Cloud FinOps is a critical part of getting the most out of cloud investments, but not all FinOps implementations are created equal. Some practices are more effective than others. Just as with cloud, FinOps itself must be optimized and high-performing to realize win-win-win business outcomes.
In this blog post, we will guide you through everything you need to know about Cloud FinOps (Financial Operations), from what it is, who the key stakeholders are, how it works, key principles, best practices, and how FinOps can benefit your organization.
What is Cloud FinOps?
As defined by the FinOps Foundation, FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.
FinOps is a term used to describe the operational aspects of a cloud infrastructure, specifically the financial aspects. It includes activities such as budgeting, forecasting, and charging back users for the use of cloud resources.
Who are Cloud FinOps Stakeholders?
Cloud FinOps stakeholders are responsible for the financial management and operations of a cloud computing environment. This includes activities such as budgeting, financial reporting, and risk management.
The primary focus of stakeholders is ensuring that the company is achieving its business goals in the most efficient and effective manner possible. In order to do this, they must have a clear understanding of the company’s financial situation. This includes things like revenue, expenses, profit margins, and cash flow.
Executives need to be able to make informed decisions about where to allocate resources. They need to know how much money should be invested in each area of the business in order to achieve the desired results.
Cloud FinOps provides executives with visibility into the costs associated with running their business on the cloud. It also gives them tools and techniques for optimizing those costs. This allows executives to make more informed decisions about where to allocate resources and how to invest in cloud infrastructure.
Finance professionals & procurement
Finance professionals are responsible for managing the financial affairs of a company. This includes things like budgeting, forecasting, and accounting. Procurement is responsible for purchasing goods and services for a company.
Both finance professionals and procurement need to have a good understanding of the costs associated with running a business on the cloud. They also need to be able to identify opportunities for cost savings. Cloud FinOps provides both finance professionals and procurement with visibility into cloud costs and helps them optimize those costs.
Development & Operations managers
Development managers are responsible for overseeing the development of software applications. Operations managers are responsible for overseeing the day-to-day operations of a company’s IT infrastructure.
Both development managers and operations managers need to have a good understanding of how much it costs to develop and operate software applications on the cloud. They also need to be able to identify opportunities for cost savings. Cloud FinOps provides both development managers and operations managers with visibility into cloud costs and helps them optimize those costs.
Cloud architects are responsible for designing, implementing, and managing a company’s cloud infrastructure. They need to have a good understanding of the costs associated with running a business on the cloud. They also need to be able to identify opportunities for cost savings.
Cloud FinOps provides cloud architects with visibility into cloud costs and helps them optimize those costs. This allows them to design more cost-effective cloud infrastructure solutions.
FinOps practitioners are responsible for managing the financial aspects of a company’s cloud computing environment. This includes things like billing, invoicing, and cost optimization.
FinOps practitioners need to have a good understanding of the costs associated with running a business on the cloud. They also need to be able to identify opportunities for cost savings. Cloud FinOps provides FinOps practitioners with visibility into cloud costs and helps them optimize those costs.
How Do Cloud FinOps Work?
FinOps in the cloud can be divided into three main phases: inform, optimize, and operate.
An important part of any successful cloud FinOps practice is having accurate and timely information about your cloud usage and costs. This means tracking your usage on a regular basis and understanding how it changes over time. There are a number of tools available to help you do this, including AWS CloudWatch, Google Cloud Monitoring, and Azure Monitor. For more simplified and enhanced cost control management insights into single- and multi-cloud environments, Ceeview has been proven a helpful solution.
Once you have a good understanding of your usage patterns, the next step is to optimize your use of resources to ensure you are getting the best value for your money. This may involve changing the way you provision or configure resources, as well as identifying and removing unused or unnecessary resources.
The final step in the cloud FinOps cycle is to operate your environment in an efficient and cost-effective manner. This includes monitoring your usage and costs on an ongoing basis and making adjustments as needed to keep your environment running smoothly. It also involves working with your team to make sure everyone understands the importance of cloud FinOps and how it can help save money and improve efficiency.
