Features of FinOps
The FinOps LifeCycle
The course is part of this learning path
As spending on the public cloud is increasing globally, companies are looking for ways to reduce cost and increase efficiency. Financial Operations, or FinOps, is similar to DevOps, which enables companies to accelerate technology delivery. FinOps is a new operating model that maximizes the value of an organization's cloud investment.
In this course, you are going to learn about FinOps Principles and how to build FinOps Teams, as well as the three phases of the FinOps Lifecycle. Specifically, you will learn how to apply FinOps processes and practices to reduce rates and avoid unnecessary cloud costs.
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- Understand what makes the cloud so powerful and why it is changing how businesses operate
- Understand what makes cloud challenging from a technology, management, and financial perspective
- Learn about the six FinOps Principles and how to build successful FinOps Teams
- Learn about FinOps capabilities and how to build a common language within your organization
- Learn about the anatomy of a cloud bill and how to take advantage of the Basic Cloud Equation
- Learn about the three phases of the FinOps Lifecycle and how to build successful processes and practices to reduce rates and avoid cost
This course is for engineers, operations, and Finance people looking to understand how to improve efficiency and reduce cost in the cloud.
to get the most out of this course, you should have a foundational understanding of cloud concepts, specifically how compute and storage are provisioned and billed in the cloud. Some familiarity with rate reduction and cost avoidance methods in the cloud would also be helpful but are not essential.
The FinOps Lifecycle section of this course references materials from:
The Anatomy of a Cloud Bill lecture references materials from:
- Cloud FinOps: Collaborative, Real-Time Cloud Financial Management, O'Reilly Media; 1st edition (January 7, 2020)
The FinOps capabilities are what the FinOps team does in its practice. I will talk about these concepts first and describe how to execute them in the FinOps Lifecycle chapters later.
The first FinOps capability is "Understanding Fully Loaded Costs". Before we can accurately allocate cloud costs to the engineering teams, the billing data needs to be mapped to the organizational hierarchy like for example the cost centers, business units, applications, and environments. Accounts, projects, and tagging often does not fully align with how leadership and Finance think of cloud spend. Also, there are untaggable cloud resources like data transfer costs that need to be apportioned to provide a complete view of cloud cost.
The second FinOps capability is "Enable Real-Time Decision Making". The FinOps team needs to build timely and consistent reports that provide spend data to stakeholders. These reports need to be customized to whoever is viewing them, ideally automatically. Spend anomalies like cost spikes, and cloud waste or potential savings opportunities like underutilized services, need to be clearly communicated to the right people in a timely manner.
The third FinOps capability is "Benchmark Performance". The FinOps team needs to incorporate trending and variance analysis in their reports. Looking at spend data at a point in time is not as useful as looking at a progression over time. Leadership and engineers will need custom reports to show business metrics and KPIs like cost per active customer, cost per widget sold, or cost per streaming hour. The FinOps team also needs to reach out to other companies to evaluate their capabilities against what is current practice in the industry.
The fourth and fifth FinOps capabilities are "Rate Reduction and Cost Avoidance". Rate Reduction refers to anything that reduces cost from public or list pricing like for example Enterprise Agreements, Private Pricing Agreements, and Reservations or Savings Plans. Cost Avoidance refers to any effort that reduces usage like right-sizing, cloud parking, auto scaling, and re-architecting workloads to be more cloud-native to take advantage of containers or serverless.
And the sixth FinOps capability is "Align Plans to the Business". The FinOps team needs to have ongoing reviews with stakeholders about optimization opportunities to drive Cost Avoidance. In addition, the FinOps team needs to develop a framework for decision-making that aligns with the business drivers. This moves cloud cost to the forefront of everyone's thinking.
To summarize the FinOps Capabilities: Cloud cost needs to be aligned with business views and be available to everyone in a timely manner. Business decisions around cloud spend need to be informed by consistent data and driven by metrics and KPIs. Rate Reduction and Cost Avoidance are the primary tools FinOps uses to reduce cloud spend.
Dieter Matzion is a member of Intuit’s Technology Finance team supporting the AWS cost optimization program.
Most recently, Dieter was part of Netflix’s AWS capacity team, where he helped develop Netflix’s rhythm and active management of AWS including cluster management and moving workloads to different instance families.
Prior to Netflix, Dieter spent two years at Google working on the Google Cloud offering focused on capacity planning and resource provisioning. At Google he developed demand-planning models and automation tools for capacity management.
Prior to that, Dieter spent seven years at PayPal in different roles ranging from managing databases, network operations, and batch operations, supporting all systems and processes for the corporate functions at a daily volume of $1.2B.
A native of Germany, Dieter has an M.S. in computer science. When not at work, he prioritizes spending time with family and enjoying the outdoors: hiking, camping, horseback riding, and cave exploration.