There’s a lot of buzz about FinOps, yet not many companies have incorporated it into their cloud strategy. According to our latest research – The State of Multi-Cloud Management – only 24% of surveyed organizations have a mature, effective FinOps practice in place. That number is predicted to grow, with 70% of respondents planning to make necessary improvements and adjustments to their FinOps approach to move the needle in the right direction.
But what is FinOps exactly? FinOps is short for financial operations, and the FinOps Foundation defines it as “the practice of bringing financial accountability to the variable spend model of cloud, enabling distributed teams to make business trade-offs between speed, cost, and quality.” Establishing a FinOps practice can bring financial accountability to cloud spend, eliminate silos, and implement a true cross-functional working style.
Why, then, are organizations so slow to incorporate it into their cloud management strategy? The problem lies in organizations not understanding how these benefits support their overall cloud strategy.
FinOps: Why It’s So Important
Let’s first look at how FinOps plays a role in cloud management. Unlike a traditional data center, which requires capex investment, the public cloud operates on an opex pay-as-you-go model. The upside is that you don’t have to tie up financial resources now on infrastructure you’ll need in the future or support peak usage that’s otherwise underutilized. But the downside is if you can’t effectively monitor and manage your workloads in the public cloud, your business could end up paying a high price, due to availability problems, performance issues, spiraling costs, or some combination.
The challenge is that IT leaders who grew up in a traditional data center have not built the skills and tools needed to support the accountability they’re being held to in this new environment. Furthermore, it’s not just IT’s problem to solve. The move to the public cloud is far more likely to be perceived as a business transformation initiative rather than a simple technology project, which means there’s a lot at stake.
This is why FinOps is not about saving money; it’s about making money.
Getting from Here to FinOps
One of the major attractions to establishing a FinOps practice is that it eliminates silos and integrates all the departments that oversee cloud deployment and management operations. A siloed approach to managing cloud costs can hurt the business, yet this is exactly what the majority of cloud decision-makers are doing. As we found, 73% of respondents stated that their cloud teams work in silos. Similarly, when it comes to which department tracks cloud costs, 89% say that it’s under IT, while just 17% give that responsibility to FinOps.
The FinOps philosophy breaks down siloed procurement in favor of cross-functional best practices. According to the FinOps Foundation, successful FinOps requires stakeholders to access “near-real-time data they need to influence their spend and help them make intelligent decisions that ultimately result in efficient cloud costs balanced against the speed/performance and quality/availability of services.”
Making smarter cloud spend decisions across the board does more than just support operational efficiency. It can drive more revenue, grow the customer base, and accelerate the velocity of strategic product and feature releases. In other words, it’s ultimately about making money. And establishing a FinOps practice allows organizations to do just that.
The benefits of implementing a FinOps practice are clear. So, start by outlining the structure of your organization’s FinOps practice and then identify responsibilities – track cloud costs, monitor migration, etc. – for the new team that will help realize these benefits. In doing so, you set your organization up for success not only today but in the future, as well.