Accelerating adoption of the cloud for agility and flexibility purposes generates significant growth in cloud consumption on highly fluctuating, on-demand models. Traditional cost tracking is therefore complex and less predictive. Consequently, how can we obtain an exhaustive view of its consumptions and ensure that all the teams in an organization make optimum use of cloud environments? The vocation of the FinOps approach is to ensure “better” consumption of the cloud environments, and thereby offer IT customers true added value.
Optimizing the costs and benefits of the cloud
The FinOps approach methodology covers governance aspects, optimization processes, and tools. It offers detailed visibility of cloud consumption, initiates cost redistribution approaches, and proposes optimization axes – always with the aim of guaranteeing businesses the advantages that cloud environments can bring.
FinOps: 3 distinct fields of activity:
First of all, we must understand the types of consumption, the consumers and the consumption trends.
Each cloud component must then be identified using tags. These tags must be defined with all cloud players in order to build a tagging strategy aligned with the company organization, cloud strategy, and the automation mechanisms necessary to operate these cloud environments.
Once this has been done, the FinOps team can tell the various cloud players how the environments are consumed and possibly perform cost allocation operations within the organization’s various entities. The FinOps team must have access to the right tools in order to be able to generate dashboards and share them with all the players.
As soon as the information phase is complete, the FinOps team can work on identifying the various consumption optimization axes. Optimizing does not necessarily mean reducing, but rather improving consumption and value while increasing profitability.
The teams will therefore look for unused, poorly sized components, or those whose use could be optimized through automation. Beware of licenses! Several subscription methods are used sometimes.
This activity must be carried out in agreement with all the cloud players: business lines, application managers, developers, architects, operations managers, as well as contract and finance managers.
Finally, we will see how to optimize the various contractualization models in order to assign a suitable subscription model to each component: on demand, reserved instance, savings plan, spot, etc.
The FinOps team requires true governance to manage all the activities described above. To do this, it will have to describe all the roles and responsibilities of each person, the processes required to manage all FinOps activities as well as the tools required to publish consumption reports, the change over time whether for budget or forecasting purposes, but also publish more business-oriented indicators, in order to demonstrate the benefits of a FinOps approach.
Lastly, special attention must be paid to the governance structure combining the implementation of architecture reference frameworks and steering bodies to secure the use of the FinOps approach in all new projects.
A continuous improvement process
The FinOps approach is a long-term process. With the first iterations, it will be possible to address FinOps best practices, generating the first optimization actions and progressively, with increasing maturity, these practices will become more widespread by empowering each of the cloud players within the company.
What kind of governance for what type of organization?
No single FinOps governance model can be applied to all IT organizations. Each organization, according to its context, cloud strategy, organization, and maturity of FinOps, must identify the governance that is most suitable for it while bearing in mind that the FinOps approach remains a continuous improvement process.
Governance must involve the key players in the organization (CIO and non-CIO). This is a real success factor! The players involved, such as finance control, purchasing, and technical teams will therefore all work together in order to apply the FinOps best practices in each of their areas of responsibility. Operations will guarantee good responsiveness and feedback, cloud and application architects will ensure the sustainability of optimizations in future architectures, while development teams will integrate the FinOps best practices into their applications.
Note that since the offers of cloud solution providers are constantly changing, FinOps governance will have to anticipate the impacts of these changes on consumption and proactively propose architecture and usage recommendations to all players involved in governance.
Therefore it is important not to wait until you have launched cloud initiatives before initiating a FinOps approach. It must be integrated right from the start of a transformation to the cloud. It is possible to start in a simple way, and progressively extend the FinOps footprint to all cloud activities while ensuring that best practices are shared across the entire organization.
To find out how Capgemini can help you maintain your control through FinOps, download our Cloud Transformation: The Keys to Success whitepaper, or contact our team today.