More organizations are steadily moving to the cloud due to the perceived advantages of shifting their workloads to the cloud. However, some organizations are often stunned when they discover how much they spend on cloud services within a particular period. This is often because of a lack of coordination, collaboration, and cloud optimization in such organizations.

FinOps stands as the ultimate solution to optimizing cloud costs, but businesses and companies do not often recognize it. Nevertheless, FinOps balances the quality of work and the cost of daily operations when implemented in any organization. In this article, we will discuss the meaning of FinOps, some of the FinOps principles, and how to optimize cloud usage using FinOps.

What is Finops?

In FinOps definition, it is generally a set of practices whereby individuals, departments, and organizations as a whole try to reduce how much they spend on cloud services. FinOps is a combination of “Finance” and “DevOps” to form a compound word, simply a collaboration between an organization’s finance and engineering teams. Apparently, this collaboration between these two categories aims to identify methods of reducing cloud costs without negatively impacting the quality of work.

It can also be defined as introducing financial accountability between teams in an organization. This will help them take responsibility for their cloud spending and seek and implement cost-reduction methods. The focus of FinOps isn’t only on reducing costs; it ensures a business entity cuts down costs while operating with as much quality as possible. On the part of the engineering team, FinOps helps them to identify better features, business models, apps, and other things that will improve the quality of work. FinOps also includes tools that help reduce cloud costs and introduce innovation in cloud services, such as Globaldots.

In the discussion of FinOps, there’s what is known as the FinOps Principles, and they are simply some elements that make up an excellent FinOps practice. According to the FinOps Foundation, six principles guide the practice of FinOps, and they include:

– Collaboration

One of the important elements or principles that must be present for the practice of FinOps is collaboration among all the departments in an organization. The finance, engineering, technology, product, and business should work together to ensure they promote cost optimization, innovation, and efficiency in an organization.

– Value-Driven Decision Making

Another principle guiding the practice of FinOps is that decisions made by the organization must align with the value of the cloud. In other words, the decisions each department in the organization makes should have a balance between the cost, innovation, and quality they get from the cloud services.

– Personal Ownership of Cloud Usage

The primary focus of FinOps in organizations is that everyone must take responsibility for the cloud services they use. For instance, those in the engineering department take responsibility for the cost of developing things like apps and web solutions. Hence, each department should have their own cloud budget, and they should tailor their cloud usage according to their assigned budget.

– Accessible and Timely FinOps Data

In implementing FinOps, one of the principles is that data should always be accessible and timely to make informed decisions. To make this possible, each department in an organization should always process and share cloud cost and usage data immediately when it becomes available. Furthermore, there should be real-time visibility, which will help different departments plan and forecast.

– Centralized FinOps Team

A centralized FinOps team is both a necessity and principle of any FinOps practice as they help to oversee what is happening and enforce accountability among departments. Note that the FinOps team only enforces accountability, and each department is still responsible for its cloud costs.

– Variable Cost Model

In the practice of FinOps, organizations should take massive advantage of the variable cost model as it offers proactive system design. Using a variable cost model in FinOps ensures an organization chooses iterative planning rather than less-dynamic long-term plans.

How to Optimize Cloud Spend with FinOps

Below, we will discuss some of the ways an individual or a company can optimize how much they spend on cloud services using FinOps:

– Important to Choose the Right Storage Type

Choosing the right storage type is something that some organizations overlook when discussing FinOps, which often leads to wastage. For instance, Amazon S3 is one of the most commonly used cloud storage options, and there are reasons many people are going for this type of cloud storage. Some of them are that the Amazon S3 is much easier to use and a large chunk of unlimited storage is delivered to users. Another thing to consider is choosing a cloud storage that allows the integration of other AWS and third-party vendor services.

– Right-sizing of Cloud Resources

Right-sizing cloud resources is another crucial step an organization must take to optimize its cloud costs. For instance, if an organization wants to use a cloud resource for around 3 months, they should choose a 1-year plan when paying for it. In other scenarios, an organization shouldn’t pay for a cloud resource meant for 1,000 employees when they only have 100.

– Close Monitoring of Software Licensing Fees

The amount of money spent on software licensing fees is a massive contributor to cloud costs in many organizations. Some organizations sometimes pay software licensing fees for cloud services they don’t use. Hence, there’s a need to deploy tools such as Globaldots, as they often have tracking features to help identify idle software.

– Correction of Cost Anomalies

Some organizations don’t pay attention to some of the cloud services and resources they pay for until they start eating deep into their budget. Hence, correcting cost anomalies early before they heavily impact a department’s cloud budget is very important.

Wrapping Up

As a final note, FinOps is simply those practices that, when implemented in an organization, help introduce innovation and improve the quality of work while reducing the cost of operations. Nevertheless, certain principles guide the implementation of FinOps in any organization.

These principles include collaboration, accessible and timely FinOps data, value-driven decision-making, and many others. Moreover, an organization can optimize its cloud costs by right-sizing its resources, choosing the right storage type, and correcting cost anomalies.