Five essential actions for a successful FinOps practice

Data has long been the driving force of the world, and throughout this time, the use of the cloud to support data solutions has only increased. The flexibility that the cloud allows for the development, deployment, and maintenance of these types of solutions is hard to ignore. However, sometimes this flexibility can lead to high costs that seem to be out of control. Effective cloud cost management is no longer optional; it is a necessity.

FinOps offers precisely a framework to optimize cloud spending. But where to start? I'm going to take ixpantia's FinOps framework, which I describe in detail in the blog post “Unlocking Cloud Efficiency: An Introduction to FinOps" as a starting point, to propose five essential actions that any organization can take to cultivate a 'Data Driven' FinOps practice:

1. Cultivate Cross-Functional Team Collaboration

Cloud environments are dynamic and complex. They require a unified approach. That’s why the first step to FinOps success is fostering strong collaboration between your finance, technology, product, and business teams. The cloud operates on a per-resource, per-second basis, and every team needs to be on the same page to truly understand how the organization is spending its cloud budget.

• Why is this important? Siloed teams often lead to fragmented insights, missed opportunities for optimization, and cost overruns.
• How to do it: Establish clear lines of communication and create shared metrics that demonstrate business impact, not just aggregate spending. This empowers each team to make informed decisions that balance cost, quality, and speed.

2. Establish a Centralized FinOps Hub

While decentralized decision-making is important, a centralized team or monitor is crucial to drive the overall FinOps practice. This doesn’t mean micromanaging every expense. Instead, this central function provides the framework and support the organization needs for cloud cost optimization.

• Why is this important? A central team is essential for implementing and enforcing best practices, standardizing processes, and ensuring that everyone is working toward common FinOps goals.
• How to do it: Empower product development teams to manage their own cloud usage within their budgets, while the centralized team provides guidance and support. This hub can also help with resource optimization, cost-effective architecture, and process improvements.

3. Implement Accessible and Timely Reporting

Visibility is key in FinOps. Cost data must be processed and shared as soon as it is available. Near-real-time visibility helps teams make better decisions and encourages autonomous action to optimize cloud utilization.

• Why is this important? When cost information is readily available, teams can quickly identify areas for improvement, track trends, and proactively address any unexpected spending.
• How to do it: Implement consistent reporting at all levels of the organization, analyze cost trends, and explain the reasons behind any increases. This transparency will help create a FinOps-focused culture.

4. Make Value-Driven Decisions

The cloud is a powerful tool for innovation, but every decision about its use should consider cost, quality, and speed. The goal is to ensure that cloud investments are driving tangible business value.

• Why is this important? Decisions solely based on technical considerations can lead to wasted resources, cost overruns, and a lack of alignment with business objectives.
• How to do it: Calculate and maintain visible economic metrics that align with your business model, and use them to demonstrate the value cloud projects add to the organization. This approach is more effective than looking at aggregate spending alone.

5. Promote Shared Responsibility

FinOps is not just the responsibility of a dedicated team; it is a shared responsibility across the organization. While the core team promotes best practices, everyone is responsible for their own cloud usage.

• Why is this important? When everyone feels accountable for their cloud spending, teams are more likely to actively look for ways to save money and optimize resources.
• How to do it: Cultivate a culture of ownership and provide the necessary training and resources for teams to manage their cloud spending effectively. Centralize the optimization of rates, commitments, and discounts to allow engineering and operations teams to focus on optimizing their environments. Executive support for FinOps practices is also critical.

Final Thoughts

By implementing these five essential actions, your organization can move towards a successful FinOps practice that is data-driven and achieves a real impact. This will not only optimize cloud spending but also foster a culture of collaboration, transparency, and accountability. Having this approach can help harness the full potential of the cloud while maintaining good profitability.