In these times of rampant inflation, companies need to pay even more attention to costs. They are also looking for new technologies that will help them keep up with the latest trends.
They are looking for ways to reduce costs while maintaining stable growth. Is there any method that allows them to achieve this goal? At this point, it is worth looking at the discipline of FinOps and big data consulting services.
FinOps: Definition
FinOps is short for “financial operations.” This term combines the words “finance” and “DevOps.” Just like DevOps, the FinOps approach combines best practices and work culture to:
- Increase the organization’s awareness of the costs generated by the cloud
- Manage costs more effectively
- Generate profits through skillful financial management
FinOps is an approach to finance based on the cooperation of financial departments with the product, IT, and business partners. Their purpose is to:
- Make financial decisions based on current data
- Understand the cloud cost model
- Enable data-driven spending planning
FinOps plays a key role in business operations, undeniably. They provide not only cost savings but also earnings. Optimizing your cloud spending can increase your revenue by enabling you to get products and services to market faster. With the help of FinOps, companies can strengthen their engineering teams so that they can work more efficiently and effectively. And this ultimately translates into delivering products in a shorter time and with reduced financial risk. This collaborative environment provides insight into where and when to invest. In addition, with financial operations, companies can make better investment decisions.
3 phases of the FinOps lifecycle
There are three iterative phases of the FinOps lifecycle:
INFORM
The first phase gives teams and organizations visibility, allocation, benchmarking, budgeting, and forecasting.
OPTIMIZE
This phase includes an examination of both generated costs and resource utilization. Thanks to this, the budget can be managed more efficiently. Optimization may involve cost savings by eliminating unnecessary expenses and reducing computing power. Besides, organizations can optimize workload performance by scaling up crucial resources.
OPERATE
The last phase is to use FinOps metrics to improve work efficiency. It also enables teams to collaborate with other stakeholders on management and workload. In this phase, companies also influence business processes through continuous improvement.
The principles of FinOps
1. TEAM COLLABORATION
The first principle of FinOps assumes a departure from the so-called silos in favor of direct cooperation between teams. The idea is to build a team consisting of engineers, developers, directors, product owners, financial managers, and so on. Their goal is to constantly monitor and improve efficiency. They also focus on supporting innovations that affect the revenue and competitiveness of the company.
2. OWNERSHIP OF CLOUD USAGE
Another principle relates to the ownership of cloud usage. Each team should take responsibility for the cloud resources they use. With an in-depth insight into your expenses, you will be able to optimize your costs.
3. THE CENTRALIZED FINOPS TEAM
Some activities, such as cost reporting and anomaly detection, need to be centralized to reduce duplication. Other activities, on the other hand, make the most sense when used in combination – such as identifying wholesale discounts or negotiating rates. Team education is equally important. The company should also compare itself to other similar companies for the same purpose.
4. REPORTS AVAILABLE TO EVERYONE
Resources in the cloud can change dynamically. With the possibilities offered by the cloud, monthly or quarterly reporting is unacceptable. Teams should have access to real-time cost reports so they can review their cloud spending. If FinOps teams rely on accurate and timely reporting, team owners will receive prompt feedback. This, in turn, will translate into a quick and better decision.
5. CLOUD AS A BUSINESS VALUE
According to the next principle of FinOps, decisions should be based on the business value of the cloud, not on costs. The goal is to achieve a meaningful balance between performance, quality, and cost of cloud usage. Consider the cloud to be a source of value rather than a cost in and of itself. You will always spend more as cloud usage increases. For the FinOps team in this process, it is important to maximize the value created by spending.
6. USING THE VARIABLE COST MODEL
The ability to use the variable cost model in the cloud is an opportunity to reduce costs. The point is to buy as much computing power as you need at the moment. In addition, you should control system performance, disable unused resources, or use available discount options.
Conclusion
Nowadays, good cost management and optimization are a necessity for every company. And the goal of financial operations is to cut costs and eliminate unnecessary expenses. The correct implementation of FinOps can therefore provide many benefits to companies. Achieving a successful model, however, requires practice and also comes with challenges. In this article, we explained what FinOps is. We also described the three phases and focused on the six principles of this discipline.