Cloud costs. Like a free lunch, there’s no such thing as a free cloud service. Okay yes, hyperscaler Cloud Service Providers (CSPs), various levels of systems integrator (SI) service and the lower tier of cloud configuration and infrastructure service providers will offer some incremental functions as gratis as part of wider platform play here and there… but in general, cloud costs money.
Because we’ve been through a period of infection, inflation and invasion (which still persists in many areas), which brought with it global geopolitical upheavals and an ensuing age of supply chain disruption, we have become more acutely attuned to looking for value. Because we also now understand Environmental, Social & Governance (ESG) goals and principles better, we are also more adroitly examining business value in relation to the cost of IT, which now increasingly come as a cloud-native technology proposition.
What is cloud FinOps?
All of these realities have helped spur the development, codification, evolution and adoption of FinOps i.e. financial operations practices focused on refining the pecuniary cost of IT Ops (base layer operations requirements and practices needed to keep an organization’s IT function running) typically and almost exclusively related to cloud.
In the fast-paced realm of financial operations, savvy businesses are embracing FinOps frameworks to elevate their fiscal prowess and drive long-term prosperity. Anchored by three indispensable pillars that denote the need to – inform, optimize and operate – FinOps is argued to provide the groundwork for organizations aiming to thrive with cloud.
“The FinOps approach draws parallels with the best practices of running any successful business, emphasizing metrics, cost optimization and continuous improvement,” said Bryan Valko, executive vice president & chief revenue officer at FinOps platform company Xosphere, Inc. “At the heart of FinOps lies the ‘inform’ pillar, which serves as a bedrock for Business Intelligence (BI) functions. Informed decision-making is paramount for businesses navigating the intricacies of budgeting, forecasting and resource allocation. By using analytics and reporting tools, organizations gain real-time insights, enabling proactive risk mitigation and capitalizing on lucrative opportunities.”
Also key here is the need to foster transparent communication across stakeholders fostering a culture of financial responsibility, aligning teams with overarching business goals. Accurate information empowers agile and responsive operations, a hallmark of businesses at the forefront of their industries.
After inform, optimize
Moving from information to action, the FinOps ‘optimize’ pillar is argued to be the linchpin for maximizing efficiency and resource utilization. Drawing a parallel with cloud computing optimization, businesses strategically allocate resources to areas that generate the most value. Employing advanced technologies and data-driven insights, organizations optimize operational costs without compromising performance or innovation. Companies are achieving cloud savings instruments such as Reserved Instances (RI) and savings plans to fortify their optimization efforts. These tools enable businesses to commit to specific cloud resource usage, ensuring predictable costs.
According to Xosphere founder and CEO Alan Hand, “The dynamic nature of cloud compute demands greater flexibility, a challenge addressed by the use of Spot Instances. Spot Instances, with their on-demand and cost-effective nature, become the linchpin for addressing usage spikes beyond committed cloud provider commitments.”
Operate: orchestrating business workflows
So then to the ‘operate’ pillar, which breathes life into the FinOps framework, orchestrating financial workflows akin to business operations.
“This involves implementing agile financial processes, automation and fostering collaboration across departments. By integrating financial operations with broader business functions, organizations position themselves to respond swiftly to market changes, regulatory demands and internal requirements,” said an optimistic Valko. “Operational excellence ensures that financial processes are not only efficient but also adaptive, a crucial facet for businesses striving to maintain a competitive edge and foster innovation.”
Current focus
While all pillars are indispensable, Valko and team say that the current FinOps emphasis has squarely been on the ‘inform’ space. This recognition underscores the foundational role of financial intelligence and has prompted increased investment in analytics tools, data visualization and reporting capabilities. Organizations are harnessing these technologies to enhance decision-making, align financial strategies with business objectives, and foster a culture of continual improvement.
“The future trajectory of FinOps is anchored in the ongoing development of technologies for optimization and operations,” clarified Valko. “Innovations in Artificial Intelligence (AI), Machine Learning (ML) and automation are set to drive efficiency, reduce costs and elevate overall financial performance. These technologies will empower businesses to optimize processes in real-time, respond nimbly to market changes, and operate with unparalleled agility.”
Future trajectories
Looking back, downwards (and upwards) but most importantly ahead, FinOps stands as a now increasingly embraced and adopted cloud management framework with its three pillars as detailed here.
While the ‘inform’ space may currently be taking center stage, the future of FinOps hinges on using emerging technologies for optimization and operations. By embracing these principles from companies like Xosphere, CloudBolt, Densify, Harness, Cloudability, Flexera and a whole shopping list of others extending all the way to the tools offered by the three major cloud hyperscalers – businesses are now looking to navigate the intricacies of modern cloud-based finance and create sustainable growth.
You don’t have to be an accountant to use cloud computing before now or indeed after FinOps, but the argument here is that with FinOps, you can account for the cloud with more control. There’s no such thing as a free FinOps lunch either, bring your own sandwiches, please.
