What is FinOps: Benefits, Challenges, and Tools

Analytics expects that businesses will rely on cloud computing even more in upcoming years, quickly moving to multi-cloud, hybrid cloud, and cloud-native architectures. Naturally, with infrastructures growing and evolving dramatically, the cost-related questions get to a new level, and cloud financial management needs new approaches. This is why effective cloud FinOps is growing in importance and becoming one of the leading requests.

The most common issues that enterprises face when trying to balance between effective infrastructures and effective spending are:

• Blurred responsibilities for Cloud spend

• Unclear responsibilities for cloud resources planning and usage

• Unclearly organized environments and per-environment tracking

• Inability to find the correlation between cloud initiatives and business goals

• Inability to keep to the expected budget and to predict how cloud costs change after the implementation of new business solutions

• Lack of communication between business, financial, and technical teams

We will discuss here how FinOps can help resolve these issues by setting up technological and business processes for effective grounded cloud decisions. We will also explain how Maestro can ensure further cloud optimization and effective financial management within the FinOps framework.

What is FinOps in Cloud?

FinOps definition says, "FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology, and business teams to collaborate on data-driven spending decisions." (FinOps definition provided by FinOps Foundation)

In other words, cloud FinOps practices and processes are used to manage and optimize the costs of cloud services. They involve a combination of cloud financial management, usage analysis, and operational processes to control cloud spend and maximize ROI.

FinOps teams closely collaborate with both finance and technical teams to monitor cloud costs and workloads, identify cost optimization opportunities, set budget targets, forecast cloud spending, and implement cost-saving measures.

While individual cloud providers like Microsoft Azure, AWS, and Google Cloud provide their own data, insights, and billing for cloud consumption, organizations may find it beneficial to use a dedicated FinOps cloud financial management solution. These solutions provide a unified and comprehensive view across multiple clouds, along with trusted insights to optimize cloud usage.

What is Cloud FinOps?

Cloud FinOps refers to the practice of managing and optimizing the financial aspects of cloud computing. Cloud services are typically billed based on consumption, and the costs can quickly escalate if not properly monitored and controlled. Cloud FinOps aims to address these challenges and help organizations optimize their cloud spend.

What are FinOps Principles?

FinOps principles are the guidelines for the effective organization of a FinOps framework within an enterprise.

According to FinOps.org (FinOps Foundation), there are six FinOps principles, each being an intrinsic part of the whole process:

• Teams need to collaborate: Real-time collaboration across different organization teams such as technical, finance, and business teams, allows them to react properly to the changes, and continuously improve and evolve the Cloud infrastructure.

• Decisions are driven by the business value of the cloud: The decisions are made to reach a balance between costs, speed, and quality. The economic and value-based metrics at the unit level are considered instead of orienting at total spending.

• Everyone takes ownership for their cloud usage: Financial ownership is assigned to teams and individuals using Cloud, encouraging them to use it in a cost-effective manner. It helps to create a culture of cost optimization and encourages responsible spending.

• FinOps data should be accessible and timely: Financial data should be reached and processed as soon as they become available. Real-time visibility allows quick and effective reactions.

• A centralized team drives FinOps: A centralized team plans, encourages, and promotes all FinOps-related activities and communication, and has a clear view of the goals and processes.

• Take advantage of the variable cost model of the cloud: Having a clear understanding of cloud utilization, lifecycles, and purpose allows you to pick the most effective models and price offerings in order to optimize your organization's cloud spending.

What Does Cloud FinOps Bring to My Business?

Properly organized Cloud FinOps empowers cross-department cooperation and enables better cloud cost management, financial accountability, and operational efficiency of the whole business operating in the Cloud. So what does this mean, practically?

1. Business Value Realization

When working with Cloud, businesses often tend to focus on cloud migration, leaving the initial business goal of the infrastructure behind.

Once proper FinOps is a result of effective cooperation between different departments, it allows getting outside of the “specific application” box, reconsidering the business value, and taking the decisions that will bring cloud management to a new level.

2. Clear Cloud Usage Accountability

FinOps introduces visibility to resource ownership and cloud spend, which increases accountability and reduces the time and effort necessary for investigations and change implementation.

3. Proper Forecasting and Cloud Reporting

FinOps teams use analytics, reporting, and forecasting cloud FinOps tools to analyze cloud spend and build expectations for upcoming cloud costs. The improved cost visibility allows them to set budgets accordingly and prevent unexpected extra expenses.

4. Improved Decision Making

Having insights from cloud usage data and financial analytics, the FinOps team can make informed decisions about the organization’s cloud computing investments, making them more focused on reaching business goals.

What are Cloud FinOps Challenges?

FinOps is a complicated operational framework that needs effective synchronized processes across different teams and layers of an organization.

