Companies that use Cloud to manage their business enjoy its benefits, such as massive innovation and agility.

However, running your company’s infrastructure in Cloud can come with a price. More often than not, that price is lost visibility and control of your costs – at times, without you realizing where the money went, and why.

The problem here is that a traditional procurement method is not serving anymore. Therefore you need a new model that enables different teams from your company to speak the same language.

In other words, your business needs a model designed to manage costs without the loss of flexibility and speed.

Therefore in this article, we’ll introduce you to FinOps by defining it, discussing its main phases and principles.

What is FinOps?

FinOps is an operating model that brings financial accountability to the spendings in the Cloud.

With FinOps, your IT, finance, and business teams can share and manage the same processes. Therefore, they can enjoy the benefits of the Cloud while maintaining velocity.

FinOps Phases

FinOps model consists of the following three phases:

1. Inform

The Inform phase gives you visibility and the cloud costs allocation. In other words, all the teams can observe how much they are spending and why.

In this phase, members from different teams can see the comparison with budgets and forecasts and the delivered value.

2. Optimize

The optimize phase sets up the right optimization steps to take to move closer to your business goals.

In practice, that could mean adopting a purchasing savings plan or reducing extra spendings by deciding to get rid of old software that serves no one.

3. Operate

The operation phase is all about taking action on the agreed objectives.

The key thing to remember here is that every step should move the business closer to its continual development and improvement.

The main principles of FinOps

There are six main principles of successful FinOps application:

1. Teams need to collaborate.

To overcome the possible challenges of a Cloud infrastructure, teams need to work together. Their collaboration should be near-real-time and aimed at delivering efficiency and innovation.

2. Everyone takes ownership of their cloud usage.

For speedy innovation, each team member has to be accountable and empowered to make decisions.

3. A centralized team drives FinOps.

To reduce duplication, some activities have to be centralized. A good example is cost reporting.

Centralizing some of the processes enables the company to avoid time-wasting and increases both the quality and the speed of the operations.

4. Reports should be accessible and timely.

Having instant access to feedback and reports increases the likelihood of more efficient collaboration between the teams, and overall more successful company’s behavior.

With timely reports, all the teams can focus their effort on the fast implementation of needed adjustments.

5. Decisions are driven by the business value of the Cloud.

Observing trending and variance analysis provides the teams with an understanding of why the costs are higher than expected.

Therefore, the decisions are more precise and action-oriented.

6. Take advantage of the variable cost model of the Cloud.

This principle enables companies to reduce costs by comparing pricing between services and resource types.

As a result, companies can and implement regular incremental improvements to their Cloud usage.

Conclusion

Altogether, the main advantage of FinOps is its ability to encourage your company’s teams to work together towards the same goals.

Moreover, FinOps enables your business to optimize speed, cost, and the quality of your Cloud, making sure all the spendings are clear.

Implementing FinOps to your business practices empowers you to move your company forward with long-term results in mind.