FinOps Solutions – Not Right or Wrong, Just Different Approaches
Unveiling FinOps Solutions
FinOps is a relatively new concept born from the explosion of cloud computing. As businesses looked for new FinOps solutions to automate processes and collaborate more efficiently, on-premise software packages were no longer providing the means to do so effectively across multiple sites. In 1999, Salesforce became the first application delivered over the Internet, denoting the arrival of SaaS software which enabled businesses with multiple sites to manage their customer information company-wide. This was closely followed by numerous social platforms and more applications. Businesses were reaping the benefits of this concept and the demand for expanded capabilities grew. In the mid 2000s Amazon launched the first commercial cloud, the Elastic Computer Cloud. Companies began to adopt these applications and services at an unprecedented pace and the trend in company spending changed dramatically. Vast numbers of servers in a data center were becoming increasingly costly and the cloud storage that the likes of Elastic Computer Cloud provided became a more cost-efficient solution.
This revolution gave rise to a new type of spend that needed to be managed, and the cost of cloud computing within businesses began to spiral out of control. The ease at which these IT systems, devices, software, applications, and services could be purchased and deployed without approval meant that IT teams faced the new problem of ‘Shadow IT.’ This was impacting businesses’ ability to manage spend. IT risks increased, and IT teams were now losing control of what was deployed across their estates.
The FinOps Foundation: Addressing Cloud Financial Management Challenges
Necessity is the mother of invention and vendors began to appear that provided solutions to manage cloud applications. One such solution was Cloudability, whose Customer Advisory Board expressed a need for a community that could discuss cloud best practices beyond the tool. This gave rise to the FinOps Foundation in 2019 with the sole goal of establishing a set of principles that could be implemented in an organization, enabling it to manage and optimize its cloud spend. The FinOps Foundation comprises thousands of independent industry experts from a diverse range of companies. They promote best practices in cloud financial management and help organizations optimize their cloud spending. They provide training to practitioners looking to teach the FinOps principles as well as those looking to bring the principles into their organizations. We have explored this more deeply in our article FinOps Unveiled : Strategies to Maximize Cloud Value and Boost Performance.
At its core, FinOps is about creating a collaborative culture where teams from engineering, finance, and business units work together. FinOps is not just an individual, a process, or a technology; it is a synergy of all these elements operating within a framework towards a unified goal. FinOps follows a cycle with three key phases that when followed, will drive the cultural shift required to continually optimize cloud spend with your organization’s business objectives and required outcomes in mind. Adoption of this methodology will drive the establishment of a Cloud Center of Excellence (CCoE) to ensure that the continuity of FinOps best practices are being adhered to.
This practice of adopting the FinOps principle first is the approach that Anglepoint endorses and provides training for, and you can explore this more closely in our eBook: What Is FinOps: Best Practices to Optimize Cloud Management
There are, of course, always other approaches. Sales teams have a plethora of training methodologies from SPIN selling or Challenger Sales to SCOTSMAN and FACT. Managing cloud spend is no different.
Gartner® Cloud Financial Management (CFM): Embracing Collaborative Financial Operations
Gartner® takes a slightly different approach, defined as Cloud Financial Management (CFM), which is a practice of people, processes, and tools, led by the CCoE and implemented across multiple roles and departments. These include Infrastructure and Operations (I&O), finance, procurement, and consumers. This empowers cloud consumers or cloud teams to make best-in-class, cost-related decisions.
Gartner® recommends that the CCoE establish the overall cloud cost management life cycle as part of its governance, brokerage, and transformation leadership responsibilities. Gartner further states that the CFM policy is formalized as part of a CCoE and all cloud adopters (application owners, technical teams and business leaders) must abide by it. Gartner analyzes that – however, this must not be misinterpreted to mean that the CCOE is solely responsible for managing cloud costs. Rather, it takes the lead on CFM policy work to ensure that CFM expectations are documented and communicated and that capability implications are clarified and included in cloud adoption planning.
Gartner® also recommends investing in a scalable cloud operating model led by the CCoE and supported by a business case that can deliver the capabilities for CFM through cross-functional collaboration between the I&O, finance, procurement, and application teams. Their CFM collaborative model outlines complex responsibility matrices that define specific roles and responsibilities across departments.
The implementation of this approach is based on a Framework for Public Cloud Financial Management. The structure encompasses four main stages: plan, track, optimize, and empower.
You can read more about CFM approach in the Gartner report Cloud Financial Management Collaboration Guides to Efficient FinOps.
FinOps Methodologies Compared: FinOps Foundation or Gartner®?
The FinOps Foundation and Gartner® approach to Cloud Financial Management (CFM) may seem to differ in their implementation, but both methodologies ultimately aim to achieve the same outcome: optimizing cloud costs and driving efficiency.
The key difference lies in their approach to implementing their respective FinOps solutions.
The FinOps Foundation promotes a cultural shift, emphasizing collaboration and shared responsibility for cloud costs across the organization. Their methodology focuses on building a culture of cost awareness and accountability, empowering individuals and teams to make informed decisions about cloud spending.
We believe Gartner takes a more prescriptive approach, providing a structured framework with defined roles and responsibilities. We feel this approach is well-suited for organizations seeking a more standardized and centralized way to manage cloud costs.
Ultimately, the right approach depends on your organization’s specific needs and preferences. If you value flexibility and cultural change, the FinOps Foundation methodology may be a good fit. If you prefer a more structured and centralized approach, we feel that the Gartner’s® framework may be more suitable. The key is to choose an approach that aligns with your organization’s culture and to set realistic goals and objectives. These can be adjusted or adapted as needed to achieve success.
It is important to remember that both methodologies offer valuable insights and best practices. By understanding the strengths and weaknesses of each approach, you can make an informed decision about which FinOps Solution is right for your organization, or even leverage elements from both to create a hybrid approach that meets your specific needs.
For a deeper dive into the Gartner® CFM approach, you can download the ‘Cloud Financial Management Collaboration Guide to Extend Efficient FinOps’ from our Gartner® research page..
Embrace Versatility in Cloud Cost Management
With every challenge, there are multiple approaches to the FinOps solution and there is no right or wrong. The key to managing cloud spend is to stay focused on the required outcomes and seek external expertise and support to ensure you are implementing industry best practices for success.
Anglepoint’s FinOps team is happy to discuss your organization’s unique challenges and requirements to optimize your cloud spend. You can contact us through our dedicated Cloud Cost Management (FinOps) page.
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