Integrating FinOps with your cloud cost optimisation strategy: Everything you need to know

Cloud burst onto the scene over 20 years ago, with the promise of innovating how businesses scale and improve operational slickness. And organisations have taken to it like ducks to water. But much like the duck in water, underneath the surface is the incessant paddling to stay afloat —here represented by the relentless challenge of managing cloud expenses.

This often unseen part of the process has become crucial to maintain smooth sailing in the digital waters.

So, what does this mean for businesses? Let’s start with understanding the difference between cloud cost optimisation and FinOps…

Every time a department in your organisation requests to leverage a tool that is cloud-based, the request is submitted with the aim of solving a problem. Rarely does the request consider the impact on the broader environment or the IT budget allocated to cloud-based tooling. FinOps, or Financial Operations, aims to reverse the negative financial impact of traditional ‘break-fix’ thinking.

If we think about cloud computing as a phone bill – everyone in the business has one, pays only for what they use, and they monitor their bill on a month to month basis ensuring that unused services or add-ons don’t unnecessarily hike up the total amount. FinOps manages the costs of cloud spend in a similar way. Teams beyond IT are forced to monitor and weigh up their decisions to leverage certain cloud-based tools and make smart trade-offs based on faster and/or higher quality services against keeping the costs down within their own budgets. This alleviates the pressure on IT overall, and their budget. We all become accountable.

The FinOps Foundation describes it as a cultural practice that not only emphasises financial accountability within cloud environments, but also aids teams in balancing and managing their cloud investments more effectively.

Adopting this approach forces teams to make spending choices based on business objectives first, and solutions second. Uniting cloud cost optimisation and FinOps aims to create the perfect flock formation—each bird plays a critical role in navigating more efficiently and effectively than they would alone, with less friction and fatigue.

It’s beneficial to cost-reduction strategies because:

• It aligns spending with outcomes, forcing teams to stay within or under budget.
• Decisions are being made with data at the forefront, leaving less room for ambiguity or personal agendas.
• The cloud strategy is presented to finance and monitored by IT with enhanced visibility as various teams now own it in part and actively impact the overall strategy.
• Forecasting, budgeting, and resource allocation will be more accurate, improving ROI.

By having all your cloud strategy, IT response, and FinOps ducks in a row, the burden of responsibility is removed from the IT team, breaking down silos and creating an organisation-wide buy-in to cost optimisation.

In a recent FinOps Foundation survey, only a small fraction of businesses reported their practices ‘were fully matured and integrated into their daily operations’. Only slightly more stated that ‘tooling, staffing, reporting and allocation’ prevented them from achieving their ideal cost optimisation goals. So, more than three quarters of organisations are still at the beginning of this journey.

This approach can also introduce other types of complications. For example, it adds an additional layer of complexity to governance processes. As companies scale, they must balance cost control with efficient growth – an area significantly impacted by skill shortages. Not to mention, the rapid development of cloud technology requires businesses to simultaneously keep up and stay ahead.

Take the time to really understand your cloud environment:

• Which tools and services do you have in place?
• What are the various pricing models?
• Pick a pricing model that is best suited to your business structure.
• Identify the tools that will help you evaluate.
• Conduct an initial cost audit on your environment.

If you’re still wondering exactly where to start, don’t fret. We have developed this handy guide to help you plot the exact steps along your journey. If you’re still struggling, our team of highly certified experts are on hand. Simply book a free consultation and we can get you on your way.