The Cloud

Upping the Cloud Game – Moving from Cost Optimization to FinOps

DEC 08, 2021

By John McGivern | Trace3 Senior Director, Cloud Billing & Optimization Services

Understand the benefits of moving from a focus on cost to a more holistic management of the cloud with FinOps.

Cloud providers are continuously lowering the barrier to entry, providing new features and endless program options in the marketplace. While extremely convenient, oftentimes a credit card being the only requirement, the costs can add up quickly. This realization led to the development of an entire industry, Cloud Cost Optimization. This industry’s sole focus was on understanding these costs and trying to control them before senior executives began to feel that the cloud was “not worth it.”

What Is Cloud FinOps?

Cloud FinOps is an emerging discipline where the lens from which you view cloud is expanded well beyond the total costs. FinOps engages various stakeholders and departments across the company with the goal of maximizing the value of each dollar spent in the cloud. In a nutshell, all the great features of the cloud should lead to a new maxim: The cloud should make you money, not cost you money.

5 Key Success Factors for a Cloud FinOps Implementation

Successfully implementing FinOps in an organization requires companies to make real changes in both mindset and culture. The mindset change focuses on how you view the cloud and its expenses. The culture change centers on truly eliminating silos and having teams work together to make cloud decisions that maximize business value for the company.

  1. Innovation Engine: To this day, most organizations still view cloud as infrastructure. While this will always be true in the literal sense, FinOps asks you to make the fundamental shift to think of cloud as the key to innovation. With its on-demand nature, immediate provisioning, and a myriad of services, the cloud should be viewed as a vehicle to quickly try out new ideas and shorten the time to market.
  2. Collaboration: In a traditional on-prem world, the IT/Engineering, Business, and Finance organizations tend to operate in a linear, waterfall-based workflow where decisions and purchases are passed from one organization to another when deemed ready. With FinOps, these teams are asked to push cost decisions left on the project continuum by jointly evaluating ideas nearer to inception. If this is done correctly, it improves the business value discussion and then allows faster deployment using the flexibility of the cloud.
  3. Hybrid Governance: A key feature of the cloud is that purchasing and provisioning moves to the edge of an organization, allowing Engineering teams to be more agile and productive. FinOps incorporates this aspect of working in the cloud with a centralized FinOps group chartered with the responsibility of understanding all costs in the cloud, supplying teams with appropriate reporting about their spend and continually taking advantage of cost-saving vehicles that aggregate company cloud resources and gain volume discounting.
  4. XaaS: Anything as a Service is a big buzzword these days, but the cloud truly brings it to life. The flexibility of the cloud includes the ability to more easily deploy modern architectures (e.g. microservices, containers, etc.) combined with a seemingly never-ending supply of pre-deployed services (e.g. voice recognition, facial recognition, ETL, etc.). With the collaboration and governance that comes with FinOps, buy vs build discussions can be expedited and new technologies tried without excessive red tape.
  5. Unit Economics: The holy grail of FinOps is to change the entire mindset from a focus on total costs to that of unit economics. In a nutshell, this is tying business value achieved to money spent. With this mindset, the question goes from “How much is this going to cost?” to “How much more revenue and profit can I generate by implementing this new feature?” The FinOps model is geared toward driving these discussions and then implementing the appropriate backend reporting to ensure that results are realized.

The FinOps Endgame

In the end, FinOps is about making money by minimizing costs while maximizing value, creating a collaborative environment through establishing accountability, and reducing time to market by leveraging the cloud as an innovation engine.

Learn more about Trace’s cloud optimization and FinOps services at trace3.com/cloud-optimization.

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John McGivern John McGivern, Trace3 Senior Director of Cloud Billing & Optimization Services, is an IT executive with extensive experience in the design, development, construction, operation, and automation of large-scale data centers and fulfillment systems. John’s achieved success in the corporate environment and has enriched breadth of industry experience through consulting engagements. Throughout his career, John leverages strong organizational skills and an unwavering commitment to success to compile a proven track record in managing and optimizing numerous functional areas including cloud design and deployment, data center construction, migration, and operations, and disaster recovery.

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