One of the latest buzzwords in cloud computing is FinOps. It describes “cloud cost optimization” and combines two crucial departments: finance and operations (also called cloud financial management or cloud cost management).
Definition of FinOps
The process of introducing financial accountability to the cloud’s variable spend paradigm enabling distributed teams to balance speed, cost, and quality in the workplace.
If done well, FinOps can assist your company in gaining a better understanding of your cloud costs. Here are a few FinOps strategies to ensure you get the most out of every penny you spend on the cloud:
Decide your FinOps team:
This is by far the most crucial stage when using a FinOps strategy. This group should serve as a governing body that develops KPIs and measurements to aid teams in understanding the unit economics of the company and offers best practices. This team typically reports to executive leadership, and depending on their participation in cloud operations, it should have members from finance, product, and technology or engineering.
Improve cloud visibility:
Establishing cloud cost awareness for all parties involved in the cloud is a crucial FinOps practice. Affected teams want visibility and a clear understanding of how their actions affect cloud expenses. Remember that different groups will perceive cloud pricing differently. Therefore it’s crucial to communicate cost information in a language they can comprehend.
Create a single source for cloud costs:
Create a single location where you always go to check your cloud charges. Each team may use a different product in larger companies, with three to four different cloud cost management solutions. This causes a problem since there is no consistency or consensus in the numbers because each team views cost from a different perspective. CloudArmee’s FinOps services can help right-size the resources and effectively streamline cloud cost management.
Take Advantage of Cost-Saving and Waste-Reduction Techniques:
Utilize the low-hanging fruits, such as reserved instances (RIs) and savings programs for cost optimization, once you have all three components mentioned above. You may also want to consider private pricing agreements, depending on the services you employ. Then, consider waste-reduction strategies.
Rearchitecting your application is your final cost-saving alternative. When switching to the cloud, the majority of businesses lift and shift. A critical stage is re-architecting your application to utilise native AWS Managed services and generate even more savings. However, this should only be done if you’ve built a central governing body with best practices and cost visibility.
Measure unit costs to understand cloud efficiency further:
Cutting costs only to save money is probably not the best use of your engineering team’s time, as the cloud is meant to spur innovation. Similarly, increasing your cloud spending isn’t necessarily a negative thing if your company is expanding and introducing new capabilities. Instead, it’s critical to recognise how effectively you’re utilising the cloud within the framework of your company.
Cost is placed in the context of your expanding and evolving firm by unit cost. For example, you can measure your average cost per customer, user session, transaction, etc., rather than concentrating on the fact that your overall cost increased by 10%. Starting with a single measure that accurately describes your firm is a good approach.
These FinOps best practices can revolutionise your cloud environment, lowering operational expenses and boosting profitability. As you begin your FinOps journey, CloudArmee, a cloud-managed services provider with proven expertise in AWS created especially to assist with cloud cost management, is a crucial tool to have.