Getting started with FinOps in Cloud Computing

The FinOps Foundation defines FinOps as "operational framework and cultural practice which maximizes the business value of cloud, enables timely data-driven decision making, and creates financial accountability through collaboration between engineering, finance, and business teams". In my role as Chief Architect, I tend to view FinOps as a mechanism for increasing the maturity of the Cost Optimization Architectural Pillar (re., AWS, Azure, GoogleCloud).

In my role as Chief Architect, I view FinOps as a mechanism for increasing the maturity of the Cost Optimization Architectural Pillar (AWS, Azure, GoogleCloud). However, in my experience working with medium and large software enterprises, Cost Optimization is often neglected.

Why is Cost Optimization Overlooked?

• The development teams priorities are driven by a value system that does not measure technicology concerns effectively. A backlog that only reflects functional changes and requirements and not non-functionals would be an illustration of this. A root cause of this often comes when architects and technical leads lack the direction, authority, or influence required to maintain a healthy backlog.
• Cost and value are not known. Most, if not all, software teams deliver value at a cost. Especially in a multi-product and multi-team environment, determining cost and value can often become difficult. Additionally, some products are foundational and do not directly derive value, and instead enable or assist other products. Likewise, some teams provide a similar role in keeping an organization running smoothly by supporting other teams. I have often encountered resistance by teams and individuals when determining cost and value. The first step is to recognize and acknowledge that the cost and value does not have to be 100% accurate for it to derive value. This view ties into the next reason why Cost Optimization is often neglected.
• The software development lifecycle does not include a process for Cost Optimization. Everyone is too busy... I have heard this countless times in the last 30 or so years of software development. Too busy for documentation, too busy for design, too busy for test automation, too busy for FinOps. Establishing a process is the first step towards addressing many of the concerns that are often neglected. Similar to the previous point on cost and value, implementing a good process now is far more beneficial than waiting a year to establish a perfect one.

Making Cost Optimization a priority

To improve Cost Optimization maturity, leadership must be actively involved. FinOps identifies Core Personas, including executives who ensure FinOps is prioritized holistically, rather than left as an afterthought. Without their backing, efforts to maximize cloud value and reduce costs will struggle to gain traction.

Without having an understanding of Cost and Value, steps to improving Cost Optimization is not possible. As an example, the introduction of a feature might provide value to a customer, but if this is the only measurement, features reducing the overal value of a product could be introduced if the cost of implementation and hosting is greater than the derived value.

Taking the First Step

The FinOps Foundation emphasizes that establishing even a basic process will immediately drive value, with FinOps maturity evolving over time.

An organization's first steps will depend on its current maturity and appetite for adoption. As with any cultural shift, adopting FinOps will cause disruption, and leadership plays a key role in determining a suitable pace and approach.

It's important to recognize that FinOps is not about acquiring a new tool or hiring a dedicated FinOps resource. Every major cloud platform (AWS, Azure, Google Cloud) already provides sufficient native tooling to establish an effective FinOps process. While a specialized tool might be a long-term goal, the initial objective should be to establish the process itself.

A practical starting point is to set up a FinOps meeting focused on continuous improvement rather than just reporting. This meeting should discuss the performance of FinOps initiatives, identify gaps, and outline steps to improve cost optimization. Depending on the organization’s maturity, discussions may include budget vs. actuals, or, if those aren’t yet defined, the meeting could serve as a working session to establish budgets.

To keep FinOps meetings effective, avoid involving the entire team unnecessarily. The focus should be on improving FinOps practices, not on status reporting, which can be handled through other means.

By embedding FinOps into regular operations and ensuring leadership support, organizations can transform cloud cost management from an afterthought into a strategic advantage.