Budgeting for Cloud (or other IT expenses) is a process of collecting estimated expenses for a specific period of time. Decisions on how to operate as a business, what to invest in and other strategic decisions are made based on budgets. If actual expenses do not match the budget, it can impact the operations and other decisions that were made based on those budgets.
The term ‘favorable to budget’ means that there are less expenses than as planned in the budget.
The term ‘unfavorable to budget’ means that there are more expenses than as planned in the budget.
It may sound like being favorable to budget is ideal, and while it is not necessarily a bad thing, it is far from ideal. Had the budget more accurately reflected there being less expense, the business might have made different decisions to invest in more or grow in different areas.
Budget Management contains the acts of:
Measures of success are represented in the context of cloud costs and may include one or more key performance indicators ( KPI ), describe objectives with key results ( OKR ), and declare thresholds defining outliers or acceptable variance from forecasted trends.
A glossary of FinOps concepts and related terminology used by practitioners all over the world.
At Indeed, we set Time is greater than Cost as a priority, so we are moving away from dollar-based budgeting to incentivize velocity. This has turned out to be incredibly useful in shifting the conversation away from the price of cloud resources (a huge variable) to the number of resources needed.
Pedro Veloso of OLX Group shared parts of his own research and how his finance team cooperates with tech/ops teams on financial optimization.
Mike Rosenberg of Nubank covered some of the non-technical considerations of Cloud Financial Management. This talk shared some of the non-technical learnings he picked up along the way.
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