What Are the Challenges of Cloud FinOps?
The challenges of Cloud FinOps include accurately forecasting usage, capacity planning, and financial forecasting. Additionally, companies need to ensure data security and compliance with regulations.
One of the challenges of Cloud FinOps is forecasting usage. This can be difficult because usage can fluctuate based on a number of factors, including seasonality, customer demand, and new product releases. To accurately forecast usage, organizations need to have a good understanding of their historical data and trends. They also need to consider how changes in the business (such as new product launches) will impact cloud usage.
Another challenge of Cloud FinOps is capacity planning. This involves ensuring that there is enough capacity to meet future demand. It can be difficult to predict future demand, particularly for organizations that are growing quickly or launching new products. As such, it is important to have a flexible capacity plan that can be adjusted as needed.
Another challenge of Cloud FinOps is financial forecasting. This involves predicting how much money will be spent on the cloud in the future and making sure there is enough budget to cover these costs. Financial forecasting can be difficult because it requires a good understanding of both current and future cloud usage patterns. Organizations also need to consider how changes in the business (such as new product launches) will impact cloud spending.
Data security is another challenge of Cloud FinOps. This is because organizations need to ensure that their data is secure when it is stored in the cloud. They also need to ensure that data remains secure when it is being transmitted between different cloud services. Data security can be challenging because it requires a careful balance between security and accessibility. Organizations need to find a way to protect their data without making it too difficult for authorized users to access it.
Compliance with regulations
Compliance with regulations is another challenge of Cloud FinOps. This includes ensuring that data stored in the cloud complies with all relevant laws and regulations. Compliance can be challenging because it requires ongoing monitoring and updates to ensure that data remains compliant. Additionally, compliance requirements can vary depending on the country or region where the data is stored .
Consequences of Poor-performing Cloud FinOps
Without a well-performing Cloud FinOps strategy, organizations can face consequences such as:
Poor-performing Cloud FinOps can have a number of consequences, the most prominent of which is increased costs. When cloud resources are not managed efficiently, organizations can end up paying more for their cloud usage than necessary. In addition, poor Cloud FinOps can lead to delayed time to market and poor customer experience.
Delayed time to market
Another consequence of poor-performing Cloud FinOps is delayed time to market. If an organization is not able to efficiently manage its cloud resources, it may take longer to launch new products and services. This can be a major problem for organizations that need to be agile in order to compete in today’s marketplace.
Poor customer experience
In addition to increased costs and delayed time to market, poor Cloud FinOps can also lead to poor customer experience. When resources are not managed properly, it can result in disruptions in service or even outages. This can cause customers to lose confidence in an organization and may lead them to take their business elsewhere.
Finally, another consequence of poor Cloud FinOps is compliance issues. If an organization is not following best practices for cloud resource management, it may run into problems with regulatory bodies or other compliance standards. This could result in significant fines or other penalties.
While the cloud has many benefits, it’s important for organizations to understand the potential risks associated with moving to the cloud. A well-designed Cloud FinOps strategy can help mitigate these risks and enable organizations to realize the full potential of the cloud.
FinOps vs. DevOps: Where do they intersect?
In many respects, FinOps and DevOps are two sides of the same coin. Both are concerned with increasing efficiency and improving the quality of services delivered to customers. However, there are some key areas where the two disciplines intersect.
One of the most important intersections is in the area of cloud costs. As more and more businesses move to the cloud, it becomes increasingly important to optimize costs. This is where FinOps comes in. By working with developers to understand how they are using cloud resources, FinOps practitioners can help identify opportunities for cost savings.
Another key intersection is in the area of automation. Both FinOps and DevOps rely heavily on automation to improve efficiency and quality. Automation is particularly important in the cloud, where it can help reduce provisioning time, improve resource utilization, and increase scalability.
