It’s clear that cloud is asserting a dominant position in the business IT landscape. According to Gartner, more than half of enterprise IT spending in key market segments will have shifted into the cloud by 2025. With so much investment going into cloud, maximizing cost-effectiveness and cost efficiency, and avoiding cloud overspending, becomes even more important - and that’s where FinOps comes in.
In this blog, we’ll explore why FinOps is so important in optimizing the cost of cloud in the modern landscape. We’ll cover the core principles behind FinOps, best practice around its implementation, and how to navigate some of the key challenges that can arise along the way.
FinOps brings together a combination of core principles, to ensure that the ethos of cost efficiency is adopted by all stakeholders connected to a cloud investment. Three stand out in particular:
Working together ensures that the right, data-driven decisions are made to maximize the value of cloud. Clear structures around responsibility and accountability help cross-functional teams strategize and address challenges in organized, efficient ways.
42% of CIOs and CTOs say resource management is an issue, typically because of overprovisioning and difficulties in scaling down. The accountability highlighted above enables greater transparency around costs, so that better and more informed decisions around cost management can be made.
Just-in-time capacity prediction, planning and purchasing, allied to agile planning and continuous design adjustments, mean that costs can constantly be right-sized to business needs, even as those needs evolve and fluctuate.
From a practical perspective, there are three vital best practices that make FinOps adherence a success:
Real-time monitoring tools and customized dashboards can help track and visualize cloud expenditure end-to-end. These insights should then be reviewed on a regular basis, so that unusual spending patterns can be identified and addressed before they can have a negative impact on overall costs.
Resources should be continuously analyzed, based on usage data, so that they can be right-sized through savings plans and reserved instances. Further optimizations can be realized through data transfer and storage efficiencies, automated scaling, and efficient termination of resources rendered obsolete.
Resource provisioning and cost allocation can be made more efficient and accurate by using automated tagging policies, as well as Infrastructure-as-Code. Furthermore, AI-driven tools can enable predictive cost analysis and automated cost policy enforcement.
FinOps can only realize its full potential when it is properly embedded into the operations of the wider business. For that to happen, two cultural processes are absolutely vital:
DevOps needs to be fully aligned with FinOps, and that starts with fostering a collaborative culture. Open communication and common responsibility can ensure that everyone is working towards the same goals in the same direction. On a more practical level, FinOps practices can then be aligned with DevOps workflows using KPIs for cost efficiency and operational effectiveness, supported by the use of cloud cost management tools, collaboration tools and CI/CD platforms with cost monitoring built in.
All the stakeholders involved in embracing FinOps need to be aware of what it involves, and what they need to do to promote the philosophy. This means extensive training and onboarding, to enable a greater understanding of how people can work together to maximize cost efficiency through collaborative, data-driven decision-making. Accountability around chargebacks and budgeting is also important to reinforce departmental responsibility.
FinOps is more than a human-driven practice - it’s also backed by some helpful software platforms that add insights and detailed data processing into the mix. A good FinOps set-up will ideally include:
A good cost management platform will aggregate data from a wide variety of sources, and present it in digestible formats so that stakeholders can understand exactly where their cloud services spending is going. With this information (especially if it’s in real time), the best and quickest decisions can be made around scaling cloud spending up or down in different areas. The insights gained through cloud cost management tools can be used for regular cost forecasting, either through integration within CloudZero for example, or standalone solutions such as Sisense or Microsoft PowerBI.
There can be many obstacles to address when rolling FinOps out across an organization. They can be cultural, because it represents a major change in approach; collaborative, in terms of how teams communicate and assume accountability; operational, in terms of dealing with data overload and visibility; or human, in making sure everyone has the right skills and training.
It’s best to try and address these challenges as early as possible, and try to foster a positive FinOps culture through onboarding and discussion. Only then can open and frank discussions be held around cloud costs, with full cross-team collaboration, clear lines of accountability, and seamless visibility and management of relevant data.
As cloud adoption continues to accelerate, the role of FinOps in business is set to evolve and expand through:
As businesses continue to leverage cloud technologies, FinOps will play an increasingly crucial role in ensuring that these investments translate into tangible business value. The future of FinOps is not just about cost-cutting, but about strategic resource allocation that drives innovation, growth, and competitive advantage in the digital economy.
Ciklum’s approach to cloud engineering can form a key part of embracing a FinOps culture across your engineering team, and wider business. Find out more here.