The FinOps methodology is becoming increasingly important to establish a new Cloud Operations governance.
Companies are investing large sums in cloud infrastructures: traditional technology management and finance is no longer sufficient to adhere to a new way, which needs a more flexible approach applicable across the company.
Cloud has transformed the way companies work; yet, many organizations have not changed the way they manage spending and evaluate the resources used every day. Therefore, a rift emerges between the use of cloud resources and cloud-related spending. This means that companies risk recording spending that is misaligned with business needs.
Therefore, we need a new approach that harmonizes financial management with the cloud peculiarities. The FinOps methodology espouses the idea of “continuous improvement” to optimize cloud costs, avoid overprovisioning and ensure, above all, that every department is getting the most value with the least expense.
Why the need for FinOps rises
The widespread cloud adoption has meant a distinct paradigm shift for businesses.
One of the aspects that has been most impacted by this change concerns the purchase of new technological resources. Prior to cloud consolidation, organizations had an incentive to acquire servers and other network equipment with technical characteristics and capabilities beyond those needed because this provided the company with ample room for future scalability.
The same approach applied to the cloud not only doesn’t work, but creates economic dynamics that organizations must avoid: companies, in fact, end up paying for licenses and instances that they aren’t using. The dynamic “pay per use” has radically changed the perspective: overprovisioning is no longer acceptable because it implies a failure to optimize the resources used.
Likewise, the agility and flexibility of the cloud must correspond to new financial methods: we need a methodology that is equally dynamic and evolving and supports the cloud, the expansion of the corporate perimeter, the creation of new points of sale and so on. In other words, the FinOps method is a cloud native approach: born, designed and consolidated specifically for the cloud, also for multi cloud.
FinOps three pillars
FinOps framework consists of three phases: inform, optimize and operate.
The first step serves to provide teams with visibility and awareness of how much they are spending and why. In other words, it’s critical that we understand how each team uses the cloud, the resulting expenses, and their goals.
The second involves the implementation of the tools and solutions aimed at making data driven decisions, therefore based on data, and at measuring and integrating the optimizations necessary to harmonize the use of allocated resources.
In the third phase, the processes necessary to achieve the technology objective, finance and business are defined, also introducing those automatisms that suggest regular actions to be taken and alert thresholds to control the execution of the configured processes. The aim, in this case, is to align the use of cloud resources with the objectives of the business.
These three stages can be regularly repeated: the FinOps methodology is rooted in the ideal of continuous improvement.
The benefits of FinOps
In addition to a clear economic advantage, because costs are aligned with business needs, following the implementation of the FinOps methodology, organizations record numerous benefits, including:
- more efficient use of resources. For the same costs, the cloud works better and it is easier to eliminate inefficiencies and excessive costs (such as open, but not used, instances);
- the objectives are shared at all levels. Each stakeholder is aligned with the company mission and, most importantly, knows how to achieve the set goals.
FinOps is not a goal: it is not a project that opens and closes. The FinOps methodology, on the other hand, is the fuel that drives the company’s cloud engine forward: it is the cycle of processes, best practices, systems and solutions that ensures that the cloud machine, continuing in the analogy, is well oiled, efficient and free of malfunctions that undermine the results.
With FinOps, companies no longer have to fear the hidden cloud costs and can focus on goals, strategies and growth.