Most people think that FinOps is just shorthand for Financial Operations but this is not correct. It is actually a blending of “Finance” and “DevOps” making “FinOps” stressing the communications and collaboration between engineering and business teams.
At its core, FinOps is a cultural practice. It’s the way for teams to manage their cloud costs, where everyone takes ownership of their cloud usage supported by a central best-practices group. Cross-functional teams in Engineering, Finance, Product, etc work together to enable faster product delivery, while at the same time gaining more financial control and predictability.
The FinOps foundation describes “FinOps” as:
“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”Technical Advisory CouncilFinOps Foundation
FinOps Principles are north stars that guide the activities in FinOps practices.
- Finance moves at the speed and granularity of IT
- Engineering considers cost as a new efficiency metric
- Continuously improve your practice to gain efficiency and innovation
- Define governance and controls for cloud usage
- Empower feature and product teams to manage their own usage of cloud against their budget
- Gain visibility into cloud spend at all levels
- Track team-level targets to drive accountability
- Centrally govern and control Committed Use Discounts, Reserved Instances, and Volume/Custom Discounts with Cloud Providers
- Centralised discount buying process removes rate negotiations from engineering team consideration
- Granular allocation of all costs, direct or shared, to the teams and cost centers responsible for them
- Fast feedback loops result in more efficient behavior
- Visibility helps determine if resources are under- or over-provisioned
- Automation of resources drives continuous improvement
- Trending and variance analysis helps to understand why costs increased
- Internal team benchmarking drives best practices and celebrates wins
- Industry peer-level benchmarking determines how your company is performing
- Rightsizing instances and services help drive appropriate resourcing levels
- Comparing pricing between services and resource types drives better decisions