Key Insight: The definition of Cloud FinOps is evolving to reflect the practices in the 16,000 strong community which are managing public and private cloud, incorporating other consumption-based PaaS and SaaS solutions, deepening interactions with sustainability and other IT disciplines, and sharpening focus on the overall business value of cloud.
The Cloud FinOps community has grown exponentially since the launch of the FinOps Foundation in 2019. Tens of thousands of people now manage the value of cloud for their organizations, and participate with fellow practitioners, supporting members, and cloud providers who make up the Cloud FinOps community.
Growth brings more variety of perspective, more participation, and more best practices. This benefits the entire community. The FinOps Foundation is where the world’s most advanced FinOps practitioners, major cloud providers, software vendors, consultancies, and many of the world’s most successful companies come together to share knowledge and work together in a neutral space. The FinOps Framework has created consistency in terminology, practices, and approaches that benefit this interaction.
The FinOps Framework is the operating model for FinOps. It is like a set of building blocks for a FinOps practice; Practitioners can choose and arrange their blocks in unique ways based on needs, resulting in different implementations of FinOps that are all constructed from the same components. The Framework is cloud, industry, and vendor agnostic, and describes the activities a Cloud FinOps practice should own. It is expounded by a growing library of stories, papers, and playbooks illustrating successful practices.
The FinOps Foundation’s Technical Advisory Council (TAC) is made up of practitioners, vendors, and representatives from the three major cloud providers, who are charged with maintaining all elements of the Framework. Beginning this year, the TAC initiated an annual review of all aspects of the FinOps Framework to align with the current practices and suggestions of practitioners, and the evolving nature of the Cloud FinOps discipline.
The first approved change for 2024 is an update to the definition of Cloud FinOps.
This updated definition was approved in a TAC vote on December 12, 2023.
The current TAC members consist of:
FinOps is an operational framework and cultural practice which maximizes the business value of cloud, enables timely data-driven decision making, and creates financial accountability through collaboration between engineering, finance, and business teams.
The previous definition, approved by the TAC in November 2021, was “FinOps is 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.”
The new definition is similar, but has several key differences that reflect the direction the FinOps community is heading.
In years past, conversations around Cloud FinOps often related to adopting the practice or finding ways to save cloud cost. Organizations were learning what FinOps was, how it could have an impact, or how to get a team established. In 2024, conversations have turned to operationalizing that practice. Practitioners write and speak about how they’ve woven Cloud FinOps into the fabric of their business. As an operational framework, Cloud FinOps can ensure predictable results, and a more reliable return on investment, particularly as cloud use grows.
The first definition sought to explain FinOps through the lens of the previously established Cloud Financial Management (CFM) term. However, there is now much higher use of the term “FinOps” among practitioners, cloud providers, analysts, and consultants than other industry terms.
Cloud FinOps practices are also shifting from a focus on cost to a focus on value. For most organizations, Cloud is no longer an experiment or new initiative; It is how they deliver value to customers more efficiently than previously possible. The FinOps community is now looking at cloud investments in the context of business results achieved, and that focus on value ripples through the organization from product managers planning new releases, to engineers delivering solutions within defined budgets, to architects improving the cost efficiency of services running in the cloud, all the way to the executive suite asking for bigger margins instead of smaller cloud bills.
The 2019 definition of Cloud FinOps focused on public cloud. At that time, Cloud FinOps was solving challenges brought on by use of public cloud that weren’t a problem for data centers, namely:
Today, the community is increasingly managing on-premises private clouds, variable-cost Platform-as-a-Service or licensed products, and other consumption-based services which present these same challenges. The FinOps Open Cost and Usage Specification (FOCUS) project is addressing data consistency, but the challenges of managing fast-changing, variable services in private environments are now being managed using the same FinOps Framework capabilities used for public cloud.
Cloud FinOps pulls insights out of massive billing files to make data-driven decisions. As cloud use continuously grows, it is increasingly important to maintain the pace of reporting and decision making, transparently, for all stakeholder personas.
The first Principle of FinOps is: Teams need to collaborate. As the role and scope of FinOps teams have broadened, this principle has become even more important. In large enterprises with siloed finance, procurement, engineering, and product management teams, the use of cloud has created a need to break down barriers that have been in place for decades. Cloud FinOps teams bring the cultural practice of FinOps to do just that.
Cloud FinOps is now an established part of many organizations’ digital strategies, with 96% of the Fortune 50 participating in FinOps Foundation programs. These organizations are using the FinOps Framework to provide visibility across disciplines, to facilitate decision-making, and to improve the profitability of products. The updated definition of Cloud FinOps reflects the current realities of our growing community that is increasingly producing business value for their customers and stakeholders.
The FinOps Foundation TAC is focusing on this inclusive and consistent definition, and all of the coming Framework changes, to provide a consistent operating model for the many more organizations now beginning that journey. Our members’ abilities to clearly scope their own FinOps efforts, to hire experienced and certified FinOps Practitioners, and to propel their organizations is only possible with a Framework that captures all the elements of a FinOps practice.
Once the TAC completes the 2024 updates to the FinOps Framework Capabilities and Updates (estimated to be late February), an additional piece will be published outlining those changes.
Do you agree with the changes to the definition? Does it reflect your Cloud FinOps practice, and the goals you are trying to achieve? Let the TAC know, and hold the Foundation accountable to making the FinOps Framework something that serves everyone, even as the practice of Cloud FinOps continues to evolve.
You can do this by sharing your best practices in our working groups, special interest groups, via the Make a Suggestion buttons on every Framework component page, at our events, or by letting us know when you find the assets there helpful or not.
The FinOps Foundation is here to support the development of the people who do this important job, and to help you to collaborate with one another. Please do your part to help your fellow community members. You can help evolve the Framework as you evolve your practices every day.