5 things sparking the FinOps adoption

In today's swiftly evolving technological realm, effective management of cloud resources is paramount for businesses across the spectrum. Enter FinOps, a specialized discipline dedicated to streamlining cloud expenditure while maximizing returns on cloud investments. With organizations increasingly transitioning their operations to the cloud, mastering and applying FinOps principles has become indispensable for upholding financial resilience, fostering innovation, and gaining a competitive edge.

First came DevOps, and operations and development were brought together. Moving away from traditional development practices and infrastructure management often happened by relying more and more on the added-value services offered by the cloud providers. There are plenty of positives, but let's spend a second on the drawbacks. Let's not ignore the elephant in the server room. Moving to the cloud is a team sport, and guess who's been warming the bench? Yes, it's finance. Agility is fantastic, but when your bills can skyrocket faster than typing stackoverlow (thank you, infra-as-a-code and CI/CD pipelines), it's time to set some ground rules. Otherwise, your love story with cloud computing can turn south, fast.

Let's talk also about the relationship between Finance and DevOps. It's like trying to explain memes to your grandparents - in social media slug, it's complicated. Sure, it has its moments, but most of the time, they're speaking different languages. Engineers couldn't care less about operational costs, while finance folks scratch their heads wondering why forecasting cloud consumption feels like reading tea leaves. Blame it on those tech geeks who spend their days worshipping code while the rest just hope their computers turn on.

This is where FinOps comes in, so let's explore five key factors igniting the adoption of FinOps in today's business world.

? Focus on the business value

In an ideal world, innovation reigns supreme, regardless of the cost. Experimentation is a crucial part of the research process and can lead to breakthrough moments. However, one thing is certain: it generates a financial burden. Engineers, being the unique creatures they are, often seek "solutions" even when they're not necessary. We tend to chase after the newest frameworks or trendiest technologies without a real business need driving the effort. Simply put, being top-notch in technology doesn't guarantee the success of your company.

Over the past decade, the overall sentiment was optimistic, with positive economic growth and stable geopolitical situations leading to the rise of startups, unicorns, and incredible advancements in science. However, today presents a different picture. The job market, especially in the IT sector, is tougher, VC funding continues to decline, and instability is the name of the game. These factors have prompted companies to reassess their budgets and optimize costs across the board, including IT expenditure. While areas like AI or security still command significant investments, projects in general are sidelined if they don't promise a substantial ROI, as they carry too much risk. Planning to push a project internally? That's fantastic, but ensure it delivers tangible value and doesn't merely fall into the "nice-to-have" category.

? Cloud adoption acceleration

Cloud computing is a rapidly expanding market, and all signs point to continued exponential growth, both from analysts' forecasts and my own observations in daily activities. Part of it is because things such as AI are bound to cloud computing, but also because the offerings matured enough up to the point it became a go-to solution even for the most demanding and challenging industries. It's not only about Netflix, Uber, Twilio, and the other new-age companies anymore.

Stringent regulations have been met head-on with expanded cloud offerings, and partnerships between hyper scalers have facilitated the migration and modernization of mission-critical workloads. The rise of multi-cloud environments underscores the fact that even the most entrenched, legacy workloads of top-tier companies aren't as untouchable as they once were. However, these shifts come with significant budget displacements and disruptive changes, which can weigh heavily on traditional corporate environments. What's needed is a framework to navigate these changes, and we might know exactly which one.

? Shift to DevOps culture

Change takes time, especially when it involves shifting people's default behaviors and habits. That's why, despite its popularity, DevOps hasn't completely taken over the development and operations world just yet. Some organizations are still crawling, others are walking, and a select few have already mastered DevOps in tandem with financial best practices, a.k.a. FinOps.

Behind the FinOps methodology lie multiple principles, but perhaps the most crucial one can be summed up as follows: everyone takes ownership of their cloud usage. Pretty brilliant, huh? By making DevOps practitioners aware and responsible for the financial implications, we can maximize the business value of cloud computing while keeping costs under control. So, the next time they're deciding on their release strategy, they'll consider costs too—because who doesn't love a cost-effective deployment?

? The rising popularity of cloud-native technologies

The rise of cloud-native technologies has fundamentally transformed the way businesses approach software development and deployment. These technologies, built specifically for cloud environments, offer unparalleled flexibility, scalability, and efficiency. However, with this newfound agility comes the challenge of managing costs effectively. Unlike traditional on-premises infrastructure, where costs are relatively fixed, cloud-native environments offer a dynamic pricing model based on usage.

Moving to horizontal scaling as a pattern means multiple resources. Geo distribution leads to complex system designs. Data consistency needs to be tackled in a different way. All these flashy new solutions such as Kubernetes, Argo, OpenTelemetry and their surrounding ecosystem are just adding new variables to an already complex formula.

? Complexity of cloud pricing models

The emergence of on-demand pricing from hyper scalers seems like it should simplify cloud cost management, right? Wrong. Despite sharing conceptual similarities, each hyper scaler possesses unique pricing strategies and commercial arrangements, making cost estimation a labyrinthine task. This complexity presents two primary challenges: the unknowns surrounding the cloud provider and those related to your workloads.

Unraveling the mysteries of your cloud provider involves navigating hidden costs, deciphering optimal offers, anticipating future price hikes, and understanding intricate terms and conditions. While FinOps aims to tackle these challenges head-on, it demands substantial time investment and analytical prowess.

Moreover, there's the enigma of your workloads—unpredictable usage patterns, unforeseen feature requests, operational incidents, and more. While the cloud's flexibility is a boon, it doesn't necessarily translate to accurate and predictable consumption forecasting. Estimating next year's cloud consumption is akin to making a calculated guess, highlighting the inherent uncertainty in cloud expenditure planning.

We haven't dug into the nitty-gritty of the FinOps framework just yet, but don't worry, I've got that on the agenda for a future post. In the meantime, why not swing by the official FinOps page? You can get a head start on understanding its core principles and practices.

FinOps adoption is still kind of in its early days, which means there's a real chance for you to step up and take the lead in your organization. Now that we've gone over my top 5 factors driving FinOps adoption, I'm itching to hear what you'd throw into the mix. Share your thoughts and ideas – let's keep this friendly conversation rolling on the road to FinOps success!