Farfetch’s FinOps Journey: A 2023 Success Story
Managing cloud costs is like playing a game against yourself. The goal isn’t to outperform others but to continually improve your own performance. For FARFETCH, 2023 was a standout year in FinOps, marked by significant achievements. The company not only optimized its costs but also matured its FinOps principles, spreading a culture of financial accountability across the organization.
Compared to 2022, FARFETCH’s technology division, FTECH, spent €3.4M less in 2023 while maintaining stable business metrics. This means the company was able to do more with every Euro spent. In this article, I explore how FARFETCH achieved this remarkable result using FinOps principles, tools, and a mindset of continuous improvement.
The FARFETCH Context
Before diving into the specifics, here are some public facts to highlight the scale of FARFETCH’s achievement:
- Cloud-native company
- Revenue in 2022: $2.3 billion
- GVM in 2022: $4.1 billion
- Technology Spend in 2022: $120 million
- FARFETCH operates three globally distributed data centers, including one in Shanghai, which support a growing base of transactions.
Source: Farfetch Fourth Quarter and Full Year 2022 Result.
Building a Cost-Conscious Culture
Even before formally adopting FinOps, FTECH had a strong culture of cost management. FinOps acted as a framework to further refine and align this culture across teams, from engineers to senior management. Here are some key initiatives that helped spread this mindset across the organization.
1. FinOps Community
An internal Slack channel was created to foster a community around FinOps. Employees could share ideas, ask questions, and receive support. This channel also served as a feedback loop for the FinOps team, allowing them to continuously improve products and services based on real-world input.
2. FinOps Training
In partnership with the People Team, a comprehensive FinOps training program was developed. Divided into five modules, the training could be taken independently and on demand. It was designed specifically for FTECH, using terms and practices familiar to employees, and helped solidify FinOps principles within the organization.
Farfetch on-Demand Training Platform
3. FinOps Character of the Month
Internally known as “ICON of the Month,” this initiative recognized individuals or teams who significantly contributed to the FinOps culture. The focus was not on the amount of savings but on how well their actions aligned with FinOps principles. Winners were featured in articles and added to a virtual gallery, turning recognition into something desirable and inspirational.
ICON of the month
Successful Cost-Saving Initiatives
With the cultural foundation set, FARFETCH translated these values into concrete actions. Some of the most impactful initiatives in 2023 included:
1. Cost-Saving Backlog
FTECH maintained a live catalog of actions aimed at waste removal, rightsizing, and optimization. This backlog became a single source of truth for all cost-saving initiatives, providing visibility across the organization. In 2023 alone, FTECH completed 3,800 actions related to decommissioning or optimization, saving the company millions of dollars.
2. Spot Instance Adoption
Spot Virtual Machines allow access to spare cloud capacity at deeply discounted prices. In 2023, the Architecture team endorsed the use of Spot Instances, even for some production workloads. The results were impressive: FARFETCH used three times more VM hours compared to 2022, at an average cost 76% lower than on-demand pricing.
3. Maximizing Reserved Instance Discounts
At the beginning of 2023, FARFETCH increased its commitment to Reserved Instances from 49% to 90% of its total virtual machine costs. This move required careful management of variable workloads and diverse machine types, but it paid off. Reserved Instances accounted for the majority of FTECH’s savings in 2023.
Cost Variation Factor Analysis – 2022 vs 2023
Disciplined Stewardship: A Key to Success
A major contributor to FARFETCH’s 2023 success was the evolution of its cost reporting. The FinOps team, in collaboration with the Data team, improved the internal cost management tool, allowing for more granular reporting. Middle management could now see actual costs against planned budgets, increasing accountability.
On a broader level, the FinOps team generated multi-cloud reports for senior leaders, complete with a calculated forecast using Earned Value Management. This proved invaluable when, by mid-Q2 2023, the forecast indicated an underrun in costs. As a result, FTECH reduced its 2023 budget, strengthening FARFETCH’s cash position.
