There is a new concept that organizations should consider, which is FinOps. FinOps derives from two notions: “Finance” and “DevOps,” and it is a management practice in which organizations can improve the financial operations in their cloud computing infrastructure.
With the help of FinOps, businesses can foster better financial responsibility and benefit from data-driven decision-making. FinOps mixes cloud engineering processes with financial management principles to help businesses better understand their cloud spending. This includes how companies should allocate their cloud costs.
Cloud computing has become quite indispensable for businesses worldwide, but it is also seen as a top operating expense.
This makes FinOps even more important, as with help, organizations could finally understand their cloud computing costs better and do what it takes to improve profits, optimize costs, or enhance their operations over the ones of the competition.
Unfortunately, businesses don’t know how to organize their cloud, which is why most of it goes to waste. In this article, we will explore the importance of FinOps, so keep reading to learn more.
What does FinOps focus on?
FinOps is a set of principles, practices, and processes through which businesses can manage their cloud financial operations much better. This concept focuses on three important pillars. Efficiency is one of them, on the principle that businesses shouldn’t waste their money.
Instead, companies must always do what it takes to spend all their resources efficiently, as in this way, every penny will be used correctly. Another important concept from FinOps is optimization, with the idea in mind that businesses should always look for other ways to improve their operations, and this also applies to their finances.
Continuous improvement is also a main philosophy of FinOps. Businesses need to improve continuously, learn from their mistakes, and search for new ways to improve. So, FinOps is a large component that encompasses small changes that aim to help a business use their cloud more effectively.
The six core principles of FinOps
Team collaboration
Team collaboration is essential for the FinOps. For an organization to improve, it needs to have a team that understands the importance of financial performance for all. Indeed, teamwork makes the dream work, and it can be the recipe to improve business operations by collaborating to achieve a common goal.
Suppose each member of the team is offering their opinion. In that case, they can bond their relationship and work together to identify the best opportunities that can help them make their cloud more efficient while saving costs.
Of course, companies should first consider the best cloud solutions to integrate into their companies. In this regard, it can be a good idea to collaborate with Intercept, which will help optimize and manage the cloud.
Ownership
In FinOps, every person is responsible for their cloud usage because this ensures that every member is involved in this process by monitoring their cloud costs.
This makes all team members more accountable, as everyone can learn that their actions have financial implications. Thanks to this, all members of a business can use their cloud resources more efficiently.
Central control
Even though everyone is responsible for their cloud usage, there is still a central control that streamlines cloud financial management.
With the help of a central authority, the organization can be more consistent and let the other team members focus on their most important tasks. This can greatly improve innovation and productivity.
Accessible data
If an organization wants to make an informed decision regarding the cloud spending, then that particular company also needs to have access to updated and accurate reports. In this way, a company will know to make informed decisions and spend their cloud expenses accordingly.
Plus, in this way, they can also identify any mistakes and adjust their plan to be able to optimize their operations better. This can improve the financial health of a corporation, and it can improve operational efficiency.
Bring value to a business with the right decisions
Decisions are very important in a business, and they can bring more value. So, when choosing a cloud solution, businesses should think about the impact that this can have on their financial results and operational performance.
At this step, they can weigh the advantages and disadvantages of this practice to ensure that they optimize their resources in a way that opens the door to more growth.
Variable cost model
A variable cost model that implies a pay-as-you-go model can also prove to be a great solution for many businesses, as they can adjust the cloud use to their exact needs. Thanks to this, they can use their cloud effectively while managing costs and diminishing the chances of cloud waste.
What are the benefits of FinOps?
FinOps principles can bring plenty of advantages to a business.
Improve the business value
With the help of FinOps solutions, businesses can maximize their values because they can align their operational and financial goals.
Businesses should always look for ways to save costs, and cost-effective cloud usage can help in this matter, as it can improve performance and optimize resources. In this way, all the money will be spent correctly, which can increase a company’s success.
Cloud cost savings
When businesses only pay for what they use, this can greatly reduce costs. Why does this happen? Thanks to this principle, companies can eliminate their unused resources and benefit from important cost savings.
Cloud accountability
Cloud accountability is also an important part of FinOps, which includes everyone having ownership over their cloud spend. This way, individuals can avoid unnecessary expenses and use their resources wisely. They can also track their cloud spending and keep everything in control.
Conclusion
As cloud computing has started to be a main focus in plenty of organizations worldwide, enterprises have become reliant on it.
However, to manage their cloud financial operations correctly, companies should consider FinOps, which combines operational governance, financial management, and business operations. With these principles, businesses can get the most out of their cloud investments and optimize cloud costs.
