FinOps and the New Path to Cloud Success

Organizations often begin migrating applications to the cloud believing that doing so will save money on IT expenditures such as data centers. While cloud migrations can help reduce costs and deliver value, they require careful management of cloud expenses focusing on what will work for the business now and down the line. By incorporating FinOps into a cloud economics strategy, companies can increase transparency to improve the management of cloud costs and expenses. FinOps also provides a strategic framework that supports stronger cloud financial management, helping businesses go from moving to the cloud to running in the cloud. 

What Is FinOps?

FinOps, a portmanteau of “finance” and “DevOps,” is an approach to cloud financial management that aims to maximize the business value of cloud programs through close collaboration of finance, IT and business teams. The decentralized nature of consumption-based cloud programs can make them difficult to manage across an organization. Spending can vary by business function. So can reporting.

FinOps aims to address these challenges by bringing cloud finance management under the control of a centralized FinOps team of leaders from IT, finance, business, and even executive functions. This cross-functional team helps increase visibility into cloud spending throughout the organization, align the various functional areas around shared cloud finance goals, and empower teams to take the necessary actions to achieve those goals.

How Does FinOps Do This?

After the FinOps team aligns on the cloud finance goals of the business, they set about building the capabilities necessary to achieve those goals, using three guiding principles:

1. Identify

Relay all necessary information to the stakeholders so they can make informed decisions about cloud usage.

2. Optimize

Look for opportunities to reduce spending and increase savings.

3. Operate

Continuously monitor performance, evaluate the progress of business objectives, and look for new ways to improve.

Capabilities include cost allocation, budget management, data analysis and show back, and managing anomalies or unexpected costs. The FinOps team works together, or with a strategic partner, to identify what capabilities will deliver the most value. Whether that’s advancing their goals, reducing spending, or reinvesting in other areas, information is gathered and analyzed to determine the changes with the greatest potential value (what’s necessary, the potential impact, etc.) and then enact those changes and monitor the progress.

These stages are not linear, meaning an organization can be in multiple stages at once. The intent of the FinOps process is repetition. The more businesses implement changes, evaluate those changes, and refine their operations, the stronger and more mature their cloud program will be.

How to Build a Mature FinOps Practice

FinOps follows the crawl, walk, run approach, designed to encourage small, focused efforts that gradually expand in scope and complexity as the program matures. This strategy helps FinOps teams trace the true impact of their efforts and assess what additional actions might be necessary.

Figure 1: Path to Unlock the Power of FinOps.

The goal is not to get to the Run stage as fast as possible in all areas of the cloud program. FinOps encourages teams to consider what actions will deliver the most value for the business. For example, a FinOps team may focus on maturing chargeback and finance integration capabilities. They move from Crawl to Walk, creating a tagging strategy for greater visibility of expense allocation and implementing that strategy, but stop short of automating that strategy (Run phase) to focus on other critical capabilities like budget management and forecasting. The automation would be helpful, but the FinOps team realizes that establishing a firm foundation of capabilities first is more important for the business. 

Automation is critical to FinOps’ success. Repeating the three phases — Identify, Optimize, and Operate — refines operations, trimming unnecessary cloud costs while maximizing value. The key is knowing when and how to implement it. 

Achieving Success in the Cloud Through FinOps

A team armed with timely, accurate, focused information is best suited to optimize decisions. Collaboration is crucial — among internal teams and with external technology partners. Experienced technology partners bring experience with the tools associated with FinOps, such as automation and data analysis, along with the strategic knowledge to know how those tools can best serve the business goals. 

Reporting, for example, can be a complicated challenge to overcome in FinOps. Bills for cloud usage are massive files. Breaking these down across business functions is time-consuming, with many businesses doing so manually. On top of this, each business function might format its reporting a different way, slowing down the process even further. A technology partner can help identify the most efficient way to standardize reporting across the organization and the right automation to streamline the process. 

Technology partners can even support FinOps teams from the beginning of their FinOps journey, working with teams to develop tools supporting their ambitions. When one of Wipro’s clients set out to create a FinOps strategy, it tapped Wipro for support. The two companies conducted a current-state assessment which was used to inform the clients’ FinOps strategy. Based on their goals, Wipro suggested opportunities for optimization, conducted feasibility studies on those opportunities, and created custom reports to help with the show back. 

Those savings were reinvested into the FinOps program, funding more proactive approaches, further refining cloud spending and maximizing business value.

Success and thriving in the cloud require each enterprise to define its own FinOps strategy based on its unique needs. An experienced technology partner can help advance these efforts. But that partner should be flexible enough to support the needs of the business rather than force them to fit a standard approach. 

About the Author

Santanu Kumar Patro
General Manager & Practice Head – Cloud Economics, Wipro FullStride Cloud Advisory and Consulting

Santanu Patro has about 20 years of experience in IT and close to 15 years’ experience in Advisory & Consulting. Being a techno-evangelist, he has been developing future ready solutions/services to meet the ever-changing requirements of an enterprise and leading a team of IT therapists to solve enterprise challenges.