FinOps at the Epicenter of Cloud Operations

Jan 31, 2023
FinOps is a Cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping disparate teams - technology, engineering, business, and finance teams to collaborate on spending decisions and make trade-offs between agility, quality and costs in their Cloud investment decisions. The practice of FinOps is maturing as large enterprises with substantial cloud consumption need effective processes and procedures to monitor, manage, allocate and forecast Cloud spends.
Harish Krishnan
Harish Krishnan

Associate Vice President and Pre-Sales Head,

Infrastructure & Cloud Technology Services,


In the Cloud world, shadow IT and the reduction in centralized procurement, gaps in financial accountability and complex and changing cloud pricing structures rapidly led to financial waste resulting out of excess, redundant or unnecessary Cloud usage. Therefore, a well thought out Cloud cost optimization strategy has become critical because if Cloud usage is not monitored and managed appropriately, the Cloud costs tend to spiral out of control.
Effective Cloud financial management enables cost optimization, ensures better visibility of costs, provides more predictability and forecasting of costs, chargeback of costs to the various business units through effective tagging of Cloud resources and more efficient usage of Cloud resources by reducing waste or unused resources.
Some of the strategies enterprises are using include right sizing of instances, shutting down development and test instances when not in use, removing unused instances, usage of spot instances and automatic scaling of resources as needed.
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As companies increasingly move workloads to Cloud, it becomes important to plan for FinOps before the migration. One needs to look for value instead of just lower costs and understand the TCO of Cloud operations. FinOps needs to become an ongoing practice within the organization.
FinOps operates on key principles of Collaboration between teams, Defined Responsibilities and ownership of Cloud usage, Centralized team to drive FinOps, Timely and Accurate Reporting, Decisions driven by Business value of Cloud and leveraging the variable cost models of Cloud.
Most Cloud providers offer basic cloud cost management tools (E.g., AWS Cost Explorer, Azure Cost Management) to help achieve this. In addition, there are several specialized third-party solutions that provide additional visibility and insight into cloud costs. Some of the leading third-party FinOps tools are – CoreStack, CloudZero, Morpheus, CloudHealth (VMware), Cloudability (Apptio), Flexera, Densify and Spot (NetApp). Third-party FinOps tools offer broad assortment of features in a single package and enable multi-cloud management.
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FinOps Foundation, which is part of the Linux Foundation and formed in 2019, is focused on advancing the discipline of Cloud financial management though best practices, education, and standards. The Foundation has come up with a FinOps maturity model that classifies FinOps maturity into three categories – Crawl, Walk and Run (Run being the highest level of maturity). There are defined characteristics and sample KPIs for each Maturity level. The focus of organizations should be to mature the capabilities that provide the highest business value to the organization.
Gartner has predicted spending on Public Cloud services to grow by over 20% in 2023 due to the agile, elastic and scalable nature of Cloud. With this continued growth in Cloud spending, there is a dire need to effectively manage the burgeoning Cloud costs and that has made FinOps a priority issue for organizations. FinOps is now at the epicenter of Cloud operations.
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