Finally, both FinOps and DevOps share a focus on continuous improvement. By constantly monitoring performance and seeking ways to optimize processes, both disciplines help organizations continually improve their services.
Cloud FinOps and DevOps intersect where both disciplines are applied in order to optimize and automate the financial and operational aspects of a cloud infrastructure.
By integrating these two disciplines, organizations can achieve improved visibility and optimized control over their cloud infrastructure while also accelerating the deployment of new applications and services.
How FinOps and DevOps work together
The key to understanding how FinOps and DevOps work together is to understand the role that each one plays in the overall cloud ecosystem. FinOps is responsible for ensuring that the financial aspects of the cloud are managed effectively, while DevOps is responsible for ensuring that the infrastructure and operations are managed effectively.
Each team has its own set of tools, processes, and skillsets that they bring to the table. However, there are certain areas where their responsibilities overlap. For example, both teams need to be able to track costs in order to make informed decisions about where to allocate resources. In addition, both teams need to be able to monitor performance in order to identify issues and opportunities for improvement.
The best way for FinOps and DevOps to work together is by sharing information and working collaboratively towards common goals. By doing so, they can ensure that the cloud infrastructure is being used efficiently and effectively, while also keeping costs under control.
In order to realize the benefits of FinOps and DevOps, organizations must first understand how these disciplines can be applied to their own cloud infrastructure.
The principles of FinOps provide a framework for teams to use when managing cloud resources. By following the principles below, teams can optimize their use of cloud resources and ensure that they are being used in the most efficient way possible.
Teams need to collaborate
In order for FinOps to be successful, it is important that teams across the organization work together collaboratively. This includes teams from different departments such as finance, IT, and operations. One way to encourage collaboration is to create a cross-functional FinOps team that meets regularly to discuss issues and share best practices.
Another way to promote collaboration is to use data visualization tools that can be accessed by all team members. These tools can help everyone understand where money is being spent and where savings can be achieved.
Everyone takes ownership of their cloud usage
FinOps success depends on everyone in the organization taking responsibility for their own cloud usage. This means understanding how much each team member is using and what they are using it for. It also means monitoring usage on a regular basis and making adjustments as needed to ensure efficient use of resources.
A centralized team drives FinOps
While it is important for everyone in the organization to be involved in FinOps, there should also be a central team responsible for driving the process forward. This team should be responsible for developing policies and procedures, setting goals, and monitoring progress. They should also have the authority to make decisions about how resources are allocated.
Reports should be accessible and timely
One of the key aspects of successful FinOps is having access to accurate and up-to-date reports on resource usage and costs. This information should be accessible to all team members so that they can make informed decisions about how to improve efficiency. Reports should also be generated on a regular basis so that trends can be identified and addressed in a timely manner.
Decisions are driven by the business value of the cloud
When making decisions about how to use resources efficiently, it is important to consider the business value of the cloud services being used. This includes factors such as how essential the service is to operations, how well it meets customer needs, and whether there are cheaper alternatives available. By taking into account the business value of cloud services, organizations can make more informed decisions about where to allocate resources.
Take advantage of the variable cost model of the cloud
In order to take advantage of the cost efficiencies that the cloud has to offer, FinOps practitioners need to understand how the cloud billing model works. The cloud is a pay-as-you-go service, so you only pay for the resources you use. This can be a challenge when moving from a traditional on-premises model, where you may have had excess capacity that you were paying for whether you used it or not. In the cloud, it’s important to only use the resources you need and to release them when they’re no longer needed.
Capacity and resource planning
An important part of taking advantage of the cloud’s pay-as-you-go billing model is capacity and resource planning. This means having a good understanding of your workloads and knowing how much capacity you need to meet your SLAs. It also means being able to scale up or down quickly as your needs change. This can be a challenge in traditional environments, where it can take weeks or months to provision new hardware. In the cloud, it can be done in minutes or hours.
