You may have read media headlines and online comments like: “Companies are still waiting for their cloud ROI” or “Businesses are struggling to control cloud costs”. Perhaps even: “We have left the cloud due to the costs”.

Many organizations have taken steps from on-premises IT to the public cloud, with costs savings being at least one of the key motives. But some of these same organizations have discovered the unfortunate fact that cost savings do not happen simply by moving to the cloud.

While costs usually stay tolerable during the first years of cloud usage, the bottom line starts to matter as your organization’s cloud behaviour evolves. This is because the methods of managing costs and creating value in the public cloud are fundamentally different from non-cloud implementations.

Agility and rapid innovation are central to the value proposition of the cloud, enabled by greater flexibility and simplified management. The flipside is that costs may also be less controllable, as developers and other innovators can set up new cloud resources without the procurement processes or financial approval that often apply in traditional (less flexible) on-premises environments. The organizational ability to follow, forecast and budget cloud spending is gradually declining, potentially leading to nasty surprises in financial reviews.

However, the solution does not lie in suppressing the flexibility gained by extending business processes to the public cloud. On the contrary, organizations should take another step forward in embracing cloud culture and ways of working.

This is where FinOps comes in.

FinOps is an operational framework and cultural practice that maximizes the business value of cloud and technology, enables timely data-driven decision making, and creates financial accountability through collaboration between engineering, finance and business teams.”

^{Source: FinOps Foundation - What is FinOps?}

At its core, FinOps is about taking ownership of cloud costs and creating real accountability across the organization.

It’s a rapidly evolving paradigm, re-defined almost annually by the FinOps Foundation. This organization follows the evolving ways of utilizing public cloud (and very lately, also private cloud), and based on its members contribution, provides best practices, standards and education for all cloud users. In this way, the FinOps practice has collectively evolved based on the actual experiences of cloud solution providers and the people using their services.

To be able to take ownership of cloud costs, one must have visibility into and the ability to understand cloud consumption. The prerequisite for this is cost allocation, without which cloud consumption cannot be directed to its respective cost owners. When the cost allocation is done well and cloud users are empowered to follow their costs, the organization has already taken a major step towards a proper FinOps practice.

Developers, data analysts, cloud operators, architects, security engineers and application users are the ones who have impact on  cloud costs and value generated in the cloud. They should thus be the cost allocation owners.

It’s also worth noting that a company’s support and leadership functions – including the finance, procurement and top management teams – need to understand how their organization consumes the public cloud and generates value with it. Even the most cost-effective and value-adding cloud initiative may be prevented by a controller or a director with insufficient understanding of the field.

However, enabling decentralized ownership and pan-organizational visibility may not immediately reduce cloud costs. It is thus recommended that organizations have a dedicated function for driving, supporting and defining the FinOps practice. There are a number of models for this. The function may reside in a Cloud Center of Excellence, for example, or may be assigned to a specific team or person. It could also be outsourced, either partially or entirely.

The main point is that the FinOps function should collect, define, develop, share, and provide education in the different ways of generating the most value from the cloud. In practice, this may mean enhancing decision-making with better data and improving understanding of cost impact, or defining how cloud commitments are used.

It could also be providing cost and value dashboards for different cloud users, enabling unit economics metrics, defining the default (best-value) configurations for different types of cloud resources, or collecting best practices on how cloud capacity should be used.

How should your organization approach FinOps? 

A good start would be having a look at the FinOps Framework provided by the FinOps Foundation. The framework provides many layers and lenses on how to approach cloud cost management and value maximization. Your next steps depend on the current state and needs of your organization.

Tietoevry Tech Services offers structured FinOps expertise, providing data-driven approach tailored to your specific business and technical needs. Whether you’re struggling with cost unpredictability, lack of visibility or inefficiencies in your cloud environment, our consulting services and cloud-agnostic FinOps tools help you take control – with a clear strategy for optimization and efficiency.

By working together, we can help your organization build a cost-aware culture, maximize the value of your cloud investments and eliminate those cloud cost concerns for good.

You might also like to read:

Platform Engineering: Future-proofing the digital infrastructure of Nordic Enterprises