The Rise of FinOps: Why It Matters

Cloud services have proven to be a great way to save money on your organisation’s daily operations. They give you greater flexibility, scalability, and compute, while reducing your expenditure on infrastructure and maintenance. 

As your usage of cloud services grows, so does your bill.

That’s where FinOps comes in. 

FinOps is a new way of thinking about how to manage cloud costs. It’s a practice that brings together engineers, finance professionals, and technologists to collaborate on ways to get the most business value from the cloud (while still staying within budget).

What is FinOps?

FinOps comes into play by helping engineering teams work together with finance and tech professionals to optimise their cloud environment(s).

For both better spend and capabilities.

It’s a fantastic practice that helps organisations get maximum business value from the cloud through giving them the ability to make more informed investment choices with accurate modelling that takes into account cost constraints, as well human resource limitations.

With FinOps, everyone on the team takes ownership over usage supported by an established group of best practices – ultimately working together to achieve faster product delivery with more stability than legacy and on-prem systems.

The Principles of FinOps 

The FinOps Foundation is a non-profit that is: “Dedicated to advancing people who practice the discipline of cloud financial management through best practices, education and standards”.

They provide a list on their website to help bring clarity to the roles involved, as well as the purpose of the practice.

Teams need to collaborate:

  • Finance moves at the speed and granularity of IT.
  • Engineering considers cost as a new efficiency metric.
  • Continuously improve your practice to gain efficiency and innovation.
  • Define governance and controls for cloud usage.

Everyone takes ownership for their cloud usage:

  • Empower feature and product teams to manage their own usage of cloud against their budget.
  • Gain visibility into cloud spend at all levels.
  • Track team-level targets to drive accountability.

A centralised team drives FinOps:

  • Centrally govern and control Committed Use Discounts, Reserved Instances, and Volume/Custom Discounts with Cloud Providers.
  • Centralised discount buying process removes rate negotiations from engineering team consideration.
  • Granular allocation of all costs, direct or shared, to the teams and cost centres responsible for them.

Reports should be accessible and timely:

  • Fast feedback loops result in more efficient behaviour.
  • Visibility helps determine if resources are under- or over-provisioned.
  • Automation of resources drives continuous improvement.

Decisions are driven by business value of cloud:

  • Trending and variance analysis helps to understand why costs increased.
  • Internal team benchmarking drives best practices and celebrates wins.
  • Industry peer-level benchmarking determines how your company is performing:
  • Rightsizing instances and services help drive appropriate resourcing levels.
  • Comparing pricing between services and resource types drives better decisions.

IT Modernisation Is On The Up

FinOps becomes essential to organisations that have taken the move to modernise their existing infrastructures and ways of working.

A recent survey, conducted by IDG, reveals that modernisation efforts are already generating measurable improvements in service quality and user experience. The survey of 400 IT leaders, finds that “modernisation efforts to-date are already generating measurable improvements in service quality, user experience, and cost-efficiency”.

Although modernisation can be a difficult process, the payoff is certainly worth it. 

IT leaders listed the following benefits that come from modernisation:

  • Improvements in quality of service  44%
  • Improved user experience/satisfaction 40%
  • Improvements in business continuity 35%
  • Cost-efficiency/savings 34%
  • Resource optimisation 33%
  • Increased agility 32%
  • Increased innovation/creation of new revenue-generating products 32%
  • Faster time to value 31%
  • Improved risk profile 30%
  • Increased availability/uptime 30%
  • Increased TAM by accessing different/new revenue streams 24%
  • None 1%

While organisations are recognising the growing need for modernisation, many of them find themselves held back by outdated infrastructure which hinders innovation and prevents employees from delivering better value. 

In fact, a staggering 39% of the respondents believe that their infrastructure holds them back from innovation.

“Many are finding their infrastructures aren’t properly optimised to support digital dexterity, a culture of practices that empowers employees to deliver stronger value,  faster, from ongoing digital initiatives”.

A Sudden Surge In Cloud Adoption

It’s now safe to say that the benefits of cloud surpass that of any traditional, legacy on-prem system. 

Cloud migration is becoming so popular, in fact, that according to IDC, in Q4 of 2021, businesses spent £16.21 billion for cloud infrastructure services – up 13% compared to last year’s total at just over £10.76 billion.

On top of that, IDC predicts the worldwide market for cloud services to reach nearly £68.52 billion in 2022, a growth rate of 21%.

It’s a move that falls in line with the growing trend towards shifting IT infrastructure resources from on-premise solutions to the cloud. With major projects happening across every industry, businesses have more resources available for innovation with less risk and without capacity limitations imposed by physical servers.

With a Growing Trend Towards the Cloud…

… FinOps becomes a fundamental key to better costs and the overall ROI on your cloud investments.

But you need to get to the cloud first.

That’s where we can help you:

Our cloud architects are absolute boffins when it comes to all things ‘hyperscale’. Let’s get you comfortably and securely moved to the cloud – then we can talk about real optimisation!

More in the Blog

Stay informed on all things AI...

< Get the latest AI news >

Join Our Webinar Cloud Migration with a twist

Aug 18, 2022 03:00 PM BST / 04:00 PM SAST