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Cloud FinOps:

The Best Way to Get More Bang for Your Buck

It’s estimated that 90% of all businesses are using some form of cloud computing services. Why? Because a cloud-based infrastructure is considered to be more reliable, scalable, and cost-effective than a traditional, on-premise IT one. We know this.

But, did we know this: Organizations go over budget on their cloud spend by an average of 23% each month.

Suddenly, cloud-based services don’t seem quite so attractive, do they? However reliable and scalable they are, if they aren’t cost-effective, can’t offer you value for money, or don’t cut costs in some way, why are we even bothering with the cloud?  

The problem with a cloud-based infrastructure is that there is little transparency or accountability within teams that use cloud services across the business. This means that there is a general lack of understanding about how cloud pricing works so costs tend to escalate and there are a huge amount of ‘hidden’ cloud resources that are being paid for, but aren’t being used.

Before we throw the towel in, admit defeat, and move back to an on-premise infrastructure, there is a solution.

That solution is Cloud FinOps.

This article will cover:

  • What is cloud FinOps and how is it different from FinOps?
  • Why you need cloud FinOps if you use the cloud
  • How to bring cloud FinOps into your organization

Let’s dig in.

What is cloud FinOps (and how is it different from FinOps)?

A photo of a hand reaching toward a sky. In the sky are illustrations of 9 clouds formed into dollar-sign shapes.

As we know, FinOps is an amalgamation of “Finance” and “DevOps”. It’s a set of principles, practices, and processes that brings software development, IT operations, and finance teams together to produce high-quality software products and services, continuously and cost-effectively.

But FinOps isn’t what this article is about. If you want more on FinOps, I suggest you get out of here and read this article instead. Because sitting tight, under the big, wide umbrella of FinOps is cloud FinOps, which is what this article is about.

In simple terms, cloud FinOps is a name given to a set of principles that will bring order to your out-of-control cloud costs. Cloud FinOps principles have been designed to create a cost-conscious culture and change the way everyone within the business views cloud spending and usage. They do this by bringing together software developers, stakeholders, and financial teams and encouraging them to:

  • participate in open and transparent collaboration;
  • use data to make strong decisions around cloud spending and usage;
  • take accountability for their actions when using cloud resources.
“It’s 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.”

- FinOps Foundation

Why you need cloud FinOps if you use the cloud

Illustration of a cloud linked to other clouds as well as icons indicating music, servers, phones, cameras, computers and letters. The illustration is overlaid on top of an image of a hallway inside a data center with racks of servers lining each side of the hallway.

The old ways of managing an on-premise IT framework won’t work if you’re managing a cloud-based platform.

With an on-premise solution, life is easy when it comes to forecasting costs and sticking to planned budgets: you know what the cost will be to keep running at optimal performance because you’ve paid upfront for storage, and you can factor things like system upgrades, new software licenses, or general server maintenance into your budgets, so there are rarely any nasty surprises waiting for you in your monthly bill.

With a cloud-based infrastructure, however, it’s a significantly bigger minefield. Because you only pay for the services you use, unless you have full insight into what resources various teams within the business are provisioning, you’ll struggle to keep track of your cloud usage and predict what the total cost for your cloud services will be each month.

This is where cloud FinOps comes to the rescue.

The top 4 benefits of introducing cloud FinOps into your business

The top four key benefits that come with introducing cloud FinOps into your business include:

Benefit #1: Cloud FinOps creates a cost-aware culture 🧑🏼‍🤝‍🧑🏼🧑🏿‍🤝‍🧑🏿🧑‍🤝‍🧑

Cloud FInOps is more than a technology solution [...] It’s a living, breathing way of approaching the cloud and cloud financial management.” - O’Reilly

Cloud FinOps gives technical, operational, management, and financial teams a set of best practices to follow around how to manage cloud usage and cloud costs. These practices will naturally develop into a positive culture that’s centered around cost awareness, which will increase the organization's ability to understand cloud spending and stop out-of-control cloud costs.

