Let’s start by asking the question, what is this new methodology that everyone is talking about and, suddenly, all companies are in need of? It’s a new groundbreaking practice, or way of doing things, that everyone claims will allow you to take control of your cloud costs and revolutionize how we work with cloud resources!

We are, of course, referring to FinOps. Let’s take a look at how it is defined by the FinOps Foundation:

“FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology, and business teams to collaborate on data-driven spending decisions.”

This is an amazing definition, but we will also provide our own interpretation of the topic. For us, FinOps is about the following things:

• First, very much like DevOps, it is about teams working together to...

FinOps is a cloud cost optimization/cloud financial management methodology, aimed at companies that already work in the cloud or are transitioning to it.

The need for FinOps becomes apparent when companies embark on their cloud journeys or strive for excellence once they are already settled in using it:

• For newcomers, when the journey to the cloud begins, it becomes apparent that the well-known on-premises rules regarding cost management or capacity management don’t apply anymore. This requires a difficult adaptation as well as training. FinOps can help in this complex process, both optimizing and enabling cloud governance in many ways.
• If an organization has used the cloud for a few years already, its cloud spend will not be aligned with its initial budget for a number of reasons, such as non-optimized workloads that are migrated through lift-and-shift, constant struggles with inefficiencies, and difficulties in applying a standardized cloud governance...

In this section, we will explain our view of the three fundamental pillars upon which a successful FinOps practice should be built.

Let’s describe one by one the three pillars, which are Inform, Optimize, and Operate, and the key points to work on and develop in each one, alongside some examples to illustrate how to get started.

Inform

One of the most important things every FinOps practice must do is to improve the visibility of cloud costs for all the technical, financial, and project management teams. Everyone needs to be initially aware of how costs are distributed between, for example, business units, projects, offices or locations, and cloud regions. This process is often called cost allocation, as it allows you to divide costs across different units.

In many organizations, this is key to enabling two important cloud cost visibility exercises, which are showback and chargeback:

• Showback refers to the operation of dividing...

As we are sure you have already determined by what we have covered so far, FinOps is definitely not a one-size-fits-all methodology.

The practice needs to be tailored and adapted to each company’s needs; it’s about doing things in a different way, which is always a challenge in organizations.

FinOps practitioners need to develop a strong knowledge and understanding of what a company needs and how to create value in small, easily obtainable steps from day one, without overreaching and trying to change everything in a month.

It is never easy to change your mindset, so taking one step at a time is often the best way forward.

In the next chapter, we will elaborate and thoroughly explore how FinOps practices can fit with other cloud governance methodologies and best practices.