Unlocking cloud cost efficiency: The benefits of adopting FinOps for businesses

Credera Team

Unlocking cloud cost efficiency: The benefits of adopting FinOps for businesses

At Credera, we recognize FinOps is an increasing area of focus for many organizations and that maximizing business value by improving collaboration and alignment between IT Operations, Finance, and DevOps teams under a well-defined framework is essential.

In this blog, we explore some of the benefits of adopting FinOps and why it should matter to your organization.

An introduction to FinOps

The complexity of managing cloud costs poses a significant challenge. Costs can quickly spiral out of control, with senior stakeholders asking questions such as:

What business value are we gaining from this cost?
What is the cost of doing business for this department or application?
Is this cost right? Can we do more with less?

Traditional cost management models tend to be misaligned, as organizations have multiple personas, each with a unique view of cloud costs and consumption. For example, Finance and Procurement prefer predictable costs, which is far from the ‘variable’ Opex-based cloud model. Product owners understand the reasons for cost increases, mapping them to new services, features, or deployments, but may struggle to predict these costs accurately and communicate them clearly. Engineers may not understand or consider the financial implications of deployments, test environments, sizing, or service choices they leverage, leading to higher costs than needed.

This is where FinOps comes into play. By integrating financial and operational expertise with cloud management, FinOps empowers businesses to gain better visibility, optimize costs, and maximize the value of their cloud investments.

We recently worked with a financial organization to help automate their FinOps practices, including reporting and cost controls for cloud usage. The aim was to give developers the freedom to run Proof of Concepts (PoCs), whilst implementing FinOps practices with spend limits, automated infrastructure clean-up, and cost consumption reporting and escalation. The result was that finance and department managers were able to understand overall cloud spend and value mapped to individual developers in near real-time, whilst developers retained their freedom for concept testing.

Why adopt FinOps?

The FinOps model encourages organizations to take a more cross-functional approach to delivering greater financial accountability for increased cost savings, reduced business risks, and improved cloud quality. Some of the benefits of implementing a FinOps function within your organization and adopting the model include:

Cost savings: FinOps helps identify cost-saving opportunities and provides strategies to optimize cloud spending. By implementing these cost-saving measures, organizations can reduce unnecessary expenses, leading to substantial savings over time.
Cost predictability: With better cost visibility and optimization strategies, FinOps enables organizations to have more predictable cloud costs. This predictability helps with budgeting and financial planning, reducing the chances of unexpected cost overruns.
Improved resource utilization: By streamlining cloud operations and optimizing resource usage, FinOps ensures that cloud resources are utilized efficiently. This leads to better resource allocation, elimination of wasteful spending, and improved operational efficiency.
Financial accountability: Assigning cost ownership to individual teams fosters a culture of financial accountability. Teams become more conscious of their cloud spending and make informed decisions, aligning their activities with the organization's financial goals.
Cross-functional collaboration: FinOps encourages collaboration between finance, operations, and development teams. By working together to optimize costs and resource utilization, these teams can achieve shared goals and drive greater efficiency across the organization.
Reduced business risks: With better cost management and optimization, organizations can mitigate the risks associated with uncontrolled cloud spending. This reduces the likelihood of financial strain and supports long-term sustainability.
Enhanced cloud quality: FinOps emphasizes optimizing cloud resources and services. As a result, organizations can deliver better-performing applications, improved user experiences, and higher-quality cloud-based solutions.
Scalability and flexibility: As businesses scale their cloud usage, FinOps provides a scalable and flexible framework to manage costs effectively. It can adapt to changing cloud requirements and accommodate growth without sacrificing cost control.
Data-driven decision-making: FinOps relies on data and analytics to identify cost-saving opportunities and measure the impact of optimization efforts. This data-driven approach ensures that decisions are based on evidence and outcomes.

Many organizations understand the benefits of FinOps to be cost-saving, better reporting, and efficiency alone, but there are other considerations, such as how do the savings enable your business to achieve more with less?

Competitive advantage: By optimizing cloud costs and promoting efficient resource usage, organizations adopting FinOps can gain a competitive edge in the market. They can redirect saved resources into other strategic initiatives, invest in innovation, or pass on cost savings to customers, potentially attracting more business.
FinOps-funding: While it is better to plan FinOps from the outset, FinOps is relatively new, and many organizations are implementing the model later in their cloud journey. Some are focused on foundations like visibility and reporting, with many finding the investment in FinOps to be self-funding.

How to get started on your FinOps journey

The key principles of FinOps encompass collaboration, accountability, optimization, and efficiency, achieved through generating cost transparency and control, reducing complexity, and driving value. There are clearly many reasons and benefits to adopting the FinOps model in your organization, so how do you get started?

Executive buy-in: Like any cloud initiative, FinOps needs executive buy-in. It is essential to ensure that the FinOps strategy, benefits, and value are socialized and supported at a senior level, who will want to see hard numbers on expected outcomes. Having exec sponsorship will ensure the required cross-functional team can be formed and process, procurement, and cultural changes are aligned to the organization's business strategy. It will also create a requirement for reporting status and provide a means to remove obstacles.
Assemble the team: Form a FinOps team that includes representatives from finance, operations, and development and start to socialize the value and benefits with key projects and stakeholders. The team will be responsible for driving the initiative, defining processes, and overseeing cost optimization efforts, so early integration with stakeholders will bear fruit later in the journey.
Understand current costs and usage: Leverage native tooling to understand and report cloud consumption. The FinOps team may need to influence ‘tagging’ and update the cloud taxonomy to effectively track and attribute costs to projects, departments, or customers. It should be noted that ‘tagging’, tagging governance and enforcement is not a light subject and is a topic for another blog.
Cloud financial management framework: Create a framework that defines cost allocation, chargeback/showback mechanisms, and budgeting processes. Determine contacts, reporting requirements, and how costs will be attributed to different teams and projects.

Once these foundations have been established, the team will leverage quality data and processes to execute the FinOps strategic tasks such as:

Define cost optimization strategies
Implement cost visibility tool and reporting
Assign cost accountability and ownership
Set budgets, targets, and consumption limits
Implement continuous monitoring and optimization processes
Encourage better collaboration
Improve FinOps education and training
Implement FinOps automation and governance

The amount of work above can feel overwhelming, so it is important to plan your FinOps strategy, take the time to consider where the greatest value is in your organization and start small. FinOps is an iterative process where Credera can help but it requires continuous improvement.

Closing thoughts

FinOps has emerged as a critical discipline for organizations leveraging cloud computing. By aligning financial and operational goals, it enables businesses to optimize costs, gain transparency, and drive financial accountability. The reasons to adopt FinOps are clear, and the benefits it offers are numerous, including cost optimization, enhanced collaboration, operational efficiency, and better financial planning. Embracing FinOps allows organizations to unlock the full potential of cloud computing whilst achieving financial excellence in the cloud.

How we can help

Our Cloud practice possesses extensive expertise in all major cloud platforms and can provide cloud management best practices that align with the FinOps foundation frameworks, backed by certified professionals.

To learn more, or to start a conversation, reach out to us at findoutmore@credera.com.