The Fundamentals of FinOps: Cloud Cost Transparency and Optimization

Historically, few people knew how best to promote a shared responsibility for an enterprise’s cloud infrastructure and costs. This led to the start of a small community of cloud practitioners who met to discuss best practices. The community grew quickly into the formal discipline of FinOps which is now practiced in many world-class organizations. The discipline includes thousands of Cloud, Finance, IT, and Engineering professionals from many diverse industries. FinOps streamlines cloud cost transparency and optimization, and planning processes in the cloud. Cross-functional teams collaborate to improve financial analytics and control, enhance budget and resource allocation, and implement an effective cloud usage strategy.

Guiding principles such as collaboration, timely reporting, centralized teams, cloud usage ownership and business-value driven decisions are at the heart of the FinOps mission. We’ve identified three fundamental building blocks that help organizations build a robust FinOps discipline upon that foundation. These components are setting up the FinOps team, implementing FinOps and leveraging software tools designed for FinOps. 

Organizational mapping

The collaboration of various stakeholders is key to building a successful FinOps discipline. They keep cloud costs under control and detect cost anomalies to prevent unexpected expenses. Building effective collaboration around cloud financial management requires aligning competing priorities of fast development, watching spend and ensuring quality work. FinOps managers are responsible for overseeing cloud costs and enabling transparency with cross-functional stakeholders. Each stakeholder group owns a set of issues that need to be solved to achieve cost excellence with FinOps.

Implementing FinOps

Cost optimization will save money, but that should not be the main goal. The goal of a successful FinOps implementation is to get as much as possible from investment in the cloud.

Every situation is different and there isn’t a single way to handle cloud optimization in FinOps. However, many organizations can achieve better control and manage their cloud spending by building upon the 4 strategies which we’ll examine in this section.

Technology tools

FinOps practitioners know that technology is limitless, and intelligence is priceless. Optimizing IT spend, reducing risk and leveraging technology all help to prevent cloud usage and cost from spiraling out of control. This is especially important for organizations with large and disparate user bases. Software tools help cross-discipline FinOps team members to effectively track, manage and reduce cloud costs. Their capabilities include the following:

FinOps inextricably links people, process and technology to break down organizational silos, facilitate information flow, improve decision making and more. While needs and usage may change over time, developing an effective plan for cloud financial management will help maintain balance between cloud performance and cost well into the future. A good FinOps strategy ensures that everyone who needs to be involved is included in the planning process.

Ready to take the next steps to improving your cloud visibility and lowering costs? We’re ready to help.