Managing financial and technological resources properly is a constant challenge for corporations. And that mainly covers the management of investments made in public cloud computing. For companies to have a broader view of the results obtained with cloud computing, FinOps emerged.
It is a very valuable tool for companies to have a more concrete dimension about the costs involved in contracting one or more public cloud providers. With the digital transformation, not having Information Technology services capable of generating a financial return is a serious mistake.
In this article, we'll show you what FinOps is and how this methodology can add value to your business. Check out!
FinOps what is it?
Launched in 2006, it consists of a model that allows a broad understanding of the expenses to adopt the services of cloud computing. This allows a company to be better equipped to improve IT financial management. In other words, it allows companies to determine whether investments made generate results that are within or above expectations.
For FinOps to be executed according to industry best practices, the involvement of finance, technology and business professionals is required. With an integrated team, it is feasible to start the journey of this methodology. The first phase is to collect information about the budget related to the costs related to cloud computing.
Next, it is necessary to verify that the team is prepared to take advantage of cloud computing in the best possible way. This activity is vital to optimize the advantages offered by this technology, which greatly increases the chances of achieving a significant financial return.
The last stage of implementing FinOps is to effect the migration to public cloud. It is certainly a process that must be carried out with a lot of planning and care. This is because a failure can make services unavailable for a long period of time, which negatively affects productivity and revenue.
Know the principles of this methodology
For an organization to really achieve success with FinOps, it is essential to follow some principles. With the intention of helping you visualize this clearly, we will point out important procedures to strengthen the institutional culture and follow good IT financial management practices. Follow!
collaborative spirit
If finance, technology, and business teams don't communicate intelligently with each other, FinOps will literally just be a speech that will get a company nowhere.
As a result, it is crucial for the financial sector to understand the particularities of investments made in IT. It is also very important to adopt Information Technology costs as a metric linked to corporate efficiency.
In this sense, it is worth defining models of governance and control for the use of cloud computing. Another vital point is to recognize the role of this technology as a key piece to innovate and follow the best digital transformation practices.
Integrated accountability for cloud spend
It is very common for some companies to consider that the Information Technology department is solely responsible for investments made in cloud computing. This view falls apart with the exemplary adoption of FinOps.
The reason is that the correct administration of the cloud budget contributes to a company having more financial resources to invest in other areas, such as marketing, customer relations, innovation, among others.
centralized management
It is essential to have a properly structured team to implement and monitor the adoption of FinOps. It's no use just launching a concept, as the most important thing is to make it viable in the day-to-day of the corporation. In this sense, it is recommended to have a group responsible for the following activities:
- Control expenses with public cloud providers, involving IT, finance and business areas;
- Negotiating values based on studies on how the cloud can add value to the business;
- Define performance parameters for cloud computing to be considered a differentiator for the company.
A centralized and comprehensive IT financial management has a decisive weight for a correct analysis of investments. After all, it is not enough to follow the fad of digital transformation, as the essential thing is to verify whether the application of financial resources in new technologies will allow the improvement of services.
Data-driven decisions
Chances are you've heard a famous saying: data is the new oil. It is certainly a premise that is here to stay. For this reason, the recommendation is to use performance reports related to the use of cloud computing.
Based on consolidated and updated information, it is feasible to assess whether it is necessary to expand or reduce the use of cloud-related resources. This procedure provides a more strategic IT financial management focused on results.
Why is IT financial management so important?
A study by 451 Research found that 80% of 300 finance and IT leaders admit that a financial management in the cloud inadequately jeopardizes corporate profitability. That same survey also revealed that 57% of respondents are struggling to manage cloud computing spending.
Undeniably, these are numbers that reveal how the implementation of FinOps contributes to a more effective financial management of IT. After all, there is no point in relying on advanced technologies if they are not managed with a focus on improving services, which is essential to increase sales and retain customers.
The more a company manages cloud costs correctly, the greater the chances of leveraging the resources of this technology strategically. Therefore, having integrated finance, IT and business professionals becomes a decisive factor in achieving a good return on investment.
The Evolution of FinOps: From Theory to Practice
Enterprise adoption of FinOps is on the rise, driven by the need for more effective cost management in multi-cloud environments. FinOps is not just about cutting costs; it’s about cost optimization and resource optimization to maximize the value of cloud resource investments.
Data analytics plays a crucial role in FinOps, providing detailed insights that inform informed decisions. With the help of artificial intelligence and generative AI, automation in FinOps can play a significant role in simplifying complex cost allocation and resource allocation processes.
FinOps and Business Culture:
Successfully implementing FinOps in organizations requires a cultural shift where financial responsibility is shared by finance teams, IT teams, and the engineering team. Cross-team collaboration is essential to align financial objectives with software delivery and operational efficiency.
A dedicated team, or a centralized team, is essential to lead the adoption of FinOps and ensure continuous optimization. Finance, together with FinOps stakeholders, should work closely to define core principles and best practices.
FinOps and the Future of the Cloud:
As FinOps grows, companies are exploring more advanced management solutions to address the complexity of cloud cost and variable cloud cost. Cloud cost modeling requires a deep understanding of the cloud business and the cost-saving opportunities it offers.
Cloud finance and cloud finance are becoming areas of focus for cloud-native companies and those in the process of migrating to the cloud. The cloud spend and cloud spending lifecycle requires a proactive approach to optimize costs and optimize costs.
FinOps and Decision Making:
Financial planning and financial management are improved with the use of FinOps reporting and Finops reporting. Informed decisions and decision-making are based on accurate and up-to-date data on resource usage and cloud usage.
The importance of FinOps lies in its ability to provide visibility and control over cloud-related financial processes. By making data-driven decisions, companies can reduce costs, reduce costs, and achieve financial sustainability.
FinOps and Continuous Improvement:
The FinOps Foundation and other organizations are working to drive the cultural shift needed to adopt FinOps. Continuous improvement and financial operations are achieved through the implementation of IT tools and management solutions.
In short, FinOps is an essential approach for any business looking to maximize the value of its cloud investments. By combining cost management, data analytics, and cross-team collaboration, FinOps enables businesses to achieve their financial goals and thrive in the cloud era.
Stay tuned for the benefits of FinOps
The adoption of this methodology provides a series of advantages for the company. One involves cost reduction, which enables more savings and efficiency. It is also worth mentioning that FinOps allows the adoption of a more teamwork-oriented mentality, strengthening the collaborative spirit in the execution of projects.
Another benefit is to boost the company's growth, because it will help to improve the management of financial and human resources. Optimizing technological tools is essential, but this is only feasible when people are properly involved in projects.
If you want to better understand what FinOps is, contact our team. We are available to help you and find the best ways to expand your business!