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So as it goes… the common theme amongst many a business or technology leader is that the cloud is expensive and hence, we need to create a FinOps discipline. Just like Tribbles from the Original Star Trek episode, costs keep multiplying at a phenomenal rate in the cloud. So we often think of FinOps as the solution to tame these tribbles.
Star Trek: The Original Series episode, “The Trouble with Tribbles”
But to better understand FinOps, what if we start by turning this picture around. What if the premise is not to cut cloud expenditure, but to increase it. Not just by a little but by a lot! And not just once or twice, but to continuously see a 20% growth of cloud cost year on year.
Why would anyone want this you might ask? Well, what if increasing cloud consumption (and hence costs) meant more users, more transactions and more services being consumed; hence more revenue! And while we achieve, more, more and even more! We need to constantly ask ourselves, are we still being efficient.
This cycle of growing (increasing demand), whilst looking for ways to optimise costs for a service have existed in all businesses for quite some time. The logical first step is to make things visible and collect data, and from this derive a heat-map of where the (cloud) business is potentially inefficient. This may be in the form of understanding patterns like sudden spikes in consumption, alarms indicating consumption is exceeding assigned budgets or simply cloud services that no longer make economic sense and are not profitable.
Driving and monitoring efficiency is important. The power of good FinOps is that business functions evolve with technology evolution.
The doing part (of making/keeping things efficient) requires a suitable methodology to support change and continuous improvement. For example, LEAN Management, namely because of it’s close relationship to TQM (total quality management). Which was leveraged in the car industry during the 80s and 90s, to take the ethos that the costs of production, quality and price are all related and each needs to be managed in union to reach standards of excellent customer satisfaction.
The dangers and wrong turns that FinOps often takes is to get too narrowly focused on simply cutting expenditure without understanding it. This can lead to a circle of finger pointing and chasing problems that are not tangibly and spiral out of control into a negative cost cutting cycle.
The best way to avoid this is to unify functions across a business and support their involvement in FinOps. Is marketing running any promotional campaigns that might spike demand? Are sales focusing on growth with new product features or a new release? Does the Finance team know the fixed and variable costs of a particular project and hence the criteria to make it profitable? Can cross department processes be harmonised to be less chatty or be optimised to only consume on demand? Data needs context, and context can help describe a strategy or intention. Context can only be drawn by bringing people together.
Themes such as pricing, quality and demand may also become significantly easier to manage with well-informed decisions.
Making (cloud) businesses efficient requires a rethink and union of different departments. A big misnomer is that migration to the cloud is all about migrating CapEx to OpEx if IT infrastructure, whereas a more accurate description would be, it is the evolution and innovation of the accounting and operating functions of many business functions towards collaboration and cross pollination of ideas to fuel problem solving and balancing the fine art of keeping things (including the cloud consumption) efficient.
The role of FinOps is not to run wild with trying to cut cloud consumption costs, but rather making cloud consumption efficient. This can only be achieved with sense making and a holistic perspective of the business. With variables needed from sales, marketing, growth strategy and of course finance... to connect all the dots, consistently and often.
This article is my 2nd article in my series on cloud. Previous article: The cloud is Sh.., long live the cloud!
Will endeavour to follow up with an article detailing some use case examples within FinOps soon.