Enterprises are leveraging cloud technologies on a large scale for accelerated innovation, performance, security and increased agility. As we continue to keep pace with technology-led transformations, it is vital to keep a check on how cloud investments can be governed, managed and controlled as well. Monitoring efficiency and utilization of cloud assets and governing the overall architecture helps enterprises to keep a tab on cloud spends. The right FinOps strategies help in prioritizing and optimizing the ongoing cloud costs to ensure maximum value is availed with minimal spend.
What is FinOps?
FinOps is short for Cloud Financial Management and is the concurrence of finance and operations on cloud. It has led businesses to become vigilant and conscious about their financial strategies and analytics to plan, budget and predict their required cloud expenses better, helping them gain more flexibility and agility in time.
FinOps brings the people, process, and technology framework together to impose financial accountability to the variable spend on cloud and ensure efficient cost control mechanisms to devise steady financial practices.
Need for FinOps
The traditional IT financial model worked independent of other teams and lacked the technically efficient cloud-enabled innovative business practices. Limitations in infrastructure adaptability with respect to business requirements only inflated the costs making the system slow moving and expensive. Organizations needed to understand what and from where costs are incurred to keep a check on the cloud spend. Also, setting up a cost centre for all business and application teams would facilitate them to have easy access to the cloud spend data, enforcing rational use of cloud.
How it works
The implementation of FinOps across the cloud lifecycle enables distributed teams to drive the business in accordance with speed, cost, and quality. FinOps brings in flexibility in operations, creates financial accountability to the variable cloud spends and helps develop best practices in understanding cloud costs better.
For organizations to gain steady and robust FinOps practices, it is important to follow the three stages of FinOps on cloud: Inform, Optimize and Operate.
Inform phase: It helps understand the factors that drive costs, enables allocation of cloud spends and aids in setting efficiency benchmarks. Governance tools help map cloud spending data to business cost centers, create budgets and forecasts and enables spend accountability via chargeback and show back mechanisms. Inform phase triggers trending and variance analysis to rightly align planning, assessment, and deployment on the cloud from an early stage on. Evaluating risks to accelerate deployments in this phase itself, enables organizations to plan a powerful governance strategy.
Optimize phase: This phase sets relevant operational goals to evade and optimize cloud costs. The intent is to identify unusual usage and curb inconsistencies across multi-cloud environments. Idle, under and over utilized services can be detected across cloud compute, storage, networks, and database with respect to defined and allocated spend and usage. Possible savings can be measured with the help of metrics along with provisioning auto-remediation and recommendations through autonomous governance platforms. FinOps team can evaluate existing cloud resources against predefined processes to optimize, spend, develop centralized reserved instances, and enhance visibility across the value chain.
Operate phase: It helps in setting up the methodologies and processes for implementation. All the decisions and plans are established to ensure cloud spends are aligned with business objectives. The emphasis is more on continuous process improvement with rightsizing, defined governance controls and resource optimization automation. Recommendations are incorporated into workflows to ensure maximum cost effectiveness.
Performing monthly, quarterly, and annual audits to assure continued alignment with defined policies is the key to successful cloud deployments. Conducting periodic reviews, filing incident reports, identifying change requests, if any to match or alter existing cloud strategies and generating metrics and reports help bridge gaps while keeping a continuous check on business productivity, compliance, costs, and performance. Additionally, timely tracking and optimization of team efforts via reports and metrics enable organizations to develop robust FinOps practices.
The adoption of FinOps is fast gaining momentum across the globe. Its ability to evaluate operational costs against actual needs is considered as the most beneficial factor for enterprises looking to digitally transform to cloud while ensuring significant savings and optimized cloud spending. With the current growth trend, it is best for all enterprises on cloud or intending to move to cloud, become acquainted with FinOps best practices as well as the people, process and relevant tools involved in greatly easing and accelerating this transition. Adopting a defined FinOps model enables enterprises to experience greater business value and ROI while optimizing their financial and operational control.