Benefit #2: Cloud FinOps alleviates uncertainties around cloud spend 💰💰💰

We touched on this earlier but traditionally, with an on-premise infrastructure, costs were easy to predict. They remained stable, and expenses were typically signed off by finance before they were spent. This gave the people in charge of the numbers greater control. Because the cloud is based on a pay-per-use model, it’s difficult to predict what the spend will be because it fluctuates depending on what’s needed to run at ‘optimum performance’ that month. This makes it impossible for finance teams to determine the budget, up-front. Cloud FinOps puts processes in place to help all teams across the business understand cloud usage patterns, establish why bills might come in higher than expected, and help them optimize their cloud spend and usage accordingly.

Benefit #3: Cloud FinOps encourages accountability and visibility 🤚🏼🤚🏽🤚🏿

Without cloud FinOps, technical teams can often work in silos with little or no collaboration or communication with other teams within the business, such as operations or finance. This leads to a huge disconnect: Technical teams feel no accountability for what they’re spending on resources because they don’t see the impact it’s having on the business, and operational and finance teams don’t understand what’s being spent, who’s spending it, and why they’re spending. They have no way to control cloud spend or usage. As a result, costs spiral, and business stakeholders are left with big questions at the end of each month: Why are cloud costs so high compared to this time last year? How did we get the forecasted spend and budget so wrong? Why is this month’s bill so different from last month’s? Cloud FinOps puts processes in place to encourage transparency and accountability across all teams within the business so everyone knows what’s going on, everyone takes accountability for their usage and spend, and everyone knows how to answer the big questions at the end of each month.

Benefit #4: Cloud FinOps optimizes cloud usage and brings with it cost-efficiency 💵 💵 💵

As we’ve seen above, cloud FinOps brings the technical, financial, and operational teams together and encourages them to collaborate. This enables faster product delivery, with greater financial control and gives everyone a better understanding of cloud usage patterns. This enables the business to predict cloud usage better and improve cloud cost efficiency as a result.

How to bring cloud FinOps into your organization

Illustration of a cloud with an interconnected network displayed inside the cloud shape and bordered with binary code. A series of icons are shown connected to the cloud, including a lock, a phone, a letter and a shopping card. Superimposed on the image is a photgraph of clouds and behind the image are a few lines of html code.

As we established earlier, cloud FinOps is a set of practices that have been designed to change the culture within your organization. These practices should change the way people think and act when using cloud resources or looking at cloud costs. They should create an all-inclusive environment that’s transparent and collaborative. They should encourage the harnessing of data to make informed decisions about cloud spend and usage. And they should bring order to the chaos typically caused by the pay-as-you-go cloud model.

But how exactly does this set of practices do that?

The 4 key practices of cloud FinOps

The key practices that organizations need to put into practice to develop a cost-aware culture that allows for transparency, collaboration, and data-led decisions include:

  • Reporting: Access to reports, stats, and charts that show real-time cloud spend and usage and past, historic trends, is an essential part of cloud FinOps. The people in charge of the purse strings should be able to see where, why, and how their money is being spent. The people in the finance team need to understand and better predict future cloud costs, and the people on the frontline, building the products, software, and services should see the effect their cloud spending and usage is having on the business itself.
  • Interpretation: It’s one thing having reports, charts, and stats at your fingertips, but another thing deciphering what they mean and how they relate to cloud spending. Provisioning of tools that enhance your ability to understand, apply and use the cloud metrics you uncover in your reports will add tremendous value to your cloud infrastructure.
  • Accountability: I’m aware that I’ve used the word “accountability” a lot in this post. But for a cloud infrastructure to be cost-effective, the people provisioning the resources need to take accountability for what they’re using. To do this, they need to be able to:
  • understand what the implications of purchasing resources are;
  • explain or justify their spending;
  • be transparent with what they’re spending and why.

Teams across the business need to have visibility into and accountability for cloud spending.

  • Governance: Cloud FinOps brings with it the practice of proactively monitoring cloud spend and putting thresholds, standards and regulations in place to not only manage cloud spending and usage, but to also manage the teams within the business to help them use cloud resources in the most efficient and cost-effective way.

How to implement the 4 cloud FinOps practices into your business

A man in business attire stands presenting in front of a table of male and female colleagues.

When you introduce anything new into a business, whether it’s a new process or a new tool, you need someone behind it, championing it. You need a central point of contact that fields questions and drives the change forwards. This is the same when introducing cloud FinOps into a business. You need someone or a team of people that will enforce cloud FinOps best practices and make sure that the change towards a cost-aware culture is a smooth, consistent and lasting process.

