FinOps 101
With each passing day, we see the potential and exponentiality of using cloud resources, because organizations need to ensure innovation and speed in delivering value from their products to the market. However, directly linked to the increase in cloud-scale use are the expenses, and the famous operating costs ( OpEx ). Some studies indicate that organizations waste an average of a third of investments with the cloud, simply because they have not adopted an efficient approach to managing this different cost model.
The magic word for this different model is managed, basically, it is to enable the organization to foster a culture allied with cloud cost management intelligence in order to generate the best return on investment ( ROI ). The market has adopted the term FinOps to describe this movement in the technology area. The implementation of the FinOps culture is an endless and cyclical journey because it is not about single and punctual activities that solve the problem of managing costs, it must be followed and incorporated together with the organization’s business strategy to generate value.
Starting from a starting point, as in the title of this article, which we refer to number 101, which in its interpretative form means an introduction to a topic, FinOps requires that some topics are placed as a focus from the beginning of the implementation journey.
Allocate and track cloud costs
If there is one action that we can consider the most important for FinOps, without a doubt, it is the issue of cost allocation and traceability, because all other actions require accurate and up-to-date information for effective decision-making. Therefore, the sooner we have cloud resources properly identified in a standardized and consistent manner, the sooner it will be possible to start tracking cloud costs and generating transparency and visibility.
Promoting cloud cost accountability
Every penny spent on the cloud certainly originated from a business demand, whether permanent or temporary, which is why it is essential that each cost is directed to the person responsible, whether direct and/or indirect. This will certainly create awareness in everyone about the financial impacts, whether from architectural decisions, scalability, availability or any other that can be adjusted. Because these decisions can generate costs, and consequently reduce the return on investment of the product, reducing its value creation.
Incorporating cloud costs into the business context
Fluctuating cloud spending numbers mean nothing when they are not associated with business numbers, this lack of correlation allows total or segmented numbers of cloud costs to respond or indicate nothing, either in the best or worst investment scenario. In order to be able to calculate the return on investment, it is crucial that the expenses are associated with numbers from the results, for example, how much a certain structure of resources is costing at the end of the month, compared to the monthly fees charged from users who use the product that is using this framework.
These are central themes that need to be focused on from the beginning of FinOps implementation. FinOps enables culture so they can turn cloud spending from a liability to an organizational asset.