Governance and policy
Another important aspect of successful cloud adoption is governance and policy. As more and more organizations move to the cloud, it’s important to have policies in place that govern who has access to what data and what they can do with it. This is especially important in regulated industries such as healthcare and finance. Without proper governance and policy in place, an organization risks violating compliance regulations which could lead to hefty fines.
Security is always a top concern for organizations, regardless of whether they’re using on-premises or cloud-based solutions. In the cloud, there are additional security concerns around data privacy and data sovereignty. Organizations need to have policies and procedures in place that address these concerns. They also need to ensure that their employees are trained on these policies and procedures.
5 FinOps best practices
FinOps is an emerging set of best practices for managing the financial aspects of cloud computing. While the term is still relatively new, the concept is quickly gaining traction as more and more businesses migrate to cloud.
At its core, FinOps is about optimizing costs and maximizing value. Here are five best practices that can help you get the most out of your cloud investment:
Plan for FinOps before you migrate to the cloud
The first step in implementing successful Cloud FinOps is to plan for it before you even begin your migration to the cloud. This means understanding your company’s overall financial goals and objectives, and then mapping out a strategy for how you will use the cloud to achieve those goals.
You should also take into account the specific needs of your team when planning for Cloud FinOps. Each team has different requirements when it comes to the cloud, so it’s important to tailor your strategy to meet those needs. For example, if you have a development team that needs to be able to quickly provision new resources, you’ll need to factor that into your plan.
Don’t sacrifice value for savings
One of the biggest mistakes companies make when trying to implement Cloud FinOps is sacrificing value for savings. The goal of Cloud FinOps is not to simply save money—it’s to optimize your use of cloud resources so that you can get the most value out of them.
That means that you shouldn’t cut corners when it comes to things like security or compliance just because you think it will save you money. Not only could this put your data at risk, but it could also end up costing you more in the long run if you have to deal with the fallout from a data breach or other incident.
Calculate your actual costs
One of the most important aspects of Cloud FinOps is understanding your actual costs—not just your monthly bill from your cloud provider. To do this, you need to track all of the costs associated with your use of the cloud, including things like storage, bandwidth, and compute time.
You should also factor in indirect costs like support and training. Once you have a clear picture of all of your costs, you can start looking for ways to reduce them without sacrificing value or performance.
Build FinOps into your organization as an ongoing practice
Successfully implementing FinOps requires buy-in and support from everyone in the organization – from the C-suite to front-line employees. To make sure FinOps is embedded into your company culture, here are some best practices:
1. Define roles and responsibilities.
Before you start implementing FinOps, it’s important to establish who will be responsible for what. Will there be a dedicated FinOps team? Who will be responsible for monitoring costs? What about optimizing resources? By clearly defining roles and responsibilities from the outset, you’ll avoid any confusion down the line.
2. Get everyone on board.
Once you’ve established who will be responsible for what, it’s time to get everyone on board with FinOps. This means communicating the importance of cost management to all employees, from the C-suite to front-line workers. It’s also essential to provide training on how to use the tools and techniques of FinOps. Only by getting everyone on board can you hope to embed FinOps into your company culture.
3. Make cost optimization a continuous process.
Monitoring and optimizing costs should not be a one-time exercise – it should be an ongoing process that is integrated into all aspects of the business. By making cost optimization a continuous process, you can keep your finger on the pulse of your finances and quickly identify any areas where savings can be made.
Set clear responsibilities
In order to successful implement FinOps within your organization, it is critical that everyone understands their roles and responsibilities. Here are some tips for setting clear responsibilities:
1. Assign a dedicated FinOps team. This team should be responsible for managing the financial aspects of the cloud migration and ongoing operations.
2. Clearly define roles and responsibilities within the FinOps team. For example, who will be responsible for tracking costs, negotiating contracts, etc?
