Home Optimization & Allocation Why Should FinOps Be the Top Choice for Cloud Cost Management?

Why Should FinOps Be the Top Choice for Cloud Cost Management?

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If you are a regular consumer of cloud services, then you must be familiar with term – FinOps. Cloud is already complex and to simplify the cost aspect of it, the popularity of FinOps is rapidly growing. FinOps is an operating model for the cloud. Well to put it into simple terms, FinOps enhances organization’s capabilities to understand cloud costs and take decisions wisely.

In the current IT landscape, as companies are moving farther away from on-premises data centers toward the cloud, figuring out how best to leverage that shift becomes increasingly important. This is where FinOps comes in picture.

What is FinOps?

FinOps is an approach to managing and operating cloud spend by breaking down the silos between engineering, finance and procurement. As DevOps have revolutionized the development processes, similarly FinOps embraces the business value of cloud by mixing tech, business and finance professionals with a completely new set of processes.
The main objective of FinOps model is that it brings together all key functions involved in planning, procuring, consuming, managing and governing cloud services in order to take data backed decisions. This also encourages to consume cloud tech without even compromising on the consumer experience and gain value from cloud what it was meant to offer in the first place.

It surely prevents cloud cost sprawl and optimizes infrastructure-wide cloud consumption, ultimately saving the efforts and time put into digital transformation led by cloud technology.

Three inevitable phases of FinOps journey

FinOps is new for everybody and if you have also encountered a few FinOps practices or looking forward to implementing complete model for your cloud infrastructure, first take a look at the complete journey of the model.
There are basically three phases i.e. Inform, Optimize and Operate. Let’s dig into these one by one.

1. Inform: You don’t even start the FinOps Journey Without This

This is the first phase in the FinOps journey, i.e., embracing visibility into the cloud along with allocation, budgeting and forecasting. One reason that cloud has been expensive is that due to one-demand and elastic nature of cloud ecosystem. This is not it; customized pricing and discounts adds to this peril. All of this arises the need for accurate and constant visibility for right decisions.

It is crucial for businesses to ensure that they are driving ROI while not trying to exhaust the budget along with accurate forecasting in order to avoid surprises. So, be informed about your infrastructure then only you can strategize for the next phase.

2. Optimization: Main Goal but not the End Goal

Once your organization and team are empowered, you need to optimize your cloud footprint. Cloud providers offer multiple ways to optimize. On-demand capacity is the most expensive. To facilitate advanced booking planning and increased commitment, cloud providers offer discounted commitments. This typically involves complex calculations to make reservations (Reserved Instance (RI) / Promised Usage Discount (CUD – Google Cloud). In addition, teams and organizations can optimize their environment, prevent waste of resources, turn off when not in use and automate for rightsizing.

3. Operate: Take control and take measured decisions

Organizations begin to continually evaluate business goals, the metrics they are tracking against those goals, and their trends. It measures the business integrity of speed, quality and cost. Organizations can only succeed if they are building a culture of FinOps that includes a Cloud Cost Center of Excellence built around business, financial and operational stakeholders that define right governance.

FinOps should lead a Cultural Shift

In essence, FinOps is a cultural practice. This operational model is the most efficient way for teams to manage cloud costs. FinOps allows teams to get together and deliver faster, with financial and operational control.

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