FinOps
Modern cloud computing environments differ substantially from traditional datacentre environments and, as such, require a whole new operating paradigm. Efficiencies that weren’t possible with legacy environments are unlocked with granular shareability of resources in cloud environments.
Conversely, minor and rapid adjustments of resource allocation that would have been unnecessary and overbearing in legacy environments are now of utmost importance, in order to recognise the opportunities afforded by modern environments. Spend is no longer static and long-term which provides both opportunities and perils.
Cloud has moved compute from capex to opex
Cloud spend is now a material part of organisations’ budgets but, contrary to the popular opinion that cloud computing is all about cost savings, its primary advantage is actually speed of delivery and innovation. To leverage this, cloud computing is inherently on-demand, scalable and self-service, meaning purchasing power is now in the hands of engineers, often bypassing traditional procurement approval processes.
FinOps is a business discipline that has evolved from the concepts of cloud cost management, cloud cost optimization and cloud financial management and exists to ensure an organisation obtains best value for money (optimum unit cost) from cloud computing. It brings financial accountability to variable cloud spend by implementing a set of actions, best practices and culture, enabling businesses to make informed decisions to optimise cloud resources and spend.
FinOps should be a central function within a business that brings together multiple disciplines within an organisation to analyse and agree on cloud spend to maximise efficiency and minimise risk to availability and performance. It should build the concept of efficiency within cloud environments, rather than pure expenditure, encouraging cloud spend to be viewed as a “value creator” rather than a “cost centre”. FinOps aims to maximise the value created for an organisation by cloud spend.
By linking cloud spend back to business output, value for money can more easily be identified and measured. FinOps practitioners identify a key business metric that is influenced by cloud infrastructure and tie cloud spend back to that metric. i.e. $X provides Y output. The idea being that additional cloud spend is not necessarily a bad thing, as long as it proportionately or exponentially increases output and revenue driven by that infrastructure. This is “Unit Economics”.
In a FinOps environment, everyone takes responsibility for their cloud usage and teams work together to ensure maximum efficiencies.
A well-implemented FinOps practice should include timely reporting, enabling organisations to react to anomalies and inefficiencies as quickly as possible to return to maximum efficiency as soon as possible. It must also leverage tools to help teams right-size their cloud environments, providing rapid scalability to ensure maximum efficiency with minimum risk to performance and availability.
FinOps is an iterative process of:
INFORM
understand and visualise the costs
OPTIMISE
maximise efficiency whilst minimising risk and introduce automation
OPERATE
work with the new frameworks and processes defined and report to the whole business in a timely fashion improving on each area with each iteration and ensuring teams aren’t overwhelmed whilst delivering value to the business on an ongoing basis.
Ultimately, FinOps is about minimising the unit cost of computing, where “unit” has a definition specific and key to the individual organisation.
AIOps Ltd is your specialist FinOps implementation partner
Get in touch today and find out how we can maximise your cloud computing efficiency.