5 Essential Things Every FinOps Team Needs

Every time your company onboards a new client or releases a new product, your cloud bill will grow. In fact, it doesn’t take a large event at all to see a spike.

Whenever your company changes direction even slightly, it can affect the bottom line. Add to that factors such as economic inflation and increased demand for high-speed, high-power cloud services, and it may seem like each month’s cloud bill is higher than it was before.

If that’s the case for you, you’re not alone. More companies than ever are assembling FinOps teams to fight ever-growing cloud costs.

Well-implemented FinOps teams can indeed save companies money and ensure margins stay healthy even during times of change and unpredictability.

Putting together a cohesive team can take some effort, however, especially if you’re new to the FinOps journey. Thankfully, there’s no reason to start at square one.

As long as your FinOps team has the people, strategies, and tools listed below, they’ll be in a solid position to keep your company’s cloud costs under control.

1. Company-Wide Representation

Not every organization is large enough to warrant having a full-time FinOps team. In medium to large companies, there may be one or a small handful of dedicated, full-time FinOps employees.

Most of the time, however, the FinOps team is a compilation of employees who primarily work other jobs within the company and devote a portion of their time toward FinOps responsibilities as well.

When recruiting employees to join the FinOps team, it’s a good idea to pull representatives from multiple departments. You can start with the finance, product, and engineering departments, as well as any others the company would like to include.

These representatives each bring their own department’s perspectives to the team and act as liaisons with the employees in their home departments. This helps to keep the entire company aligned toward the same financial goals.

Additionally, it helps if these representatives are leaders within their own departments. An engineering lead, for example, would be in a better position to influence the entire engineering team to control costs than would an engineer in a non-leadership role.

Plus, team leaders are typically used to working closely with other departments. For example, a product manager is likely accustomed to collaborating with finance to decide whether a particular feature is worth the cost.

Choosing representatives who already collaborate frequently can make FinOps tasks more seamless and natural.

2. Knowledge Of Cloud Costs And Unit Economics

Department representatives primarily need to bring their department’s perspective to the table, along with an open mind and a willingness to collaborate on managing costs.

If the company will be hiring an outside candidate or choosing a full-time FinOps leader, however, there are some important requirements to keep in mind for this position.

First of all, the FinOps specialist needs to know how cloud costs work in general, including how to track costs and how changing infrastructure and engineering decisions can affect margins.

Secondly, a FinOps leader doesn’t necessarily have to understand the accounting side of finance, but he or she should be familiar with unit economics.

Specifically, they need to know how to find the unit economics of each product or feature given the tools they have to track costs. They should also demonstrate an understanding of why unit economics are so important and how they can be used to make strategic business decisions.

3. A Way To Keep Track Of Cloud Spending

Setting up a FinOps team is moot if your company doesn’t have a way to track costs.

If you can’t measure costs in detail, you won’t know whether your actions are having a positive or negative effect until next month or even next quarter when you get the cloud bill. Even if you do see a reduction in costs, you wouldn’t necessarily understand which decisions led to this result.

To make a sizable difference based on anything besides sheer luck, you have to be able to break your costs down into enough detail to monitor changes and trends.

This means you’ll need granularity not only in terms of what you track — costs for individual products, features, and customers, for example — but also when.

You’ll want to see the effects of your team’s decisions in as close to real time as possible. Otherwise, you’ll always be playing a game of catch-up and you’ll never get ahead of cost issues as they arise.

4. Shared Accountability

When projects don’t go according to budget plans, who is held responsible?

In many companies, executives tend to shift blame toward engineers for spending too much money or toward the finance department for their failure to rein in engineers’ spending and enforce the agreed-upon budget.

If the company employs a dedicated FinOps specialist, that person may come under fire when the company’s results don’t line up with the spending plan.

However, placing blame on one person or department is at best unproductive, and at worst harmful to your company culture. In reality, there are a number of things that could have gone wrong to contribute to the overspending.

Think of all the ways a perfectly balanced FinOps team would work together:

• The product team would devise plans for new products with costs in mind. Ideally, they would thoroughly understand how much their desired product would cost to implement, and they would convey those costs to the rest of the FinOps team.
• The finance department would develop a budget for the project, taking into account the (hopefully accurate) estimates of how much it will cost.
• Anyone involved with pricing and packaging would structure pricing tiers with a healthy margin in mind.
• Engineers would build a robust, efficient product that operates within the financial constraints. To do this, they would have to tag all resources correctly, track their cloud spend in real time, and alert other team members early if they suspect the project will go over-budget.
• Product, finance, and engineering teams would all need to stay nimble and adapt to problems and changes as they come up.
• The FinOps team leader would encourage everyone to stay on track and realign the team when goals start drifting.

If a breakdown occurs in any one of those areas, it’s likely not the fault of just one person or department. Shared accountability keeps everyone working together with the same incentives and avoids introducing strife and tension between team members.

5. An Emphasis On Costs In The Company Culture

Sharing accountability is a crucial part of building a positive company culture about optimizing costs, but it’s not the only factor.

The FinOps Foundation is one of the best resources for building your company’s culture around cost optimization. In fact, it provides an entire framework for building culture throughout each stage of the FinOps journey.

Following this established framework can help your dedicated FinOps specialists and departmental representatives find their place in the overall puzzle.

You Build The team; CloudZero Will Bring The Tools

Assembling a FinOps team is a fairly straightforward exercise; the part you might be struggling with is coming up with a way to track costs in enough detail to be useful.

You could hire yet another team to analyze your AWS reports, figure out which costs belong in which categories, break the results down into unit economics, build a convenient dashboard for easy visualization, and devise a way for all company members to view their relevant information at the appropriate level.

At the end of the day, however, reinventing the wheel costs far more time and money than simply implementing a ready-made solution such as CloudZero.

With CloudXero, your entire company — not just your FinOps team — can be part of the cost conversation.

Each employee can see how his or her decisions affect the company’s bottom line, and the FinOps team can use these insights to build smarter strategies for the future.

CloudZero specialists are also happy to provide consultation for clients who want to take the next steps on their FinOps journeys.

to see the power of CloudZero for yourself.