Glossary What is FinOps?

FinOps, or financial operations, is an approach to optimizing cloud spending within an organization. FinOps principles help organizations manage cloud resources efficiently and cost effectively to align with business objectives. FinOps combines technical expertise, financial management, and governance processes to control cloud costs.

The goal of FinOps is to provide cost visibility, allocation, and optimization. It also maintains governance and continuous analysis for improvement. The use of Financial Operations enables organizations to maximize value of their cloud investments. Thus, aiding better financial performance and business outcomes.

Difficulties with cloud financing

Cloud computing provides many valuable resources to businesses. However, if managed improperly, it can lead to troublesome costs for an organization. Cloud computing operates as a pay-as-you-go model, where businesses are charged based on recurring payments. This model provides a business flexibility, but costs can accumulate quickly if ineffectively managed. Moreover, unused resources that are overlooked can result in wasted spending for an organization.

Without proper governance such as budget limits and cost control, businesses may have trouble controlling cloud costs. Cloud services often come with additional costs as well that may result in unforeseen expenses. Also, without proper monitoring organizations can lack visibility of cloud spending, making it difficult to control cloud costs.

Cloud framework

A FinOps framework helps an organization increase control and visibility through cloud management. The framework helps an organization get informed on cost visibility and allocation. It optimizes efficiency through pricing and usage best practices while implementing organizational change management.

FinOps collects data on cloud usage, spending and performance to visualize how resources are being used. Analyzing data helps the organization make informed decisions about where their applications should reside in terms of what computer, cloud or platform they run on.

Cost forecasting is another asset within the operation. Cost forecasting provides analysis options for deploying applications while evaluating budget requirements, cost anticipation and cost saving. By forecasting costs, businesses can better allocate their budgets while optimizing their resource options.

The value of business involvement

FinOps establishes policies that bring IT, business leaders, and finance teams together. The collaboration of these teams is essential for cloud management and alignment of business goals. By connecting these teams, business objectives can align across business goals, financial planning and IT initiatives.

Other effective benefits of team collaboration across departments include:

• Cost transparency
• Cost accountability
• Opportunities for optimization
• Risk management
• Opportunities for continuous improvement

Learn more about FinOps