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.
(Definition Updated: November 2021 by the FinOps Foundation Technical Advisory Council
At its core, FinOps is a cultural practice. It’s the way for teams to manage their cloud costs, where everyone takes ownership of their cloud usage supported by a central best-practices group. Cross-functional teams in Engineering, Finance, Product, etc work together to enable faster product delivery, while at the same time gaining more financial control and predictability.
FinOps is a portmanteau of “Finance” and “DevOps” stressing the communications and collaboration business and engineering teams.
Other names for the practice include “Cloud Financial Management”, “Cloud Financial Engineering” “Cloud Cost Management”, “Cloud Optimization”, or “Cloud Financial Optimization”.
It is sometimes incorrectly referred to “Cloud Financial Operations” but that term is falling out of favor due to its ambiguity with the more traditional “Financial Operations” role that exists in Finance.
If it seems that FinOps is about saving money, then think again. FinOps is about making money.
Cloud spend can drive more revenue, signal customer base growth, enable more product and feature release velocity, or even help shut down a data center. FinOps is all about removing blockers; empowering engineering teams to deliver better features, apps, and migrations faster; and enabling a cross-functional conversation about where to invest and when. Sometimes a business will decide to tighten the belt; sometimes it’ll decide to invest more. But now teams know why they’re making those decisions.
FinOps Maturity Model
The practice of FinOps is inherently iterative and maturity of any given process, functional activity, Capability or Domain will improve with repetition. Typically a “Crawl” stage organization is highly reactive and focused on addressing problems after they occur, while a Run stage practice is proactively factoring cost into their architecture design choices and ongoing engineering processes.
A “Crawl, Walk, Run” maturity approach to performing FinOps enables organizations to start small, and grow in scale, scope and complexity as business value warrants maturing a functional activity. Taking quick action at a small scale and limited scope allows FinOps teams to assess the outcomes of their actions, and to gain insights into the value of taking further action in a larger, faster, or more granular way.
Core Stakeholders of Cloud Financial Management
While a central FinOps function may work to enable organizational change, FinOps is not done by a single person or team but rather changes the way that disparate engineering, finance, and business teams work together. Individuals at every level and in every area of an organization can have a different role to play in the FinOps practice: Executives, Engineers, FinOps Practitioners, Operations, Finance and Procurement. Read more about FinOps Personas and Roles…
There are 6 FinOps Principles are north stars that guide the activities of our FinOps practice.
FinOps Team Structures
The above diagram demonstrates how, for organizations operating on the FinOps model, a cross-functional team known as a Cloud Cost Center of Excellence (CCoE) interacts with the rest of the business to manage the cloud strategy, governance, and best practices that the rest of the organization can leverage to transform the business using the cloud. Read how to start FinOps in your organization