FinOps and Cloud

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FinOps and the Cloud

Today, we live in a tech world where the enterprises have set up a ‘cloud-first’ strategy or aspire for it. Fundamentally this is reshaping the on-premise procurement model for data centers. The decision-making in the cloud happens in real time, by engineers who may or may not have enough understanding of the enterprise’s finances. Ultimately, the distributed teams working mostly in their silos have the ability to affect the cash flow and the financial bottom line of the organizations. This is a new phenomenon that has much wider impacts. It has lead to a new job profile in cloud native organizations and it is known as FinOps.

FinOps is responsible for balancing cost, take care of speed and quality to gain cloud efficiency, and making sure innovation investment exists.

Stakeholders of FinOps

Effective FinOps involves breaking the silos that exist between finance, engineering and the line of business. The job of FinOps is not necessarily to reduce the spend but to make sure that the different stakeholders understand the impact.

In simple terms, FinOps brings together three teams. FinOps makes sure that Finance learns the cloud, Engineering learns the impact of the resources they use to the financial health of the company and lastly, the line of business understands the ongoing cost of running the business. 

Lifecycle of FinOps

Showback Phase

In this phase, FinOps drives the process of educating the organization with the spend broken down into line of business, often showing the cost optimization resources, industry benchmarks and tools available to be efficient. In many organizations, this is the where individuals learn how their actions can affect the overall spend.

Optimization Phase

In the optimization phase the engineering teams act either on reducing the spend by primarily three different actions. First they delete the unused resources. Secondly they stop the development resources that are unused during off-hours. And lastly, they rightsize the resources.  

This is often the longest and and most continuous phase. Often enterprises take the services of cloud management companies to handle this phase better. Avance is one of the industry’s leading tools that can help to continuously monitor and optimize resources. 

Operational Phase

In this phase, the line of business, the engineering and the finance work together to set the budgets for ongoing businesses focusing on the scaling, performance and the profitability of the enterprise.

In summary, the engineers have the new found power to make real time decisions on use of cloud resources that affect the organization’s bottom line increasing developer velocity.  However, it can adversely affect the organization’s financial bottom line. FinOps attempts to link the missing pieces to bring visibility and makes sure that the stakeholders are educated in the effective use of resources.

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