Introduction
The successful implementation of FinOps often hinges on a fundamental cultural shift within an organization. Transitioning from traditional IT cost management to a FinOps mindset requires buy-in and participation from cross-functional teams and leadership, including finance, engineering, and business stakeholders. To measure the impact of this cultural change can be a complex and multifaceted challenge.
In this article we dip our toes into the challenges of measuring a successful cultural shift, but we dive deeper into how an organization can be helped to successfully shift his culture by establishing baselines, setting key metrics, and demonstrating the ROI of FinOps Cultural Initiatives.
Challenges of Measuring the Success of a Cultural Shift
Organizational culture is inherently intangible and difficult to quantify. Unlike discrete business metrics, such as revenue or customer churn, cultural transformation is a gradual process that can be influenced by a myriad of factors. Measuring the success of a FinOps culture change initiative requires a holistic approach that considers both quantitative and qualitative data.
One of the primary challenges is establishing clear and measurable objectives for the cultural shift. Questions that need to be asked are: What does “success” look like, and how can it be objectively evaluated? Additionally, the timeline for cultural change can be unpredictable, making it difficult to set realistic milestones and track progress effectively.
Another challenge lies in the inherent resistance to change that often accompanies cultural transformations. Employees may be hesitant to adopt new ways of working, and their buy-in and engagement can be crucial to the success of the initiative. Measuring the level of employee adoption and sentiment can be a valuable but complex undertaking.
Establishing Baselines and Tracking Progress
To effectively measure the impact of FinOps culture change, organizations should establish clear baselines for each of the key metrics identified. This baseline data can serve as a reference point to track progress over time and evaluate the effectiveness of the cultural transformation initiatives. When establishing baselines, it is important to consider the current state of the organization’s cloud cost management practices, resource utilization, team collaboration, and financial visibility. This can involve conducting audits (such as a FinOps Maturity Assessment), analyzing historical data, and gathering feedback from cross-functional teams. Once the baselines are established, organizations can set realistic targets and milestones for each metric, considering the expected timeline for the cultural change. Regular monitoring and reporting on these metrics can help track progress and identify areas that require additional attention or intervention.
Key Metrics to Track the Impact of FinOps Culture Change
After the baselines set, the organization knows the starting point. From now, the FinOps culture change has entered the two-way street: the numbers side (Cloud Cost Optimization and Resource Utilization) and the Interaction side (Team Collaboration and Financial Visibility). As the number side is easy to quantify after the set baseline, we elaborate a bit more on the Interaction side. We do this because here is where it becomes complex.
1. Cloud Cost Optimization
Tracking metrics regarding cloud cost optimization can help visualize and quantify the financial impact of the FinOps approach. This is also a key driver for cultural change. By monitoring and feedback sessions on the costs, organizations can really steer on FinOps and the culture change. Some general examples on metrics that can be used:
• Cloud spends per business unit or application.
• Cloud cost savings achieved through optimization efforts.
• Percentage of cloud resources under FinOps governance
• Average price per resource is going down.
2. Resource Utilization
A mature FinOps organization works day in – day out on optimizing resources and the utilization of those resources. By monitoring the utilization of resources, organizations can identify and steer on optimizations and showcase the impact of FinOps on resource efficiency. Some examples where you focus on when monitoring utilization of resources:
• CPU and memory utilization
• Idle or underutilized resources
• Rightsizing of cloud resources
3. Team Collaboration
To measure the team collaboration is pivotal to a successful integration of the FinOps practice. Measuring the level of cross-functional collaboration and engagement can provide insights into this integration in an organization. Next to team engagement and participation the adoption of tools and processes are important. Some example metrics that can be used for this:
• FinOps processes in place that enables engineers and finance to take collaborative action on
• Regular cross-functional meetings are enabling engineering and finance teams to discuss the (non-) possibilities of enabling more cloud resources.
When an organization are implementing and anchoring the processes within a governance framework and adding those to the cross-functional collaboration is where the real magic happens. An example of abovementioned metric is the implementation of tollgates within a CI/CD pipeline. Engineering teams get realtime feedback on the price difference/increase if they submit their code to the environment. Based on that feedback the teams can obtain the approval from their cross-functional teams and get it going. This ensures that finance is involved and there is grip on the costs of the cloud environment.
4. Financial Visibility
FinOps is all about financial visibility and is also a key outcome of a successful FinOps Culture Change. Organizations can decide based on data when this is available in a timely manner. Also, an accurate forecast ensures that the growth is not out of control. A successful FinOps approach gives organizations enhanced financial management capabilities where they can act upon. Some examples on these metrics:
• The data is 90% of the time accessible.
• The data is corresponding with the data we have gotten from the cloud providers.
• The delta of the forecasts is less then 10% of the actuals.
Demonstrating the ROI of FinOps Cultural Initiatives
After setting up the baseline and setting metrics where cultural initiatives can be assessed upon, it is important to demonstrate the ROI on the FinOps Cultural Initiatives. To embrace the iterative way-of-working from FinOps, the initiatives must justify the resources allocation and effort to drive the cultural transformation.
When organizations want to calculate the ROI of FinOps cultural initiatives, organizations need to investigate the following key components:
1. Cost Savings: Quantify the cost savings achieved through cloud cost optimization, improved resource utilization, and reduced waste.
2. Operational Efficiency: Measure the impact on team productivity, decision-making, and overall operational efficiency.
3. Risk Mitigation: Assess the reduction in financial and operational risks associated with cloud cost management.
4. Competitive Advantage: Evaluate the strategic benefits of enhanced cloud financial management, such as improved agility, scalability, and customer satisfaction.
When conducting this ROI analysis on the FinOps cultural transformation, also conduct a FinOps Maturity Assessment (FOMA) to see in which way the organization has grown in their FinOps Practice. This combination gives organizations a comprehensive analysis how they developed the organization in quantifying their value to key stakeholders, including executive leadership.
Conclusion
As earlier mentioned, measuring the impact of a (FinOps) culture change is a complex but essential task for organizations who want to maximize their investments in embracing the cloud. After setting a clear baseline, organizations can focus on the key metrics: cloud cost optimization, resource utilization, team collaboration and financial visibility. Due to the baseline organizations can set realistic targets, regularly monitoring, and reporting on these metrics and track the process of the cultural transformation and demonstrate tangible business benefits. Also, organizations are able – due to the baseline and the monitoring and reporting - to navigate the earlier mentioned challenges and see the success that comes with the cultural shift.
After a set period, it is important to evaluate the initiatives through a comprehensive analysis based on a ROI and FOMA assessment. This analysis can be used to secure ongoing leadership support for these transformative efforts.
In the end the ability to quantify the ROI of FinOps cultural initiatives can be a powerful tool in securing ongoing support and resources for these transformative efforts.
