FinOps – introduction, origins and next steps
Financial Operations (FinOps) is a culture that will help you creating cost awareness in your organisation!
Introduction
Companies are moving their computing capacity to the cloud in order to benefit from the fact that the systems are managed (outsourced) by a 3rd party e.g. AWS, Azure, Google cloud etc. Efficient architecture is always the focus, however, due to a rush or uninformed decisions, various companies have been in a position where the spending on cloud services was too high. The amount spent on the cloud is sometimes that high that the choice to migrate to the cloud is disputed… Therefore, step 1 in the process of reducing the costs is analysing the existing expenditure on the cloud (inform). Step 2 is to optimize these costs, which means that the unneeded resources will have to be eliminated. Also, the teams should be now more aware of how to use the cloud services and what costs are involved. Step 3 is to operate and always be thoughtful of the ups and downs of each cloud service (operate).
- Inform
- Optimise
- Operate
This is called the FinOps lifecycle. FinOps i.e. Financial Operations is the intersection of people, process and technology as it relates to managing the financial operations of a business. FinOps is a culture and can be followed or adopted by taking into account factors such as the following principles:
- Teams collaboration
- Cloud business value-driving decisions
- Cloud usage is the responsibility of everyone in the organisation
- Accessible and timely FinOps reports
- Centralized reports drive FinOps
- Taking advantage of the variable cloud cost model
What we are aiming for? The most important concept is unit economics. We should always measure our cloud spend against a business metric e.g. total revenue, shipments made, paid subscribers, customer orders. This is a complex process!
But who is FinOps for?
FinOps advantages (AMVOW)
- Awareness — creating awareness of cloud expending
- Money — saving money with quick wins or with a long term planning
- Visibility — gain visibility of the cloud expending
- Optimisation — identifying possible optimisation areas
- Waste — reducing waste
FinOps disadvantages (MIC)
- Management — if not properly managed it can backfire horribly
- Investment — requires investment planning for tools and training
- Collaboration — requires collaboration between teams not understanding entirely the dynamic cloud model
Conclusion
We have talked about FinOps, what it is, what are the pros and cons. We saw the lifecycle, the core principles and factors. Now that we also know who FinOps is for, we can start talking to them about the topic and chase at reducing cloud costs! Customers will also appreciate the reduction of cloud expenditure and any costs to be more generic!
More info and credits
The majority of information mentioned in this article would not be possible without attending the online course of Freddy Ayala and also without having to deal with an unexpected bill on my personal AWS account. So thank you, Freddy! Also, I am glad that I have managed to identify the world of FinOps from a small but expensive mistake!
By the way, I have written about this experience in previous articles:
Last but not least, feel free to spend some time reading the State of FinOps Report. It contains very useful information!
Thank you!
Before you go away, I would like to thank you for reaching this point. I really hope I have managed to transfer some knowledge to you and the people around you. Yes, that’s the plan! Sharing knowledge is my passion and I am looking forward to keeping up. Who knows? One day I may be able to publish a book on Cloud Infrastructure/DevOps within the Telecommunication industry :)
Find me…
At greekdigitalcommunity.com;
At Reply.com. I’m a Senior Consultant at Net Reply UK. I like writing about various automation topics, from technical to more abstract. My team in Net UK consists of consultants, software developers, technology enthusiasts specialising in Telecommunications and technological concepts such as Software Defined Networks (SDN), Network Function Virtualisation (NFV), DevOps. Our mission is to build the Next Generation Networks leveraging the art of software and latest technological trends. If you would like more information, feel free to reach out to me LinkedIn (stelios-moschos) | Twitter (smosgr) | hiretheauthor.com/steliosmoschos | smos.gr. Alternatively you can learn more about us on LinkedIn (Net UK) and Twitter (Net UK)
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