If you've bought into the promise of the cloud, you may be frustrated to find that anticipated cost savings haven’t arrived. Perhaps you’re spending even more than you thought you would. You’re certainly not alone: amid tightening budgets, the issue of cloud has shot up the boardroom agenda. It’s no longer just a CTO’s concern — it’s everyone’s.
However, while increasing interest in cloud costs across stakeholders is to be welcomed, better reporting and richer data alone won’t have the impact you need it to. Given the cloud is often foundational to a business’s digital strategy, information overload may even prove limiting, hampering your ability to innovate.
This is where FinOps comes in. FinOps is a practice or discipline that bridges the gap between technologists and finance leaders. It has become a term used more and more widely in recent years because of its ability to foster a culture that is capable of responding to the needs of both technology and finance teams.
However, for FinOps to be effective it can’t just become another buzzword used in boardrooms: it needs to be backed up by action. Only then will it be possible for organizations to not only better manage cloud costs, but also ensure that their cloud investments are delivering a positive and substantial impact.
The '4 Rs' of of FinOps
There is a standard definition of FinOps agreed upon by the FinOps foundation together with the six underlying core principles. However, I like to think about it in terms of the four Rs:
Report: Track and analyze cloud costs.
Recommend: Identify cost-saving opportunities.
Remediate: Implement recommendations to reduce costs.
Retain: Foster a culture of cost awareness and optimization.
Every one of these elements is important. However, the latter two are often overlooked. This is because organizations are usually comfortable asking ‘what’s happening?’ and ‘what should we do?’ but building the structures and processes needed to respond to those things is much harder.
This is why business leaders are so important to successful FinOps — they are in a position to empower teams and individuals to act. They are also able to ensure a FinOps initiative gets the investment and long-term support it needs: given the rewards of FinOps are rarely realized overnight, this is critical.
How can leaders ensure FinOps delivers?
FinOps is about getting the triad of data professionals, technologists and finance leaders to work together more effectively. This doesn’t happen on its own. While good reporting and recommendations provide a solid foundation for maximizing the value of cloud, what matters is bridging the gap between the first of the two Rs — reporting and recommendation — to the latter — remediation and retention.
It’s all well and good talking about a mindset shift, but it’s only through action that individuals can be empowered in the way they should to take ownership of cloud cost challenges. So, let’s take a look at what role leaders can play in ensuring FinOps initiatives deliver value to their businesses.
FinOps is about getting the triad of data professionals, technologists and finance leaders to work together more effectively. This doesn’t happen on its own.
FinOps is about getting the triad of data professionals, technologists and finance leaders to work together more effectively. This doesn’t happen on its own.
Focusing on evaluation as an activity
FinOps assessments are a critical first step. This is clearly important from both a technical and financial standpoint — it helps you to understand the current state of play: it corresponds with the first R, reporting.
But effective evaluation should be seen as much more than just reporting. It’s really the foundation of a cultural change. This is because it requires engagement across multiple stakeholders and functions, opening up different pockets of knowledge and data. Seen from this perspective, when done properly, it’s crucial for retaining the cultural transformation of FinOps.
For business leaders, driving a commitment to finding and surfacing everything needed to establish both context and opportunities is vital in helping an organization maximize the value of cloud.
Implementing mechanisms for cultural change
How do you actually drive such a commitment? This is where mechanisms like workshops and other sessions come in to facilitate dialogue across domains.
In a fast-paced and hectic environment, these rituals and ceremonies can be marginalized and deprioritized, but this is a mistake: they help ensure that everyone can take the actions to drive optimization. They are forums that enable remediation and help retain a culture of cost-awareness. When people talk about the value of FinOps, it is important to remember that these kinds of sessions aren’t separate from that: they are fundamental to it.
Business leaders need to ensure that these kinds of mechanisms are in place and prioritized by everyone, whatever their domain of expertise.
Leveraging automation
Automation plays a pivotal role in FinOps. It sits across all the first three Rs of FinOps, ensuring teams and individuals have the time and space needed to retain the benefits of such an initiative.
Automation can remove some of the manual work of reporting, ensuring relevant stakeholders have the information they need when they need it
It can help produce recommendations quickly, particularly when algorithms are used to analyze financial and compute data on extremely large scales
Some forms of automation can make changes, making remediation in some areas automatic
Leaders need to ensure automation is baked into FinOps. Done well, automation can help weave financial considerations into development and deployment pipelines and allows stakeholders to focus on tackling new and more challenging optimization problems.
Strategic measurement
Metrics are the coordinates of a successful FinOps journey. But to get value from FinOps it’s important that they are thought about strategically. Just as evaluation is an activity that requires coordination across functions, consistent measurement needs to be treated as something teams actually do, not just passive reporting delivered to a dashboard.
This means two things: first, thinking beyond the dashboards and tools that vendors provide out of the box. Ask yourself and get your teams to think about your needs that are specific to your organizational context.
Second, measuring the strategic impact of FinOps on wider organizational goals. How, for instance, is FinOps helping you to ride out tough market challenges or a difficult economic climate?
Answering such questions isn’t just valuable for senior stakeholders, it also drives a FinOps initiative forward, illustrating how the day-to-day activities of those actually involved are adding value. That’s essential for retaining your FinOps wins and ensuring that early successes turn into long-term change.
Impact comes from action
FinOps can have a significant impact on businesses. But business leaders play a vital role in ensuring that the word means more than just glorified reporting — it needs to be met by consistent and collaborative activities that drive change over a sustained period of time.
It’s true that FinOps requires commitment from a diverse range of stakeholders across both technology and finance. But it needs leadership to ensure that the link between reporting and action is always in place. Only then can you be confident that you’re remediating issues that are hurting your bottom line and retaining the long-term benefits that FinOps can deliver.
