Three keys to success in your early cloud FinOps planning

According to the FinOps Foundation—a leading authority on the subject—FinOps is “The practice of bringing financial accountability to the variable spend model of the cloud, enabling distributed teams to make business trade-offs between speed, cost, and quality.”

The key word being distributed. Gone are the days of inefficient centralized cloud spending control practices.

Welcome to the cloud operating model that brings accountability to variable spending. FinOps does this by bringing everyone to the same table—technology, finance, and business leadership–sharing the same language and agreeing on best practices.

That is, if it’s done right. And what your organization does in the first 90 days of implementing a FinOps program can determine its success or failure.

The key to a successful cloud journey

A mature FinOps program destroys the legacy paradigm of centralized IT control. It empowers the right people to make the correct business tradeoffs between cost, quality, and speed in the cloud. It’s the key to a successful cloud journey.

But what does it take to get to a mature FinOps program?

While it can take years to fully mature an enterprise FinOps practice, what you do in the first 90 days of the program is critical to its success. It will result in your enterprise evolving into either an effective cloud operating model or continue to perpetuate a decades-old, monolithic operating structure.

The first 90 days of a well-planned FinOps program can be broken into three basic phases:

• Awareness,
• Learning, and
• Becoming cloud savvy

Notice I didn't mention maturity. You can't expect a fully mature institution to be built in 90 days. However, with some basic organizational change management tools, you can create a strong FinOps foundation and an enterprise that is savvy enough to reach a maturity level that delivers all the value the cloud has to offer.

Let's look at each of these phases in more depth.

Awareness

Every organizational change program begins with three key elements: executive support, stakeholder awareness, and a champion to drive the program forward. FinOps is no exception.

Whether your FinOps program is spawned by IT operations, finance or procurement, it needs executive support on both the IT and business side. A FinOps lead, or champion, needs the authority and support to form a team that is:

• Unfettered by legacy IT thinking
• Resilient in the face of resistance
• Aware of tools and approaches for cloud cost-optimization

Ideally, this team is a balanced representation of the enterprise, including members from the business and IT.

Once a FinOps team is assembled, they’ll spend the first 30 days engaging in an awareness campaign across the enterprise that includes creating an Acceptable Use Policy, Tagging Architecture, KPIs, baseline cloud financial reporting visualizations, and an operational RACI. Creating a concise communication plan will outline the approach to collaborating with all FinOps stakeholders on each of these foundational tools and describe how the FinOps team will approach each resource owner regarding a cloud spend show-back cadence.

Even if your ultimate goal is a complete chargeback model of accountability, it's always a good idea to begin your awareness campaign with a show-back model as an educational tool. It gives resource owners time to adapt their budgeting processes to a cloud operating model. This is the time to introduce and educate stakeholders on estimation, budgeting, and the use of alerts to help them manage their cloud costs proactively.

Learning

Once cloud resource owners become aware of costs in the cloud, the learning phase turns the focus onto managing those costs in a way that balances business value with the cost-of-service consumption.

At this point,

• Establish a reporting cadence that lets every stakeholder get comfortable with understanding the importance of cloud costs
• Ensure meetings are informative and helpful rather than punitive
• Be prepared to offer optimization suggestions and further your stakeholders’ education on their respective workloads

Your collaborative goal should be to understand resource usage well enough to establish initial budgets and alerts. Be sure to allow for budgets and alerts to evolve as the stakeholders’ understanding of the cloud evolves and matures.

Take lessons back to the FinOps team and be prepared to adjust the tagging architecture to provide more detailed insights for stakeholders. By this time, stakeholders should have optimized their respective workloads enough that the FinOps team can begin drafting a commitment plan at the aggregate level.

Stay conservative and plan for no more than about 10 to 20 percent commitment coverage at this point. You'll want to stagger your purchases throughout the year to help level your discount efficiency and commitment purchasing.

Cloud savvy

The final stage of the first 90 days of your FinOps program is about becoming a cloud savvy enterprise. Because your FinOps team started involving them early, stakeholders and resource owners have had time to begin understanding the impact of business tradeoffs between cost, quality, and speed.

During this period, the FinOps team works with everyone, including finance, on understanding the impact that optimization actions have had on budget to spend variance and adjust appropriately. You'll also review and revise your operational RACI to reflect lessons learned over the past 60 days and reinforce everyone's operational responsibilities in your new cloud operating model.

The FinOps team will be ready to make your first batch of commitments (around 10 percent coverage) and publish a commitment purchase schedule that shares an aggregate view of the enterprise's intent. This helps everyone budget appropriately.

Conclusion

Every cloud journey reflects the uniqueness and culture of the organization taking that journey. Every successful transition to a cloud operating model reflects a well-considered FinOps program. The first 90 days are critical to that success.

By securing executive support early and focusing on collaboration, communication and learning, your FinOps team can quickly get the entire enterprise thinking and acting cooperatively in a cloud-savvy manner—setting the stage for a mature FinOps practice and a successful journey to a cloud operating model.