Cloud FinOps

Cloud FinOps: “FinOps is an evolving cloud financial management discipline and cultural practice that enables organisations to get maximum business value by helping engineering, finance, technology, and business teams to collaborate on data-driven decisions. It’s a way for teams to manage their cloud costs, where everyone takes ownership of their cloud usage supported by a central best-practices group”. - FinOps Foundation. FinOps was ranked as the number one challenge by customers in the Flex era – State of the Cloud Report ’23.

‍

DigiRen helps customers identify and implement immediate cloud cost reduction, but also helps them establish processes and procedures to drive sustained & consistent cloud cost optimisation, cloud economic governance and cloud cost avoidance. We do this via the DigiRen FinOps framework, helping customers action immediate tactical requirements, and building FinOps capabilities and organisations maturity.

Cost Optimisation – ““Help me reduce cloud spend NOW”.

1.    Baseline cloud spend: many organisations use third party FinOps tools, but in our experience multiple data sources (using cloud vendor and third-party tools) are required to accurately baseline the full current cloud spend and cost reduction opportunity.

2.    Customer Contextual Considerations: It is not uncommon for specific workloads to have valid rationale for running in a “non-cost optimised manner”. Before defining an organisation's cloud cost optimisation (savings) target, specific contextual considerations need to be applied.

3.    Cost Optimisation Target and Action Levers: Once an accurate cloud spend baseline has been established, a cost optimisation (savings) target action plan will triage opportunities from high value and easy to action, down to low value & significant effort, identify the levers required (commercial, technical, architectural) to realise the savings, and define the activities and responsibilities (user versus central team) for action and target savings realisation.

 Cost Visibility: mechanism for cultural change – “Continual cloud savings & spend accountability”.

It is not unusual for an organisation’s internal “consumers of cloud” not to have visibility (or chargeback) of their cloud spend. Centrally funded cloud commercial models (with no visibility or charge back) do not foster the right FinOps behaviours across an organisation. Cloud spend visibility is one the simplest and most effective activities to improve cloud spend accountability and promote positive organisational FinOps behaviours. Additionally, building internal “cloud spend visibility” capabilities enable cloud spend anomaly detection, an activity that consistently helps organisations minimise and or avoid significant unwanted cloud costs.

To enable and leverage cloud cost visibility, organisations need to establish:

1. Real-time cloud cost dashboards and reporting that create a single source of truth accessible by cloud users, central cloud teams, and finance and leadership.

2. An internal cloud FinOps governance forum that drives cloud spend awareness and accountability, but also provides consumer education & enablement, guidance& support for cloud cost reduction actions, and maturating of the organisations FinOps capability.

This FinOps governance model is a key enabler in helping organisations mature from a “single point in time” cloud spend reduction approach to creating and embedding reoccurring FinOps practices across the organisation to drive continual cloud cost reduction.

Phase 1 and 2 of the FinOps journey establish a FinOps foundation that (i) drives cost reduction (ii) cloud spend accountability, and (iii) establishes organisational mechanisms to driver repeatable processes for continual cost reduction. These activities are predominantly re-active, creating insight and action to remediate unwanted or excessive cloud spend. Phase 3 focuses on helping organisations go “upstream” and implement FinOps in the solution design and financial forecasting processes to avoid unwanted cloud spend.

There are three key activities associated with this next level of FinOps maturity

1. Implementing FinOps into the internal cloud solution design process, ensuring the right cloud service selection, FinOps controls, accurate budgeting and user accountability are established.

2. Building FinOps practices into the annual planning process, taking into consideration both current cloud environments but also new projects and forecasted spend.

3. Establishing closed loop FinOps practices that report on cloud budget versus actual cloud spend to drive user and project cloud spend accountability, and capture learnings that are used to improve the FinOps planning function.