FinOps is a relatively new term that has become popular in the technology industry in recent years. It refers to the practice of optimizing the use and cost of information technology resources in a company. This includes such things as cloud hosting, use of online platforms, and hiring technical staff.
FinOps is a discipline and a cultural practice, but it also refers to the FinOps Foundation a non-profit commercial organization, part of the Linux Foundation, composed of members from companies and other organizations that promote the FinOps discipline.
The goal of FinOps is to help companies maximize their profitability and reduce unnecessary costs in the use of technology. This is achieved by constantly monitoring resources and implementing sustainable and efficient practices.
One of the main advantages of FinOps is that it allows companies to quickly adapt to changes in the market and in the company's needs. For example, if a company experiences a sudden increase in demand for its products or services, it can use FinOps to increase its cloud hosting capacity or hire more technical staff quickly and efficiently. This allows the company to stay competitive and remain profitable.
Another advantage of FinOps is that it allows companies to have greater control over their technology costs. Often, companies have difficulty predicting exactly how much technology usage will cost in the long run. With FinOps, they can constantly monitor resource usage and take steps to reduce unnecessary costs.
Who are the key FinOps participants?
To implement FinOps in a company, it is important to have a dedicated team and a corporate culture that supports efficiency and sustainability. It is also essential to have the right tools and technologies in place to monitor and optimize the use of technology resources. This can include things like cloud-based cost tracking platforms, resource optimization tools and automation systems.
The roles vary by organization, but there are generally five key players, as defined by the FinOps Foundation :
Executives. Executives such as a CTO, CIO, CFO or cloud center of excellence director focus on large-scale, complex IT projects, foster accountability and transparency, and ensure that teams stick to budgets.
Product/business owner. Typically, members of the product/business owner's team, such as the cloud optimization manager, cloud analyst or business operations manager, are responsible for bringing new products and features to market and accelerating product growth year over year. Product owners are often key participants in cloud infrastructure automation.
Engineering and operations. Software and systems engineers, cloud architects, service delivery managers and other members of the engineering and operations team help accelerate the delivery of high-quality services while maintaining the flow of business operations. To translate this into an effective FinOps operating model, these teams work together to establish accountability practices across engineering teams, and identify anomalies, rate reductions and areas for cost avoidance so that application and service delivery is more cost-effective.
Finance/procurement. Finance and procurement team members use the information provided by the FinOps team to negotiate the most favorable contracts, implement discount and volume commitment programs, and create cloud budgets, forecasts and cost reports.
FinOps Professional. FinOps professionals lead the cultural change necessary to achieve FinOps success, bringing business, IT and finance teams together to optimize cloud usage and increase business value. Applying their knowledge of the FinOps framework, principles and deliverables, they focus on establishing a FinOps culture, educating the organization on best practices, establishing benchmarks, creating visibility around cloud costs, and guiding budgets and forecasting.
Why do you need reporting and automation in FinOps?
To achieve maximum benefit, FinOps practices must drive both reporting and automation in their cloud operations. According to the FinOps Foundation, advanced reporting enables more than 90% of cloud spend to be allocated with very little variance between planned and actual spend. FinOps mature reporting also requires an organization to have specific key performance indicators (KPIs) defined as measures of success.
By combining advanced reporting with automation, organizations can increase the ROI of cloud investments by continuously identifying efficiency opportunities and taking action to optimize the cloud in real time. In addition, organizations can leverage metrics-based optimization through dynamic resource automation so that the underlying infrastructure of a cloud environment always has resources to meet service level objectives.
Cloud operations that apply both automation and advanced reporting ensure optimal digital experiences for the end user, in addition to reducing cloud spend.
In summary, FinOps is an approach focused on optimizing financial costs in the enterprise and maximizing profitability through the use of financial analysis techniques and tools and the implementation of appropriate processes and systems for managing financial resources. It is especially relevant in the context of technology and software companies where costs can be very volatile and difficult to predict. In these cases, the implementation of a FinOps approach can help companies optimize their costs and increase their long-term profitability.