For sure, there is a set of challenges that you need to face before cloud financial operations start showing results. These can be challenges related to the organization of the processes, technical implementation, or general perception of the changes within the teams.

1. Cultural Change

As the FinOps framework includes processes that are to be introduced on all levels of an organization, the successful implementation of FinOps approaches needs this organization to face a real cultural change. This includes creating a culture of accountability, and financial responsibility while taking into account the needs of the business and the aims of the other participants.

Introducing this culture may be challenging, as it is necessary not only to establish proper procedures but also to change the mindsets of the teams.

2. Governance

For sure, introducing new processes, tools, and responsibilities needs everything to be well-governed and organized. The new approaches should meet existing compliance standards, regulations, and laws. Describing these approaches, establishing policies, and bringing them into action is often a huge task.

3. Technical Difficulties

Implementing the suggested changes may be a big technical challenge. Starting from organizing effective infrastructure cost data collection and processing, up to implementing per-instance optimizations, elements migration, and access management.

All the changes, for sure, should rely not only on practicability but also on keeping the balance between effort and cost-effectiveness, keeping in mind the business value of the overall solution.

FinOps Tool - Implement FinOps Using Maestro

Maestro is a cloud management framework, aimed at making multi-cloud infrastructures management clear and convenient. It provides unified controls over resources across different public and private cloud platforms.

Maestro’s built-in cloud FinOps tools and capabilities help establish:

• cloud cost management and control

• infrastructure review and optimization

Initially, Maestro was created as a single entry point for cloud users with different goals and expertise. Thus, throughout the market-driven evolution, it became a convenient space for effective cooperation between Financial and Engineering & DevOps teams.

Transparent resources inventory, resource creation approvals, role-based access – on one hand, and financial quotas, detailed reporting, recommendations, tagging, and ownership – on the other. These tools create a convenient space, where teams can cooperate on infrastructure review and planning, increase its effectiveness and make grounded spending decisions.

Here are some main Maestro features that can improve a company's cloud financial management and help it implement FinOps.

1. Maestro Recommendations

Maestro includes a wide range of reports and recommendations, providing a multidimensional overview of the infrastructure status and optimization options. Recommendations match industry best practices to your actual infrastructure usage and suggest the best way for optimization, based on your specific situation and workload.

The Insights feature gives information about tags, security status, costs, schedules, and lifetime, providing recommendations on possible improvements and “fix it” buttons for quick reactions.

Recently, this feature was empowered by the ML-based RightSizer mechanism that analyses the utilization trends of specific instances and provides recommendations on their proper scaling, scheduling, and shutdown.

2. Maestro Quotas

Quotas mechanism allows setting up account expenses limits and tracking these limits depletion, which is an important part of FinOps transformation. Empowered by tags, quotas allow to set up expenses expectations and reactions.

The limits can cover not only a specific cloud or region but also specific environments, once their cloud resources are properly tagged.

The Approval mechanism that can be switched on once a specific quota is depleted adds extra control over infrastructure growth.

3. Resource Ownership

A clear understanding of the ownership of existing resources is one of the keys to accountability in the Cloud. Ownership brings accountability for the specific resources to the personal level, giving the responsibility to specific users and allowing direct communication between decision-makers.

With Maestro, cloud resources are assigned to specific users which enhances the investigations, and positions responsibility properly. The default owner concept allows controlling even resources created automatically or from outside Maestro, as well as passing the responsibility to a new user if the initial owner leaves the account. 

4. Resource Tagging

Maestro allows tagging cloud resources via its UI and CLI tools. Using tags allows for effective tracking of the expenses by tag-based groups, planning expenses with the Quotas, and automating resources start/shutdown with schedules. Tagging provides a clear distinction between environments, purposes, and teams. Having this, the teams can build targeted strategies around specific groups of resources, keeping in mind the personal needs and goals of the Ownership concept.

In-build tracking mechanisms detect the untagged resources and draw users’ attention to them, to improve the tagging coverage.

How Does This Work?

The listed Maestro features and capabilities build a complex environment for effective multi-dimensional infrastructure analysis and well-organized cloud accountability.

An important point to emphasize: the enterprise Cloud transformation and FinOps framework introduction can be performed gradually. The cost savings, resulting from initial optimizations, can be used to implement new transformation steps for better performance and better benefit – and Maestro can help not only in planning this transformation but also with tracking its effectiveness.

Thus, Maestro becomes a safe and effective entry point for effective cooperation considering different types of goals and expertise. Most of the data, necessary for making effective FinOps decisions, are given within the unified workspace. All decision-makers can stay on the same page, analyzing past events, the current situation, and expected trends to reach both the business and financial goals of the enterprise.