The shift from on-premises IT to cloud-based infrastructure has created new avenues for businesses to transition their culture to FinOps. More than just saving money, FinOps gives companies the opportunity to really examine their approach to managing cloud costs in general.
In this blog, we explain FinOps as a concept and framework that can apply to any business considering how to approach a shift to a cloud-based architecture. We will seek to clarify exactly what FinOps means, focusing on the ‘Cloud FinOps’ definition of the term.
What is FinOps?
The term Fin Ops is a combination of the terms ‘finance’ and ‘DevOps. The term isn’t a specific practice, but a reference to all of a company’s methods regarding the use of engineering to enhance and/or manage the financial component of business. It is also called Cloud Finance Operations, or simply ‘financial operations’, but the ideas behind either remain the same.
FinOps deals with the specifics of finance, such as banking applications, cloud spending limits, and financial information systems, as well as the abstract concepts like the financial principles that govern operational policy. The FinOps Foundation—the foremost authority on the subject—defines FinOps as such: “FinOps is a portmanteau of “Finance” and “DevOps”, stressing the communications and collaboration between business and engineering teams.”
FinOps: Core Principles
The exact tenets of FinOps may vary slightly among different practitioners, but the intent behind them is generally consistent. The following is a list of the most common principles associated with FinOps:
- Accountability and Ownership – Accountability is a term that will be found in any business management handbook, likely because a cultural shift in any direction is hard to pull off without it. For FinOps, accountability is probably the most important item to check off first. It infers transparency, both from the financial reporting presented by different teams and the clear expression of benchmark goals from management. This requires a dependable means to apply cloud-derived metrics to business goals and track ownership.
- Centralized Collaboration – The idea of centralization in FinOps doesn’t necessarily apply to infrastructure, but to the way different departments collaborate regarding cloud costs. Part of transparency is creating an environment where challenges and solutions are presented to all departments that would be affected by any decision. The cloud facilitates centralized collaboration through services like task management and the ability to share data regardless of the individual’s location.
- Accessible, Timely, and Accurate Reporting – This principle applies to department heads and team leads, and is a requirement to fulfill the transparency requirements of FinOps. Having the discipline to perform these tasks is expected, but cloud-based financial services makes gathering this information much easier through industry-specific automation and data tracking.
- Value-Driven Decision-Making – Empowering staff with decision-making capability is a necessary step in establishing autonomy within a growing business. Within the FinOps framework, this means each individual must understand the cost implications of their actions. It also means they should be equipped to make choices with the company’s overarching financial strategy in mind.
- Leverage Cloud Assets – Actions like rightsizing and using on-demand services instead of permanent solutions are part of cost optimization. Using the variable costs of cloud infrastructure can help companies manage the overhauls here. Cloud services can be used to inform all decisions and policies related to cost management, with automation for even more efficient and error-free reporting.
Why Should I Adopt FinOps?
Guidelines that promote accountability and ownership will always help a company’s structure in the long run. FinOps presents an opportunity to instill these principles and others at any stage of cloud development, and the reduced friction between departments can improve overall productivity throughout each department.
Beyond the obvious impact on the bottom line, FinOps is a change that can help prepare any organization to scale for larger workloads. Coupled with the inherent benefits of the cloud in that regard, FinOps can serve as a foundational framework for cloud-based businesses.
Expert Help With FinOps
If you’re interested in diving deeper into revamping your company’s structure from a FinOps perspective, or you just want to understand more about what can be done, please visit our FinOps Services page for details. You can also click the button below to be connected directly with one of our experts.