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Exploring the Emerging Role of FinOps

Cloud overspending is becoming a top-of-mind budget item for the modern CFO. To direct resource utilization in the cloud, some organizations are turning to increased automation and more diligent cloud procurement processes. As part of this momentum, new roles are emerging to oversee cloud financial operations.

Amid rising cloud costs, FinOps is emerging as a helpful discipline. It is not always a specific role but more often a culture that blends engineers, finance and business areas to participate in dynamic cloud cost management. But getting all these players on the same page isn’t always easy — new findings say influencing developers to actually make optimizations is a top challenge.

The FinOps Foundation recently released The State of FinOps 2022 report, a deep exploration into the role and the state of FinOps adoption across 1,000 companies worldwide. Below, I’ll highlight the key insights from the report to understand current trends and consider how organizations might implement similar tactics to better operationalize their cloud impact.

Who Is Practicing FinOps?

What type of person is involved in FinOps? Well, folks come from diverse backgrounds, spanning cloud financial management, IT or DevOps or consultants. Many are also new to the practice in general—the average career tenure is roughly three years. FinOps tends to be a well-paying field—45% of practitioners report salaries of over $100,000 annually.

FinOps also tends to be associated with larger enterprises—45% of respondents came from organizations with 10,000 or more employees. In terms of industry, it is most common in financial services and IT companies, although studies show the practice is proliferating in many other sectors too. Geographically, FinOps is most adopted in primarily adopted in North America and Europe.

Team Dynamics

The average team size is five people, although many feel they’re a “one-person show.” Interestingly, more mature adoption tends to involve a larger team, upwards of 20+ members for established teams. There’s also a notable increase in FinOps within organizations managing between $50 million and $500 million of cloud costs.

FinOps must interface with many levels of the company, sharing projections with both development and executive leadership. Most FinOps teams report directly to the CTO or other C-suite members. This makes sense, as an executive directive was found to be the most common way to promote a FinOps culture, followed by organic and grassroots adoption.

Technology and Tools

In general, FinOps tends to be achieved through cloud awareness and dedicated tooling. The most mature practitioners are “all-in on cloud.” The largest subgroup (24%) runs 1,000 to 5,000 computing instances in the public cloud, hosting technology like virtual machines, containers and serverless functions. Simply put, the average FinOps practitioner has a lot on their plate.

In terms of tooling, there’s not one cloud cost management suite to rule them all. Teams use an average of 3.7 tools. A variance of tooling here is likely due to rising hybrid multi-cloud architectures and the need to manage costs separately within each cloud environment.

As such, FinOps tooling includes a mixture of native cloud provider tools and other middleware. Surprisingly, after AWS Cost Explorer, the second most common tool is a homegrown tool. After that, Cloudablity, CloudHealth and Azure Cost Management rank as popular primary tools.

Top Challenge: Collaboration

The top barrier has to do with interdepartmental collaboration. Getting engineers to take action on cost optimization was the biggest challenge, cited by 30% of respondents. Other common challenges included accurately forecasting cloud spending (29%), convincing the organization to adopt FinOps (22%), enabling automation (20%) and reducing waste or unused resources (19%).

Developers in the flow likely don’t want to be burdened by new cost optimization rules, so FinOps may encounter an uphill battle trying to affect low-level change. It will probably take a combination of shift-left IDE-based cost projection tooling and a decree from upper management to jumpstart this change.

Besides getting everyone on board, FinOps is often tasked with chargeback models—48% of respondents report using chargeback to report cloud costs, the report found. Yet, correlating cloud costs to a single department or team is challenging with so much shared infrastructure. As such, shared costs remain a challenge; so much so that many practitioners don’t even split them up.

There is also the need to resolve unexpected anomalies and increases in cloud costs, and it can be hard to distinguish between the two. As a result, 53% of respondents said it takes days for their FinOps teams to respond to unexpected cost increases. In the future, finding ways to shorten this timeframe will help save the company money.

Next Goal: Getting Engineers to Take Action

The vast majority (94%) of organizations are wasting money in the cloud, according to the 2022 HashiCorp State of Cloud Strategy Survey. Idle or overprovisioned resources can unnecessarily increase the cloud budget, making the need for FinOps evident. Investing in cloud optimization is also another tactic to meet sustainability pledges.

FinOps is an emerging role that can help forecast spending and reduce waste. But the practice does require time and resources to reach an ROI. For example, a mature team only has a 5% deviation comparing forecasted spend and actual spend, whereas a less mature team can have as high as a 20% deviation. To improve, teams will require automation for evaluating and communicating cloud projections and more established anomaly management best practices.

But above all, organizations must grapple with the number-one problem: Getting engineers to take action. Perhaps this is due to the fact that most respondents share cost data with technical teams monthly. Instead, more frequent cost transparency would match the pace of agile development and might empower more engineers.

The State of FinOps 2022 surveyed 1,056 respondents on their FinOps roles. The yearly study is conducted by The FinOps Foundation, a Linux Foundation program. For more details, you can read the entire report here.

Bill Doerrfeld

Bill Doerrfeld is a tech journalist and analyst. His beat is cloud technologies, specifically the web API economy. He began researching APIs as an Associate Editor at ProgrammableWeb, and since 2015 has been the Editor at Nordic APIs, a high impact blog on API strategy for providers. He loves discovering new trends, researching new technology, and writing on topics like DevOps, REST design, GraphQL, SaaS marketing, IoT, AI, and more. He also gets out into the world to speak occasionally.

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