FinOps A collection of best practices and tools to help organizations
Insights Best Practices Technology

FinOps- A collection of best practices and tools to help organizations

The outbreak of the cloud in the 21st century has unleashed new levels of innovation and agility in IT infrastructure. It has provided computing power as a utility, allowing businesses to access infrastructure and services on demand through third-party cloud providers such as AWS, Azure, and Google. However, when using these services, it is easy to lose track and control of the costs incurred along the way. The cloud’s ability to scale on demand is a valuable asset for development teams but can be a fighting point for finance teams. The complex cloud pricing structures can quickly lead to excessive costs and redundant or unnecessary use of resources.

This sparked the development of FinOps – a collection of best practices and tools to help organizations monitor, understand and control their spending on cloud resources. These best practices were developed by the FinOps Foundation, a non-profit trade association dedicated to empowering individuals/organizations to practice the discipline of cloud financial management. The aim is to help interdisciplinary teams work together effectively and make the best decisions in terms of performance, quality and costs in technology investments and thus generate more revenue.

Principles of FinOps:

Collaboration of teams: Finance and engineering teams should effectively collaborate to reduce costs and maintain high performance simultaneously.

Ownership of usage:  Development teams manage their own cloud usage in their provided budget. It gains visibility of expenditure on different levels and drives accountability.

Centralized team:  A centralized FinOps teams governs some important activities such as bulk buying of resources and cost reporting of all teams.

Accurate and Timely Reporting: Providing accurate, complete, and timely reports from all teams so that critical decisions can be made as quickly as possible.

Decisions Driven by Business value: Decisions should be driven by core business values rather than depending only on costs. Benchmarks should be set for a balance of performance, quality and cost of cloud.

Cost: Taking advantage of variable cost model of cloud. Turning off unused resources, experimenting on different usage models before committing for long term plans.

Phases in FinOps:

Inform: Accurate and timely information about the costs can be achieved with the help of resource tags and business mappings. This helps to improve cost visibility and allocation, thus driving more revenue.

Optimize: Based on the information received, organizations can optimize their cloud footprint. Advanced reservation and commitment to usage to resources can avail high discounts from the cloud providers. Other optimizations include planned scaling up and down of processing power and switching off unnecessary resources to save costs.

Operate: During this phase, business, finance, technology, and engineering teams can collaborate with other stakeholders to manage cloud usage based on FinOps principles. Taking agreed actions, with a focus on continuous monitoring and improvement.

 

For more information head over to FinOps Foundations website:https://www.finops.org/introduction/what-is-finops/