Understanding FinOps: A Comprehensive Guide

What is FinOps?

FinOps, short for Financial Operations, is an operational framework and cultural practice designed to maximize business value by managing cloud costs. It facilitates real-time decision-making through the collaboration of engineering, finance, and business teams. FinOps enables organizations to understand their cloud costs, optimize spending, and operate efficiently.

Overview Video

Here is a very comprehesive overview Video for getting stared with FinOps by the FinOps Foundation.

The FinOps Framework

The FinOps Framework provides a structured approach to implementing FinOps within an organization. It gives you an overview of all relevant capabilities, stakeholders, roles etc., that are necessary to establish a FinOps organization.

It includes the following core elements:

Principles

The principles of FinOps include collaboration between teams, accessible and timely data, and taking ownership of cloud usage and costs. These principles guide the adoption and practice of FinOps in an organization.

Domains and Capabilities

FinOps domains represent various areas of activity or knowledge necessary for a successful FinOps practice. These domains ensure that all aspects of cloud financial management are covered comprehensively. FinOps capabilities define the functional areas supporting each FinOps domain. These capabilities include specific activities, key personas involved, performance metrics, and real-world practices essential for a robust FinOps practice.

Phases

The FinOps journey is divided into three iterative phases:

1. Inform: Understanding cloud usage and cost.
2. Optimize: Identifying opportunities for cost-saving and efficiency.
3. Operate: Continuous improvement and operationalization of best practices.

Personas

FinOps involves multiple personas, such as executives, finance, and engineering teams. Each persona plays a crucial role in implementing and sustaining FinOps practices, ensuring financial accountability, and optimizing cloud usage.

Maturity

The FinOps maturity model follows a “Crawl, Walk, Run” approach, allowing organizations to start small and scale as they become more proficient in FinOps practices. This model helps organizations gradually improve their cloud financial management capabilities.

Further Reading

If you want to continue reading, please have a look at our guide how to introduce FinOps

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Attribution

Substantial parts of this work, especially the pictures are licensed under the CC BY 4.0 License.