The FinOps Cycle: Keys To Continuous Cloud Spend Efficiency
When embarking on a FinOps journey there are 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. Whether you are starting with basic requirements of forecasting and budgeting for a cloud migration or striving to meet ESG standards, this cyclical process helps plan out your road map. In our previous post “What is FinOps, what it is not and why do we need it?” we talked about the importance of understanding that FinOps is not a one-man job but an organization-wide culture. When moving through the following phases of the FinOps cycle it will be important to include your steering committee made up of stakeholders from across the business. This will ensure that the collaboration required is in place, promoting visibility and accountability.
Inform Phase
The inform phase drives accountability through data transparency. The beginning of the FinOps cycle must be based on accurate data, and this phase promotes visibility into cloud expenditure and accurate allocation of costs based on tags, accounts, or business mapping. These are all crucial aspects for intelligent decision-making. This phase is where the groundwork for financial planning can be undertaken to help establish budgets and forecast spend. All potential required spend can be brought to the table to remove the risk of financial surprises. Operating in this manner will allow teams and individuals to be benchmarked and will foster a high-performance mentality with performance measured against established metrics.
Each time this phase is revisited additional capabilities can be addressed, ensuring that FinOps within your organization continues to improve and evolve. This phase includes a thorough examination of existing financial management practices, highlighting areas needing improvement, and evaluating tools for effective data sharing.
Optimize Phase
The optimize phase identifies opportunities to optimize consumption and pricing. Once a clear view of cloud expenditure has been established, this phase focuses on empowering teams and individuals to optimize cloud resources to ensure cost-efficiency. It involves eliminating wasteful resource usage, making advanced reservation plans for discounts offered by cloud providers, and adjusting resources based on actual needs. During this phase of the FinOps cycle, rightsizing can be carried out based on factual information, and resources can be adjusted to meet actual needs. Automation can also adjust or turn off unnecessary resources to drive further spend reduction.
Operate Phase
The operate phase is when the process and automation are reviewed for better informed decision-making. Continuous assessment of business objectives and cloud cost metrics ensures alignment with organizational goals. Future-proofing an organization today requires the culture of FinOps to be established. Organizations can bring together all the stakeholders to define appropriate governance policies and models by establishing a Cloud Cost Center of Excellence
Within the FinOps cycle, several capabilities are defined that represent functional areas of activity, with corresponding asks or processes that can be built following the three phases. These include cost allocation, data analysis, showback, anomaly management, shared cost management, and forecasting (details at finops.org). These activities lay the foundation for continuous improvement, education, knowledge sharing, advocacy, actionable tasks, and redefining business objectives, driving overall FinOps maturity.
FinOps Maturity
The nature of how a FinOps culture permeates an organization means that as the technology landscape grows and changes, so will the requirements within your organization. As each capability progresses through the three phases, your FinOps maturity advances. Your FinOps maturity can be defined as one of three levels, often described as ‘Crawl, Walk, and Run.’ Achieving the maturity of ‘Run’ in every capability shouldn’t be the sole aim. Keep in mind the outcomes the FinOps framework is being built to provide. The ‘Walk’ maturity level will be satisfactory to deliver immediate benefits that relate to your business objectives.
Where to Start?
The simple answer is – Just start! Stay focused on outcomes, prioritize capabilities, and achieve results systematically. If you are planning to bring FinOps disciplines into your organization, Anglepoint has outlined a series of workshops that will help assess your maturity, define core policies, build a RACI, and plan your FinOps roadmap.
Find out more about our FinOps Services or get in touch with our experts.
Download our latest eBook “Best Practice FinOps: Optimize Cloud Management” explores this topic and offers recommendations to implement effective FinOps in your organization.
Register for our FinOps Lightning Course presented by Anglepoint’s FinOps Director, Jason Kelly will offer guidance and recommendations to help you achieve FinOps Excellence.