3. Educate all stakeholders on the importance of FinOps and how it can help save money and optimize cloud resources.
4. Make sure everyone understands the company’s financial goals and how FinOps can help achieve them.
5. Set up regular check-ins with the FinOps team to ensure that everyone is on track and meeting their objectives.
Cloud FinOps benefits
Making the decision to pursue a high-performing Cloud FinOps practice is an important step in achieving success for your business. By implementing the right strategies and tools, you can enjoy a wide range of benefits that will help your organization operate more efficiently and effectively.
Some of the most significant benefits include cost efficiency, resilience, velocity, real-time reporting, better team collaboration, and increased operational flexibility.
One of the primary benefits of Cloud FinOps is cost efficiency. By optimizing cloud spend, organizations can save money on their overall cloud bill. In addition, by automating cloud financial processes, organizations can free up time and resources that can be better spent on other tasks.
Another benefit of Cloud FinOps is resiliency. By having a well-defined set of financial processes and procedures in place, organizations can ensure that their cloud infrastructure is able to withstand unexpected events or disruptions. This helps to prevent downtime and keep businesses running smoothly.
Cloud FinOps also enables organizations to achieve greater velocity in their workflows. By automating financial processes, businesses can move faster and be more agile in their operations. This increased agility can lead to improved customer satisfaction and increased revenues.
Another benefit of Cloud FinOps is real-time reporting. With automated financial reporting tools, businesses can gain instant visibility into their cloud spend. This allows them to make informed decisions about where to allocate their resources and how to optimize their cloud usage.
More effective workflows
Finally, Cloud FinOps can also help to improve workflows within an organization. By automating financial tasks, businesses can eliminate manual errors and improve efficiencies across their operations. This leads to improved productivity and decreased costs.
Better team collaboration
When it comes to cloud FinOps, better team collaboration is one of the most significant benefits. In order to optimize cloud usage and spend, it’s important that all stakeholders are working together efficiently. By aligning incentives and establishing clear roles and responsibilities, teams can work more effectively to improve overall performance.
Increased operational flexibility
Another key benefit of cloud FinOps is increased operational flexibility. With a well-run FinOps operation in place, organizations can quickly adapt to changing needs and demands. This agility is essential in today’s fast-paced business environment.
Cloud cost optimization
Perhaps the most obvious benefit of cloud FinOps is improved cost management. By taking advantage of the variable cost model of the cloud, organizations can save significantly on their overall IT spend. With proper planning and execution, these savings can be substantial – often 10-15% or more.
What is Cloud FinOps?
Cloud FinOps is a set of best practices and principles for optimizing the financial performance of cloud computing. It helps organizations to save money on their cloud bills, while still getting the most value from their investment.
Who are the stakeholders in Cloud FinOps?
The stakeholders in Cloud FinOps include executives, finance professionals, development and operations managers, cloud architects, and FinOps practitioners.
How does Cloud FinOps work?
Cloud FinOps works by informing decision makers about how much money is being spent on cloud resources, optimizing resource usage to get the most value for the money, and operating the cloud in a more cost-effective way.
What are some of the challenges of Cloud FinOps?
Some of the challenges of Cloud FinOps include forecasting usage, capacity planning, financial forecasting, data security, and compliance with regulations.
What are the consequences of poor-performing Cloud FinOps?
The consequences of poor-performing Cloud FinOps include increased costs, delayed time to market, poor customer experience, and compliance issues.
Where do FinOps and DevOps intersect?
Cloud FinOps and DevOps intersect where both disciplines are applied in order to optimize and automate the financial, software delivery, and operational aspects of a cloud infrastructure.
What are some of the benefits of Cloud FinOps?
Some of the benefits of Cloud FinOps include cost efficiency, resiliency, velocity, real-time reporting, more effective workflows, better team collaboration, increased operational flexibility, and cloud cost optimization.
In conclusion, Cloud FinOps is a collaborative effort between executives, finance professionals, development and operations managers, cloud architects and practitioners that aims to optimize the use of cloud resources. Cloud FinOps can provide cost efficiency, resiliency, velocity, real-time reporting, better workflows, increased operational flexibility and more effective team collaboration.