“Hey really quick, can you put together some cost forecasts for the coming year for our AWS and GCP costs?”
At some point in your career, you may receive this kind of request from your manager, VP of Engineering, CTO, CFO, or CEO. You might explore Cost Explorer, put together some fancy graphs and breakdowns, and send them over, thinking you’re done. Not even close. This request will predictably be followed up with requests to find ways to reduce costs. Next thing you know, you’re on a call with your AWS account manager talking about savings plans, reserved instances, and getting upsold to upgrade your support account so you have a dedicated TAM. Congratulations, you just unlocked a whole new world, and it isn’t going to get easier.
🚀 Welcome to the World of FinOps
FinOps, or Cloud Financial Operations, is a new and exciting field that is gaining popularity in the industry. It is a response to the growing need for companies to better manage their cloud costs, and to do so in a more efficient way. With FinOps, companies can optimize their cloud spending by using a combination of people, processes, and tools. This means that not only can they save money, but they can also allocate resources in a more effective and sustainable manner.
The goal of FinOps is to help organizations understand and manage their cloud costs in real-time. By doing so, companies can make informed decisions about how to allocate resources and optimize their cloud infrastructure. This can lead to significant improvements in overall business performance, as well as a more sustainable and cost-effective approach to cloud management.
FinOps relies on a collaborative approach that involves teams from across an organization. These teams may include finance, engineering, and operations. By working together, they can identify cost optimization opportunities and implement changes to improve cloud efficiency. This means that not only can FinOps help companies save money, but it can also lead to a more streamlined and effective approach to cloud management. Overall, FinOps is an exciting and innovative field that is changing the way companies think about cloud management and cost optimization.
🤔 Why is FinOps Important?
Cloud spending can easily get out of control if not properly managed. This can result in financial losses which can be detrimental to an organization’s performance, making it difficult to achieve their goals. Without a clear understanding of cloud costs and usage patterns, organizations can quickly find themselves with unexpected bills or overspending on underutilized resources.
The FinOps methodology is vital in addressing these challenges. It provides a framework for organizations to manage their cloud costs, which in turn helps to improve the organization’s financial health. By implementing FinOps, organizations can gain visibility into their cloud usage and identify areas where costs can be optimized. This allows them to make informed decisions which can result in significant cost savings over time.
The use of FinOps also helps in promoting transparency and accountability within an organization. By providing a clear breakdown of cloud costs and the usage patterns, it becomes easier to allocate resources and make informed business decisions. This not only helps to improve financial performance but also helps in achieving organizational goals.
FinOps is important because it provides a structured approach to managing cloud costs, which can help organizations to optimize their spending, improve financial health, and achieve their goals.
📊 FinOps in Practice
Implementing FinOps in practice can be a daunting task, but the benefits are well worth the effort. Here are a few key steps to getting started:
- Establish a cross-functional team: As mentioned earlier, FinOps requires collaboration across different teams within an organization. Establishing a cross-functional team that includes representatives from finance, engineering, and operations is essential.
- Identify cost optimization opportunities: Review your cloud usage and identify areas where costs can be optimized. This may include identifying underutilized resources, selecting the right pricing models, and finding ways to reduce data transfer costs.
- Implement changes: Once you have identified cost optimization opportunities, it’s time to implement changes. This may involve purchasing savings plans, reserved instances, or adjusting your resource allocation.
- Monitor and measure: Finally, it’s important to continually monitor and measure your cloud usage and costs. This will help you identify new opportunities for cost optimization and ensure that you are meeting your goals.
By following these steps, organizations can successfully implement FinOps and achieve significant cost savings while also improving their cloud infrastructure and overall business performance.
📚 Learn More about FinOps
Interested in learning more about FinOps and how it can benefit your organization? Check out these resources:
- FinOps Foundation: A community dedicated to advancing the field of FinOps through education, best practices, and standards.
- Cloud FinOps: Collaborative, Real-Time Cloud Value Decision Making: This 2nd edition of the book from O’Reilly is one of the greatest resources I have read on FinOps culture for engineering and finance teams.
- The Ultimate Guide to FinOps: A comprehensive guide to FinOps that covers everything from the basics to advanced strategies.
- AWS Well-Architected Framework: A framework for designing and operating reliable, secure, efficient, and cost-effective systems in the cloud, with a focus on FinOps best practices.