A complete understanding of usage and spend across all cloud assets will serve teams well. With this view, these teams can: 

• Accurately forecast and budget 
• Allocate costs based on usage to drive accountability 
• Detect anomalies and sudden cost fluctuations  
• Embrace the underlying processes that glue their financial picture together  

Let’s look at the following functional areas and how a FinOps approach effectively addresses the management of cloud costs and propels your organization forward within each one. 

Finance teams

Finance teams have various ways to control cloud costs: by instituting and enforcing financial and accounting process rules, establishing budget allocations by team, negotiating contracts and other strategies. Because financial management involves all levels of an organization top down and bottom up, such as cloud spend rolling up to IT spend, or the cloud budget stemming from a percent of total expenses, it’s important to accurately forecast and budget cloud spend as granularly as possible.  

Another important metric Finance considers when planning for projects to invest in is ROI to understand one project’s expected revenues in relation to costs against other projects.  In order to do this effectively, Finance must evaluate the unit economics for each project i.e., cost divided by a unit (such as applications, BU, region). A Finance controller may allocate those costs proportional to the unit’s cloud usage. Understanding the revenue relative to the associated costs enables decision-making for the projects and efforts that are the most profitable for the company. It also sets a benchmark for success.   

Allocating costs also drives accountability. In the past, IT was considered a cost center that absorbed all technology costs. Now, with an increase in decentralized decision-making and budgets, finance can properly chargeback users based on their usage. 

With CAPEX (long-term costs) and OPEX (expense-as-you-go), moving to the cloud has forced many finance teams to embrace OPEX financial strategies. Spending on “as-you-need” public cloud services is a big change for organizations that, just a few years ago, would’ve spent millions on a datacenter. It has significant implications for the CFO and their team in context of profitability and Wall Street expectations. This should be a careful consideration.

Cloud operations teams

Cloud operations/cloud center of excellence (CCOE) teams are the administrators of the public cloud, and they hold the access keys for the software development team. In larger enterprises, it is possible that one manager will be assigned to one cloud service provider. This team is likely a part of regular cloud vendor negotiations. Some of their tasks include: 

• Provisioning cloud access 
• Setting up computing, storage, database and networking needs for specific users/teams 
• Monitoring usage and costs 
• Configuring capacity and workload rules 
• Maintaining data security 
• Accelerating digital projects 

The cloud operations team also has visibility to the cloud billing. They are expected to minimize overspend or waste. 

CCOE teams should make proactive decisions on which cloud service providers (CSPs) are the best for certain executions, how to scale operations and how to maintain high up-time in line with developer productivity. 

Software engineering and Dev teams

Software developers and their ability to create test, development, and production environments are an integral part of your organization’s product innovation, revenue scaling, and employee productivity. Without governance or clear rules of when and how to use what cloud resource however, they will simply do “what it takes” to get work done.  

While developers usually try to maximize their efforts in launching cool new features, products, and capabilities, they don’t often keep track of their cloud spend. Finance teams will notice big run ups on cloud costs, however. In some organizations, they will attempt to curb the spend if it exceeds budget or escalates exponentially. Alternatively, because some specialized software developers can be considered “expensive” resources, another approach is to allow them free rein to do their work, at any cost.  

In both scenarios, FinOps can look at the importance of the workstream to downstream projects and the revenue associated with the cloud spend before making decisions about the spend itself.

IT Ops and Services teams

In some companies, the person with the IT operations role has evolved into the cloud operations or application owners. On the path to digital transformation, many IT teams have been tasked with migrating applications from the datacenter to the cloud. They re-platform, refactor, and rebuild to be cloud native. Because the IT team’s goal is to drive efficiency for both tools and personnel, this team should work to optimize IT costs across multi-cloud environments. 

In the interest of delivering to business unit expectations, IT Ops strives to have high up-time with low time to resolve issues in a compliant and secure environment. That means that the workloads going to both private and public cloud need to be well-oiled and high functioning. They are stewards of cost and are often held responsible for knowing the licensing arrangements between what is paid on-premises and what might be “BYOL” in the cloud. An IT asset management (ITAM) program can be used to manage the user lifecycle across all hardware and software and SaaS licensing for maximum cost efficiency. 

FinOps becomes a powerful enabler

As discussed in our first blog post in this series, FinOps isn’t just about capping cloud spend. It isn’t meant to place limits on creativity, productivity and innovation. Instead, FinOps is an organizational mindset that enables your organization to achieve strategic goals while effectively managing costs. In the spirit of creating visibility and reducing cost and risk, it’s closely aligned with ITAM programs and SaaS management. FinOps also includes the drive to understand and manage all technology. At Snow, we call this Technology Intelligence.  

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Starting the journey with a team-based framework

Getting a cross-functional team united and focused on the same mission is the foundation of addressing cloud costs and achieving a more future-ready FinOps framework. This framework prevents siloed teams (e.g., Finance) from identifying cost savings and cutting off services without context as to what is mission critical. FinOps provides for cross-functional collaboration from engineering, operational, finance and executive teams. Actions and decisions made by any one of these organizational teams influences the others.  

FinOps teams come together to:

• Define cloud use strategy
• Adjust cloud budgets
• Set cloud usage practices
• Review results and analyze value
• Make ongoing adjustments

This organizational collaboration allows teams to learn from each other and to build on collective knowledge. Pulling together technology, operations and finance teams also encourages everyone to take a fresh look at their tasks from the point of view of their collaborators. The FinOps team collaboration ultimately results in enhanced creativity, innovation and efficiency.

Establishing hands-on FinOps processes 

FinOps shines a light onto cloud resources and allows distributed engineering and business teams to make trade-offs between speed, cost and quality in their cloud architecture and investment decisions. These processes help drive financial accountability and accelerate business value realization by enabling frictionless cloud governance and controls. They align cloud activities to the organization’s overall goals and strategies to deploy and manage resources more efficiently. Meanwhile, the policies ensure cloud costs are predictable and manageable. All told, FinOps supports the consistent adoption of best practices across the organization. 

Tools to realize cross-functional FinOps benefits 

Cloud financial optimization tools help organizations optimize cloud usage and costs. These tools may be native to specific cloud providers, or third-party vendors may offer them. Some organizations have also developed in-house cloud cost optimization and cloud management tools. FinOps teams rely on software solutions to track cloud usage with users and projects, interpret lengthy invoices, generate reports and make cloud usage and optimization decisions. Traditional cloud financial management tools are usually tailored to reporting on the cloud resources an organization is using and how much those resources cost. FinOps tools serve a similar purpose, but the analysis and reporting are tailored to provide FinOps teams with actionable cloud financial management recommendations and optimizations.  

FinOps tool features and functionalities can include the following:

• Budget allocation tags 
• Detailed views of cloud use
• Cost reporting
• Budgeting and projection resources 

That’s just the half of it. All this functionality shows how these tools enable team members to improve performance and spend.

Let Snow help you experience a successful FinOps journey 

Your quest for an effective FinOps program will take your finance, engineering, operations and executive teams on quite the ride. FinOps is a continuous journey towards ensuring maximum value from the cloud for minimum spend. You don’t always know where you’re going, but you know you’re not going back to the old days of cloud financial and accountability challenges.  

Snow Software can help guide and enable your FinOps team with our latest solutions and platforms for cloud cost optimization. We take a unique approach by harnessing Technology Intelligence so you can understand and manage all your technology assets. Technology Intelligence captures all the key factors needed to drive FinOps programs and important business decisions around investments, operations and strategy.

The post Successful FinOps: Focusing on People, Processes and Tools appeared first on Snow Software.