Over the years, moves to the cloud have happened in several different ways and at various speeds. The reality is that today most enterprises are spending massive amounts on their cloud environments, and many teams are struggling to contend with the governance implications of this reality.
Fundamentally, teams struggle with an either-or proposition: Either they give development and engineering teams free rein in terms of how they use cloud models, and, in the process, they leave the business exposed to a wide range of risks or they try to enforce central controls and restrictions on cloud usage and, in the process, stifle speed, flexibility and innovation.
FinOps is a Necessary Discipline
Teams are struggling with cloud governance in general, and one particularly vexing aspect of governance relates to cloud cost management. Quite simply, the procurement models and approaches that worked in the days of on-premises data centers simply don’t cut it today. At all.
For these reasons, FinOps is emerging as a necessary discipline. At its root, FinOps is about establishing the people, process, and technology for establishing financial accountability in pay-as-you-go cloud environments.
Here’s how the FinOps Foundation defines it:
“FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.”
Recently, I started preparing for the FinOps certification, and in the process, I have had the chance to talk with quite a few practitioners. Along the way, I’ve heard several misconceptions about the discipline. I’ll list and dispel a few of the most common myths in the following sections.
Myth: FinOps is a Buzzword, not a Discipline
While the term may still be new to some, the need for FinOps is clear, real, and not going anywhere. Consider that in a survey of more than 800 professionals, the FinOps Foundation found FinOps team sizes grew 75% in the last 12 months, and respondents are expecting 50% more growth in the next year. Today, the FinOps Foundation has more than 5,300 members. Further, on any given day, a search on career sites for roles specifically referencing FinOps will typically yield hundreds of opportunities.
Myth: The Sole Goal of FinOps is Saving Money
More than just tracking and controlling spending, FinOps offers a way to optimize spending, so each dollar invested ultimately yields the most business value. Rather than simply helping save money, FinOps is about making money.
FinOps teams should advocate and lead with value-based discussions rather than focusing on cost. For example, if additional spending on a certain cloud service increases marginal value, FinOps teams help justify that additional investment.
FinOps helps teams reduce wasted spending, but it also enables teams to invest more in services that allow the business to innovate, adapt, and scale. Ultimately, it offers teams a way to capitalize more fully on the advantages of cloud pricing models.
Myth: FinOps Teams are Responsible for FinOps
To be successful, organizations need to build a central FinOps team. These teams establish guidelines and best practices and facilitate unified reporting and visibility. However, FinOps doesn’t start and end with a single team.
Those that succeed with FinOps are the ones that effectively break down silos. Individuals from leadership, finance, operations, development, and more all have a role to play. In a FinOps-driven organization, a range of teams collaborate, and in the process, they all benefit. For example, development teams can innovate more quickly and make more intelligent, data-driven decisions around balancing speed, quality, and cost.
Through FinOps, everyone takes ownership of cloud usage. Cross-functional teams work together to establish more effective management of cloud vendors and rates. Ultimately, rather than creating conflict, friction is reduced. The end goal is to establish alignment around business objectives.
Myth: FinOps Teams Stifle Innovation
With traditional procurement models, central teams retained visibility and control over expenditures. While this would add layers of time and effort to purchases, this was accepted as a worthwhile tradeoff.
Part of the reason for FinOps has come into existence is that it enables teams to break away from the rigid, centrally controlled procurement models that used to be the norm.
Rather than having a finance team that acts as a central gatekeeper and bottleneck, FinOps enables teams to fully leverage opportunities available for automation in the cloud. Compared to rigid, monthly, or quarterly budget cycles—and being blindsided by cost overruns long after the fact—teams move to continuous optimization.
Real-time reporting and just-in-time processes are two of the core principles of FinOps. Fundamentally, FinOps is about removing obstacles, and the focus is on enabling development teams to speed up their ability to deliver new features and capabilities.
In the cloud, the reality is that teams can spin up a cloud resource with the click of a mouse. FinOps is about bringing real-time visibility to teams so, along with this instant access, there can also be informed decision making and ultimately accountability—all while fostering agility.
Myth: FinOps is Only for the Largest Enterprises With the Biggest Cloud Budgets
Clearly, the larger the business’ cloud investments, the larger the stakes. In addition, the larger investments, the bigger the problems that silos between technology, finance, and procurement can create.
The goal for FinOps is to establish the people, processes, and technologies that enable more intelligent decisions about cloud investments. Ultimately, FinOps enables teams to ensure that each dollar spent in the cloud is delivering the most business value. Given that context, it is clear FinOps is invaluable for any organization making investments in cloud services. This is particularly true as organizations become more reliant on more cloud vendors and service types and more internal teams begin to access services.
Establishing a strong FinOps practice can support growth in cloud investments while equipping teams to ensure better those bigger investments will yield maximum business value.
In my experience, it seems that most organizations take on the creation of a FinOps practice after encountering significant issues, such as massive cost overruns or major snafus that impede operations. It is far better to make this move proactively before issues and obstacles arise. Further, the sooner the move is made, the sooner the business benefits.
As organizations’ investments in cloud services continue to grow, FinOps is becoming an increasingly vital discipline. FinOps offers teams a way to make more informed cloud investments and ultimately ensure those investments yield maximum business value. Consequently, FinOps represents a key aspect of cloud governance, which also requires teams to ensure security, compliance, and operational policies are constantly adhered to.