately, so you can make better-informed decisions about your future cloud investments and avoid overprovisioning – and save in the process.
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• Improved collaboration: FinOps fosters a culture where your IT, finance and business teams collaborate more closely to manage cloud costs. In this way, everyone is on the same page regarding cloud usage and cost management. It’s an inclusive approach that improves operational efficiency and empowers teams to make more informed cloud-related decisions.
• Effective usage of cloud resources: FinOps helps you manage your cloud resources smartly. With better insights into consumption patterns, you can allocate resources more efficiently and identify opportunities for cost optimization without compromising performance. For example, you can switch off underutilized resources during off-peak hours.

FinOps for a multicloud environment

As digital transformation continues across industries, many organizations are using the services of multiple cloud providers. While a multicloud strategy offers benefits such as a reduced risk of data loss, improved performance and avoiding vendor lock-in, it also introduces complexity in cost management.

Because of its financial management approach,  – and particularly the FinOps Open Cost and Usage Specification – can help you streamline your multicloud operations. With a unified view of cloud expenses, you can track and manage your costs across multiple platforms. This is crucial to achieving cost efficiency in a multicloud environment.  

• ALSO READ → Cloud economics in action can get you to 1,000% ROI

Implementing FinOps

Adopting FinOps in your organization is not a one-step process. It’s a cultural shift that involves people, processes and tools, and breaking down the silos between IT, finance and business teams to create a collaborative and accountable environment focused on cloud costs.

For successful FinOps implementation, you first need visibility of your cloud spending – so, you need to understand your cloud-related expenses. You can achieve this by implementing cloud cost-management tools that can provide a detailed breakdown of your spending.

You also need to put a governance process in place for oversight and control over cloud expenses. This will assist in identifying and eliminating wasteful spending.

A key factor in FinOps adoption is the implementation of the right tools and technologies. Cloud cost-management tools provide detailed insights but have to be integrated with other IT and financial systems to provide a holistic view.

Best practices in FinOps

Best practices that can guide organizations while they are adopting a FinOps model include:

• Establishing a dedicated FinOps team: This team will serve as the point of contact for all cloud-related financial queries and work closely with IT, finance and business teams.
• Promoting cross-functional collaboration: Encourage regular communication and collaboration between your IT, finance and business teams. This fosters transparency and better management and optimization of cloud costs.
• Training teams on cloud cost management: Equip your teams with the knowledge and tools they need for effective cloud cost management.
• Implementing cloud cost-management tools: To prevent wasteful spending, select tools that provide detailed insights into cloud costs and resource usage.

Take the next step

As the need for cloud services grows, so does the need for effective financial management of these resources. To use the power of the cloud in the most cost-effective way possible, take the time now to understand and implement FinOps in your organization.

In this way, you can transform your cloud operations from a cost center into a value driver, with cost savings and improved resource usage making it a worthwhile investment.