Here’s How to Take Your FinOps Game to the Next Level

While cloud cost optimization may seem like a straightforward process, in reality it’s only simple if your objective is just to gain visibility into your expenses and ways to lower cloud costs. If you aim higher — if you want to optimize cloud spending in the truest sense of the word — don’t settle for quick wins that deliver limited value.

You need a more comprehensive approach that entails a higher level of maturity in areas such as data enrichment, cloud spending analysis and the hiring of experts to manage cloud costs. To illustrate this, I’ll elaborate on what advanced financial operations, or what the FinOps Foundation calls the “run” stage in the FinOps maturity model, entails and the steps businesses can take to achieve it.

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Basic Vs. Advanced FinOps

Distinguishing between basic FinOps and advanced or next-generation FinOps can be challenging, as the line separating the two can be blurry. The primary difference, however, lies in the level of nuance and actionability that FinOps processes offer.

With basic FinOps, you get fundamental insights and strategies for spending reduction. For example, basic FinOps might help you realize that most of your cloud server instances are grossly overprovisioned, and that you could cut spending dramatically by selecting different instance types.

In contrast, advanced FinOps provides deeper insight into what you’re spending and the extent to which your spending drives revenue. For example, advanced FinOps might allow you to map revenue to each cloud server instance that your business operates so that you can make granular decisions about how to configure each specific server. It could even enable you to modify server configurations across different times of day or days of the week based on fluctuations in the amount of revenue opportunity linked to each one.

While basic FinOps is a good starting point to curtail overspending, it doesn’t provide cost optimization. To achieve that, businesses must consider taking FinOps to the next level.

Next-Level FinOps Best Practices

Exactly how to move beyond basic FinOps depends on factors like which types of cloud spending data you have to work with and what your cloud architecture looks like. But in general, it involves adopting practices like the following.

FinOps data enrichment

It’s easy in most cases to collect data about overall cloud spending. But generic spending data isn’t enough to drive sophisticated decisions. For that, you need data that is easy to interpret for diverse purposes and stakeholders.

For instance, an engineer probably wants to see metrics about cloud spending that map onto cloud resources, whereas an executive will want to link spending data to business revenue. This is where data enrichment comes into play. Data enrichment means mapping cloud spending data onto other types of data, like cloud infrastructure or revenue metrics, so it’s more actionable.

True-unit economics

Similarly, advanced FinOps requires what I call true-unit economics, meaning the ability to determine how much business revenue stems from each dollar you spend in the cloud. An increase in cloud spending is not a bad thing if it reflects an increase in revenue, and by the same token, a decrease in spending could be bad if it decreases your revenue.

There is no simple way to get true-unit visibility into cloud spending, but it starts with being able to correlate spending metrics with business metrics. The ability to analyze spending on a unit-by-unit or workload-by-workload basis is critical, too, because spending by some departments or for some apps may drive more revenue than spending elsewhere.

FinOps team reorganization

In a basic FinOps practice, responsibility for managing cloud costs is treated, at best, as a secondary responsibility tacked onto the job descriptions of personnel whose main roles are in other areas, like engineering or finance.

This doesn’t suffice if you want to achieve advanced FinOps. To reach that goal, you need personnel — either in-house employees or consultants you work with externally — who make FinOps a key focus, and who possess the unique blend of skills necessary to interpret complex cloud spending data and generate insights about how to improve spending without compromising business priorities.

I’m not saying that FinOps responsibility should only be delegated to a few key stakeholders. On the contrary, everyone who can help influence cloud cost outcomes should play a hand in optimizing spending. But to make the most of FinOps, personnel must treat it as more than secondary. It needs to be a top-of-mind concern across the organization.

Automation

Automation tools can help achieve basic FinOps goals by, for example, automatically collecting spending data and flagging anomalies. This saves time and simplifies data analysis. But in the context of advanced FinOps, automation becomes even more important because it can help to operationalize cloud cost optimization goals.

For instance, businesses can deploy automations that block overprovisioning of cloud resources. With this approach, you don’t have to settle for merely asking employees to follow spending guidance. You automatically enforce the cloud spending rules that you set.

Embrace Advanced FinOps

If your business hasn’t yet made it a priority to rein in unnecessary cost spending, then by all means, start your FinOps strategy by embracing basic cloud cost management practices.

But if you’ve already covered the basics and want to get as close as possible to an optimal cloud spending strategy, don’t settle for simple solutions. Embrace advanced FinOps practices that deliver the greatest level of granular visibility and actionability for managing cloud spending.

At the same time, plug yourself into the growing FinOps community, where you can stand on the shoulders of giants. And if you manage a team that wears FinOps as one of their hats, consider providing them with additional focus so that your organization can break through plateaus and get to the more advanced forms of FinOps discussed above.