The short answer is no. While cost savings are a part of FinOps, the essence of FinOps is driving business value. In this article we’ll zoom into the business value side of FinOps.
The cloud was the catalyst in transforming organizations to become more agile, innovative, and get competitive advantage. On the other side of the coin, this exponential usage of cloud resources and adoption led to a significant challenge: the rise of uncontrolled cloud cost bill.
In this article I’ll explore problems that are arising when utilizing the cloud and how FinOps delivers the solution not only by spending less, but by giving more business value.
Aliging Cloud Spend with Business Objectives
One of the key benefits of FinOps is its ability to align cloud spending with an organization’s broader business goals and priorities. By providing data with a comprehensive understanding of cloud costs and usage, FinOps enables teams to make informed decisions about resource allocation and investment.
This data-driven approach enables organizations to make informed decision based on (near) real-time usage and cost data. Leveraging the comprehensive understanding of cloud cost and usage with the given data, FinOps teams allows business to:
1. Scale Resources Efficiently: FinOps provides the insights needed to scale resources up or down based on actual usage, ensuring that organizations are paying only for what they need.
2. Experiment with New Technologies: With a clear understanding of cloud costs, businesses can make informed decisions about exploring and adopting new cloud services and technologies. This fosters a culture of innovation and agility.
3. Optimize Existing Resources: FinOps helps identify underutilized or inefficient cloud resources, enabling organizations to optimize their existing infrastructure and redirect funds to more strategic initiatives.
For example, a retail company might use FinOps to identify opportunities to optimize its cloud infrastructure during off-peak seasons. By scaling down resources during these periods, the company can free up budget to invest in enhancing its e-commerce platform or developing new personalized shopping experiences for customers. This strategic allocation of resources not only reduces costs but also directly supports the company’s business objectives.
Driving Innovation, Agility, and Gamification
By providing cost visibility and control, FinOps empowers teams to explore and adopt new cloud technologies without fear of spiralling costs. This fosters a culture of innovation and agility, allowing businesses to stay competitive and responsive to market changes.
For example, a software company might use FinOps to experiment with new cloud-native architectures or serverless computing services, knowing that they can closely monitor and optimize the associated costs. With these services this software company can hugely adjust their cloud environment to the fluctuating demands when needed. This can give the company a significant competitive advantage.
A key strategy that fosters a culture of fail fast and innovation can be the introduction of a Cloud Workload Kanban board with three pillars: Grow, Maintain and Extinguish:
Grow: These are initiatives where experimentation and business value are the most important. These initiatives also have the vision of the company in mind. Costs aren’t that important.
Maintain: These initiatives are longer term and more used and utilized. With these initiatives the quality gates are important, so there is need for cost optimization and allocation. Business value meets costs.
Extinguish: These initiatives cost too much and are not having the business value that is needed. Therefor these need to be extinguished.
Gamification can drive innovation too! FinOps taps into the natural human desire for competition and recognition and sent out a reward system for engineers:
The central FinOps Team set up a system where engineers are rewarded for identifying and implementing cost-saving measures, such as auto-scheduling resources or embracing cloud-native skills. The savings realized from these efforts can then be used to fund a “playground” environment where engineers can freely experiment with new ideas and technologies.
Breaking Down Organizational Silos
As you’ve already read, FinOps is capable to bridging the gap between business, IT, and finance teams. Since FinOps is not only one of those teams, but they can also be the facilitator in cross-functional collaboration and communication. Therefore, is FinOps the ultimate fixer in breaking down the organizational silos and enabler to a more integrated approach to cloud management.
FinOps is not confined to a single department; it sets up shop on the border of business, IT, and finance. This collaborative approach allows for a deeper understanding of the interplay between cloud costs, resource utilization, and business goals.
For example, the finance team might work with the FinOps team to develop dashboards and reporting that provide real-time visibility into cloud spend. The business team can then use this information to make more informed decisions about resource allocation and investment. Meanwhile, the IT team can leverage the FinOps insights to optimize cloud infrastructure and experiment with new technologies.
The earlier mentioned gamification example is also an example how different departments can work together to get a shared objective and work together to get the most savings possible.
The FinOps Teams has to be a Strategist, Critical Thinker and Facilitator in One
There is need for a controlled cloud growth approach. The only way to achieve this is to support the organization’s long-term business objectives. By avoiding the pitfalls of over-provisioning or under-provisioning cloud resources, data-driven decisions for resource allocation and scalability, a central FinOps team can help in achieving this!
When looking into the FinOps Team and how they can achieve this, I can see three traits that are equally important so that they can harness the power of cloud and the power of the business:
1. Strategic: The FinOps team needs to be strategic in the long-term vision of the cloud within the organization. This gives them the information to fill in the trainings and conversations with the teams so they can help teams in driving innovation and aligning the spend of the team with the business objectives.
2. Critical Thinker: The FinOps Team is the devil’s advocate when utilizing the cloud and aligning it with the innovative mindset. This means that they need to make data-driven decisions on when to put a workload on the extinguish list and when to maintain it or grow it.
3. Facilitator: The FinOps Team is nowhere without the whole organization. Therefore they need to align with every department to get the flywheel of FinOps moving forward. When the FinOps team will give the tools needed for the different teams (and departments), utilize the power of the correct dashboarding and insights, then the flywheel will propel itself every turn faster and faster.
In my opinion, the cloud continues to play a critical role in business success, FinOps will become an increasingly essential practice for organizations looking to maximize their cloud ROI and achieve their strategic objectives. By embracing FinOps, businesses can transform their cloud investments from a cost center to a strategic enabler, driving sustainable growth and competitive advantage in the digital age.
