Policy & Governance

Establishing and evolving policies, controls and governance mechanisms to ensure that cloud use and intersecting FinOps Scopes align with business objectives, complies with regulatory requirements, and optimizes cloud resources efficiently.

Definition

Policy and Governance can be thought of as a set of statements of intent, with associated assurances of adherence.

A Cloud and Technology Policy is a clear statement of intent, describing the execution of specific cloud-related activities in accordance with a standard model designed to deliver some improvement of business value.

Cloud and Technology Governance is a set of processes, tooling or other guardrail solution that aims to control the activity as described by the Technology Policy to promote the desired behavior and outcomes.

Combining good Policy and Governance provides us with a mechanism to orchestrate and direct our activities for Cloud and intersecting FinOps Scopes.

It’s possible to imagine a world in which good things happen naturally, without any attention or control being applied to them. In most business situations though, the right things will only happen if people are directed or inspired to do them, the actions and their outcomes are monitored, and there are some (positive or negative) consequences arising from their actions.

A FinOps Culture is a set of attitudes and behaviors oriented to drive business value from cloud technology. Transitioning to this from a data center culture is one of the key challenges of FinOps. Policy and Governance is how we establish and sustain a FinOps culture. In fact, it is the way in which all culture is established and sustained. Think of any organization with a recognizable culture and you will see an effective Policy & Governance framework.

So the simple answer to why Policy & Governance frameworks are important is that organizations cannot sustainably deliver business value from cloud without them.

Policy and Governance are key components of successful FinOps practice. They work to align activities within the cloud and intersecting FinOps Scopes  to the business overall goals and strategies, control the deployment and usage of Cloud resources in order to maximize ROI. We are able to ensure our cloud costs are predictable and manageable, and we can use Policy & Governance to support the consistent adoption of best practices across the organization, and support defense-in-depth against known threats and risks.

Governance includes both the mechanisms to enforce and enact policy, and KPIs to measure that compliance, defined and agreed to by stakeholders. KPI aligned with FinOps objectives (for example: 80% of compute costs covered by a commitment, 70% of teams trained…) are shared with all personas transparently to drive the behavior that will be most valuable to the organization. This visibility ensures that the organization is on the right track and if not, identifies areas for corrective actions.

It is important to avoid tracking too many indicators creating noise that creates inaction. A few strong indicators to start might be a better option to take actions. Compliance KPIs will evolve over time to adapt to FinOps objectives.

Policy & Governance has many interactions with other Capabilities, providing guardrails for good behavior that can be reported upon in Reporting & Analytics, identifying opportunities for improvement that might require work in FinOps Education & Enablement, or in one of the capabilities in the Optimize Usage & Cost Domain. There will also be a strong interaction with other operational policy and governance drivers in the organization, such as IT Security, IT Asset Management, Cloud Centers of Excellence, or DevOps platform and shared service teams. All of these groups strive for consistent good behavior in cloud and intersecting FinOps Scopes.

Maturity Assessment

Functional Activities

Measures of Success & KPIs

• Technology Policy adherence: cost of resources compliant with Policies / Total Resource cost

Inputs & Outputs

Governance

Governance implements Policy through:

• Guidelines – that set out best practice for policy implementation and how it can be achieved. These are advisory, rather than mandatory
• Guardrails – formal processes and structures that define mandatory pathways for policy-compliant action, possibly with consequences for non-compliance
• Automation – processes that automate policy implementation and which therefore control how compliant actions are carried out.

An example of a good  governance measure might be:

“At the end of each month, we will notify you of the cloud resources with zero utilization. These will be decommissioned by us the following Tuesday, unless you opt out of this process by providing a reason for retention.”

Policy

If a policy is poorly conceived or expressed, of dubious authority, too broad or general to be useful in practice, or imposes a cost on the organization that is out of proportion to its benefit, it is a bad policy.
Some examples of good policy statements might be:

• “Our policy is to cover more than 80% of our optimized cloud usage with discounted pricing plans”
• “Our policy is to reduce wasted spend by decommissioning cloud resources that deliver no business value”