The tech industry is always coming up with new team names by combining different disciplines, such as DevOps, DevSecOps, AIOps, or most recently, NoOps. At first glance, these names might not seem appealing. However, when their associated practices are followed correctly, they can be transformative. They force collaboration early and often – which helps companies improve velocity and foresee potential risks before disasters occur.
The latest addition to many companies is the hybrid department of FinOps, which combines finance and operations. This strategic move has already been shown to be incredibly impactful by those who have experienced it firsthand.
What is FinOps?
FinOps is a public cloud management discipline that enables organizations to get maximum business value from cloud by helping technology, finance, and business teams to collaborate on data-driven spending decisions.” – Intel
FinOps is a public cloud management discipline that enables organizations to get maximum business value from cloud by helping technology, finance, and business teams to collaborate on data-driven spending decisions. By collaborating, these teams are able to make decisions that result in the best possible outcomes for the company as a whole.
FinOps engineers play a significant role in quantifying financial products and services, by developing mathematical models and analytical pricing systems. They are involved in building intelligent systems that understand, analyze and predict market movements, as well as providing real-time advice to investors and financial institutions.
FinOps is the term used to describe the various methods used to manage an organization’s Cloud spending. It’s important to have different levels within your organization (such as developers, architects, and executives) because each level has different requirements. However, the goal of FinOps is to create a common language that can be used by all members of the organization so that everyone can communicate effectively.
According to the FinOps Foundation Community, “FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.” – Finops.org
The FinOps Foundation and the ‘Cloud FinOps’ book quickly dispel the myth that:
“If it seems that FinOps is about saving money, then think again. FinOps is about making money“
If you’re an engineer, it’s easiest to think about FinOps from your perspective. This AWS blog post describes FinOps from the engineer’s perspective:
“FinOps is the idea of combining financial accountability with autonomous team delivery. Delivery teams can be made responsible not just for delivering code, operating the code, securing the code, and making sure that the code accomplishes its objectives, but also for managing its costs, both fixed and variable. – aws.amazon.com
The goal is to “change the team’s delivery process to include consideration of costs”. This means that we need to think about every aspect of our project from start to finish and determine how much it will cost to complete each task. By doing this, we can save money and time in the long run.
As FinOps becomes more and more demanding on delivery teams, it’s important for organizations to invest in solutions and support that will enable those teams to act autonomously. This might mean investing in FinOps-specific tools or providing dedicated resources to help with tasks like planning and forecasting. By doing this, organizations can help their teams to be more effective and efficient in their work and ultimately help to improve the bottom line.
FinOps is also known as Cloud Financial Management, Cloud Financial Engineering, Cloud Cost Management, Cloud Optimization, and Cloud Financial Optimization.
According to the FinOps Foundation, there are three phases to ensure the success of financial operations within a company: Inform, Optimize, and Operate.
The first stage, Inform, is all about making sure that everyone who needs access to information has it. This includes allocating costs and transforming them into metrics and dimensions that will make sense to the business.
Optimize is the next phase and it’s focused on reducing cloud costs. This can be done by utilizing financial levers or by enabling engineering to create more cost-effective infrastructure
Operate is the last stage and it’s concerned with the processes that support these practices and help scale the effort. These processes are essential for a company to run smoothly and efficiently.
FinOps Vs. DevOps – Comparison
DevOps is a combination of Development and Operations, two areas of work that are melded together to create a more efficient process of delivering software to marketplaces.
The term “DevOps” is used to reference a set of practices, tools, and principles that when used together can help decrease the number of disruptions and allow for quicker software delivery.
Automation is a key component of DevOps as well as breaking down the barriers that separate teams (silos), working collaboratively, and “shifting left” which is when companies proactively work to identify potential issues with software and address them early on in the process.
Like DevOps culture and practices, FinOps is a transformation of culture and practices, supported by new kinds of tools. It starts with collaboration between teams and breaking down silos.
The outcomes – like improved communication and collaboration – are similar. However, the responsibilities associated with FinOps are quite different.
Whereas DevOps is all about software development, FinOps focuses on cost management and optimization. Engineering and finance collaborate to ensure there is sufficient visibility into the cost to drive better decisions throughout the company. By doing so, they can help to avoid overspending and improve the financial health of the business overall.
At some companies, there is a dedicated financial operations (FinOps) team to handle these responsibilities. However, at others, these responsibilities are shared among members of other engineering teams, such as DevOps or infrastructure engineering.
Additionally, some finance teams also have subsets that handle these duties, such as financial planning and analysis.
The goal of FinOps is to provide various stakeholders with the visibility and cost understanding they need to drive better outcomes for the business. The result of FinOps can be savings, but it doesn’t always have to be.
In fact, in many cases, FinOps may drive more spending or a strategic decision to make cost a secondary priority after something like the speed of delivery. As the FinOps Foundation puts it, “FinOps is about making money.”
How FinOps Benefits the Businesses
When organizations move from on-premise infrastructure to the Cloud, they often find that their existing financial controls are no longer effective.
With the adoption of the, ‘you build it, you run it, you own it’ product team model, it’s essential to provide the right support if you want them to be empowered to make sound financial decisions regarding their products’ use of cloud services.
In a large organization, there can be hundreds of these product teams, so a scalable FinOps system is needed to meet their needs.
Further Readings : Applications of Cloud Computing
Best FinOps Tools
There are several tools available to support your FinOps initiatives. Here are a few worth highlighting:
- AWS Cost Explorer: This tool provides interactive visualizations of your AWS costs and usage.
- Azure Portal: The Azure portal provides an overview of your Azure resources and usage.
- Google Cloud Platform Console: The Google Cloud Platform Console provides an overview of your Google Cloud resources and usage.
- ProsperOps: ProsperOps is focused on Savings Plans and Reserved Instances (RIs). They use algorithms, advanced techniques, and continuous execution to help you save money on your RIs and Savings Plans. One of the benefits of ProsperOps is that they only charge you for savings — not for a percentage of your spending like other tools.
- CloudZero: CloudZero provides a service that helps you to understand your cloud costs by translating them into a language that is more understandable for your financial stakeholders. With this information, you can make more informed decisions about business metrics that are relevant to your company, like the cost per product feature or customers, unit cost, and so on.
Embracing FinOps: Benefits
There are several benefits that an organization can reap by following FinOps best practices, including:
- Gaining visibility into cloud usage and costs, which provides better control over spending.
- Assisting cross-functional teams in maintaining financial accountability for the cloud services they use. This drives better decision making when it comes to budget and optimization opportunities.
- Automating tasks related to fulfillment requests and data management, reduces the risk of human error and speeds up processes.
- Organizational alignment on cloud spending between different departments and teams. This fosters transparency and communication on budgeting decisions.
Adoption of FinOps as a Service in Nepal
There is a huge scope for FinOps in Nepal. In the past year, there has been a tremendous demand for AWS specialists in Nepal because of the high number of AWS projects in Nepal. The market of AWS is growing, and there is no reason why you should miss the opportunity.
FinOps is a new, very young service that is being offered in the cloud. It is not very popular in Nepal, but big companies are starting to get their feet wet and it is picking up.
The best thing that the cloud brings to companies is the ability to scale quickly. In the case of FinOps, you can spin up a cloud server, a database, and an application, and get it all up and integrated in a few hours, instead of days/weeks as it would be with traditional infrastructure. So you can adapt better to changing market conditions, and quickly absorb new staff.