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)
In this chapter, we are going to talk about the FinOps Principles and FinOps Teams. Think of the FinOps Principles as a set of guidelines that need to be done as a whole. Doing one without the others won't work. The same is true for doing all but one. Think of the FinOps Principles as North Star goals to guide our activities as we practice FinOps.
The first FinOps Principle is "Teams need to collaborate". Collaboration is the trademark of FinOps, without it people make decisions based on partial data. Continuous improvement and fast decision-making are required to be successful and collaboration is the engine of the practice of FinOps.
The second principle is "The business value of cloud drives decisions". Use unit economics and value-based metrics to demonstrate business impact rather than aggregated cloud spend. Empower teams with data to make conscious trade-off decisions between cost, quality, and speed.
The third principle is "Everyone takes ownership for their cloud usage". Because the cloud decentralized purchasing decisions to the engineers, we need to hold the engineers accountable for their spend. Engineers have to use cost as a new efficiency metric when managing their cloud workloads against their budget.
The fourth principle is "FinOps reports should be accessible and timely". Engineers need near-real-time access to cloud cost data to drive better decisions around utilization. The FinOps team needs to ensure the data is consistent to build trust within the organization. Without trust, engineers won't use what you provide and are unable to make informed decisions.
The fifth principle is "A centralized team drives FinOps". Some activities work better centralized like getting executive support, reporting, automation, and governance, negotiating with cloud providers, and purchasing prepayment products. Some activities need to be decentralized like right-sizing, waste reduction, and forecasting. While a central team cannot perform all activities, it can drive them throughout the organization.
And the sixth principle is "Take advantage of the variable cost model of the cloud". Not having to pay for something when you turn it off is hugely powerful. FinOps needs to change the way we design applications in the cloud. Always look for new technologies that follow this principle and teach your engineers how to use them.
Let's switch gears and talk about FinOps Teams. The FinOps team coordinates efforts across all other groups, so three things are critical here: The FinOps team needs executive support, it has to be located in a part of the organization that allows it to reach out to all other teams, and it has to have strong soft skills to drive efforts, negotiate deliverables, and evangelize and train.
The FinOps team performs the following activities: Champion FinOps Principles, Propagate Best Practices, Coordinate FinOps across the organization, and Perform centralized FinOps functions on behalf of the company.
When looking at the structure of the FinOps team, it can be either a dedicated team that performs FinOps functions full time or it can be a mission-based team where team members have FinOps responsibilities in addition to other jobs. In either case, the FinOps team will need to align to other cloud and finance teams in the organization to be successful.
To summarize FinOps Principles and FinOps Teams: The six FinOps principles need to be viewed as North Star goals and executed as a whole. A centralized FinOps team drives FinOps activities throughout the organization through collaboration, negotiation, and training.
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.