But aside from having a cloud FinOps advocate within the business, you also need to find a way to report on real-time and historic cloud activity in an easy-to-understand way, encourage transparency and accountability across multiple teams, and enforce thresholds, regulations, and standards when it comes to cloud spending and usage.

This is where a cloud cost optimization tool like Aimably will come in handy.

Implementing cloud FinOps with Aimably

Aimably is an AWS cost optimization tool that has a unique set of features that enable the key cloud FinOps principles to be implemented into a business in a stress-free, frictionless way.

Its simple, user-friendly interface makes it easy for teams across the business to manage and take responsibility for AWS cloud spend.

Let me explain.

Aimably Pulse 💓💓💓

Aimably Pulse changes how you monitor and hit your cloud cost KPIs. Here’s how Aimably Pulse can help you implement the key cloud FinOps practices:

  • Reporting: Monthly reports give an engineering-focused summary of the total infrastructure spend in relation to last month's bill.
  • Interpretation: Aimably Pulse gives simple to understand breakdowns for each account to allow for quick and easy spend diagnosis.
  • Accountability: Each team member will know how their cloud spending is tracking against historical data which encourages them to take accountability for what they're spending.
  • Governance: Team leads are assigned daily goals to help their teams track and hit their monthly goals.
Aimably Insight 🔍🔍🔍

Aimably Insight allows teams to build budgets and make appropriate adjustments to their cloud spending, in-line with business needs. Here’s how Aimably Insight can help you implement the key cloud FinOps practices:

  • Reporting: You’ll get daily reports on usage so you’ll know exactly what you’re spending each day on AWS cloud services. Plus, you’ll be able to view all your resources in real-time, in one place with Aimably Insight, which gives you a live snapshot of your entire AWS footprint across the globe.
  • Interpretation: Often, it can be hard to know exactly what is triggering an up-spike in spending. What Aimably Insight does is help you uncover the individual services and line items that are triggering an increase in your daily spend.
  • Accountability: You’ll have access to historical data with Aimably Insight, so you’ll know exactly when and why usage or spending has changed. You’ll also be able to directly connect your spend to things like operational decisions or infrastructure changes, and have details by member accounts, so you can determine where and what is causing fluctuations.  This makes it easy for teams and individuals to take responsibility for their activities.
  • Governance: With Aimably Insight you can review all the instances and services that you are housing within your AWS accounts and start to understand what impact this is having on your bottom line. This information can help you to put measures in place to manage and control your infrastructure better.
Aimably Reduce ⬇️ ⬇️ ⬇️

Aimably Reduce finds ways to cut costs without impacting performance. Here’s how Aimably Reduce can help you implement the key cloud FinOps practices:

  • Reporting: Aimably Reduce gives you access to reports that tell you what you should be spending for each server instance and give you clear estimates of the potential impact on performance if resources were to be down-sized.
  • Interpretation: As you know, cloud cost optimization can be confusing. Aimably Reduce will help you interpret and identify your key priorities, based on current needs and usage.
  • Accountability: With Aimably Reduce, all completed tasks can be traced back to individual team members, giving people ownership of their tasks.
  • Governance: Aimably Reduce will help you put thresholds in place by giving you high-impact cost recommendations and automatically configuring work schedules in alignment with specific team’s work hours.
Aimably Warn ⚠️ ⚠️ ⚠️

Aimably Warn helps you keep your bill under control by monitoring spend and warning you when things start to escalate. Here’s how Aimably Warn can help you implement the key cloud FinOps practices:

  • Reporting: Aimably Warn allows you to create bespoke reports that align with your business needs. With over 80 configurations to choose from, you decide how you monitor and report on your spend and usage.
  • Interpretation: Aimably Warn can detect unexpected AWS usage and longer-term thresholds to help you understand larger architectural issues.
  • Accountability: You can get specific system usage notifications with Aimably Warn. These will alert you of out of control spending behaviors in your team, and ensure that all team members take accountability for their actions.
  • Governance: You can set spend thresholds and use Aimably Warn to automatically notify specific team members if they’ve exceeded these spend thresholds.

As you can see, cloud FinOps plays a crucial part in managing your cloud usage and spend. With a tool like Aimably, you can integrate cloud FinOps into your business seamlessly.

Book in for a free consultation with one of Aimably experts today.

SaaS Finances 101