The primary goal of FinOps is to increase the business value derived from cloud spending by implementing best practices while consolidating finance and IT. Cloud computing provides many opportunities for efficiency, but at the same time it can create organizational-level inefficiencies because of a lack of a clear understanding of cloud usage and spending at the management level. According to the HashiCorp State of Cloud Strategy Survey, as much as 40% of the respondent organizations stated that they categorically overspent when it came to cloud spending. This is a serious cause for concern and calls for the implementation of adequate spending governance so as to thwart overspending but not crush innovation. Here’s everything you need to know about FinOps.
FinOps is a collection of best practices, organizational processes, and solutions for managing cloud expenditures and bringing financial accountability to cloud spending. It focuses on optimizing cloud spending and making tradeoffs by looking at things from a business standpoint. It lays emphasis upon understanding the cloud usage and cost structures within the organization. It can also involve setting budgets for cloud usage and ensuring that they are enforced properly. It also focuses on promoting accountability when it comes to cloud usage within the organization. FinOps efforts across organizations must abide by the following principles:
The FinOps journey can be divided into three iterative phases: inform, optimize, and operate. It is important to acknowledge that this is not a chronological representation of the FinOps implementation journey given that these phases are not necessarily operated upon in any specific order or even just once. FinOps is an iterative process and the journey to cost optimization of cloud spending might vary greatly from one organization to another. Each FinOps team will have to revisit and review the three stages to ensure the circumvent overspending. Here’s everything you need to know about the different phases:
While the cloud can enable innovation and agility, it's all too simple to lose control over costs in the process. Traditional businesses find it harder to get accustomed to the FinOps model given that it can be incredibly hard for the management team to understand the variable cost structures associated with the cloud model. Here are some common problems associated with FinOps implementations:
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