So now you know Why FinOps is crucial. You’ve seen the cloud’s promise of flexibility, advanced technology, cost savings… and you’ve also understood how quickly that promise can turn into a budget-draining black hole.
One minute, you’re thrilled by the magic of auto-scaling; the next, you’re wondering why your cloud bill is much higher than the initial estimations and the engineers will overwhelm you with technical terminology and probably will ask for more (“you need to spend money in order to save money”).
This is where we come to the rescue!
Think of FinOps as the finance person for the engineers – someone with budgeting orientation and the technical person for the finance and business; someone that translates the foreign languages and ensures collaborative effort to maximize cloud value and expenditure transparency.
So, how do we actually do this? How do we turn cloud mazes into solved puzzles?
Grab your (virtual) whiteboard, because we’re diving into “How”- where we break down the strategies, tools, and best practices that will keep your cloud costs under control while still getting the most out of your investment, and most importantly, in your own language.
Cloud Financial Management
Since cloud is a long race, and not a solo one, we start by bringing Finance, Engineering, Operations, and Product together. We start with an assessment of the current state and the planned needs. We will walk through to form a FinOps team, define the roles, making sure everyone speaks the same language.
We set clear roles and responsibilities so everyone knows their contribution and maintains ownership.
And with the Leadership vision, we will set the expectation and rules for how we track and measure the costs.
Measuring can be challenging, since the cloud billing records do not relate to the organization terminology, products, business units, OPEX/CAPEX, so we will design the cost allocation rules, maybe more than one, to break down the costs by your needs.
Based on the team study, we establish policies, controls, and governance mechanisms to ensure that cloud use aligns with business objectives, complies with regulatory requirements, and sets the tools and processes, designs the reports, to ensure that the cloud resources are used efficiently.
Gaining Cost Visibility
Cloud bills are confusing and full of surprises, with terms that sometimes neither the engineers nor the financiers can explain. You can find them deep in the vendor documentation.
We will build a smart tracking system, implement tagging and cost allocation rules to analyze the spend by purpose.
We will create near-real-time reports and easy-to-read dashboards. We will set up alerts and anomalies detection rules to spot suspected spending patterns and avoid surprises.
We want to give everyone in the company the power to keep an eye on their spending, meet the budget, and predict the future costs.
Optimizing Cloud Spend
With a clear understanding of where the money is going, we will ensure that it is both transparent and optimized. This requires a multi-faceted approach.
Rightsizing the resources is a continuous task, monitoring the utilization, adjusting the instance sizes, storage tiers, network usage and other services configuration to match the actual demand.
Cloud providers offer significant discounts for committing to specific usage levels over a period. We will identify the opportunities and manage the plans to maximize the savings.
We will implement tools and processes to identify and prevent waste, such as idle resources, and unoptimized usage of storage or data transfer.
Unexpected cost spikes can quickly sum up to significant numbers. We will analyze those cost spikes, investigate the root cause and learn how to prevent them.
The cloud is evolving and the organization is accumulating data. We will initiate a regular review of your cloud environment design, to identify opportunities for improvement, savings or retention and inform you of the latest cost-saving management trends and best practices helping you make decisions about the best cloud strategy for your organization.
Summary
I hope you can see now how FinOps closes the gap between tech and finance teams to get the most out of cloud spending and understand the importance of this discipline for organizations looking to optimize their cloud spending and align with their business goals.
FinOps strategies are tailored to the unique objectives and requirements for each organization, and continuously adjusted to the challenges and opportunities of each organization.
