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Discover what FinOps is, how it differs from DevOps, and how practicing FinOps can save time and money.
DevOps. DevSecOps. AIOps. NoOps. RevOps. FinOps. It's hard to keep up sometimes. No worries, though. CloudZero sits at the intersection of finance and operations — and we recently joined the FinOps Foundation, which brings together FinOps practitioners to collaborate, learn, and network.
In this guide, we'll share more about FinOps and why it matters to you as a SaaS company that relies on cloud services and OpEx financials.
Table Of Contents
It 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.”
Credit: FinOps Foundation
The FinOps framework goes beyond just reporting spending. It also enables teams to accurately link spending to the people, products, and processes that generate those costs. You can track who gets what and why — and where your cloud budget goes.
For a SaaS company, controlling costs isn’t just about cutting spending. Knowing how much it costs to run specific aspects of your business, and exactly what levers you can pull to change it, can give you a competitive edge.
FinOps can help you answer questions such as:
These are all specific examples of the importance of FinOps to SaaS companies. The FinOps approach takes cost data and breaks it down into granular, actionable insights that tell a story in the context of your business.
So, how do you get a better handle on your cloud spend? You can do this in three phases — the lifecycle of FinOps: Inform, Optimize, and Operate.
That’s the short end of implementing a FinOps framework. The FinOps Foundation breaks down the process further as you can see in this image:
Now, let’s break this FinOps implementation plan down real quick.
Start by researching pain points, operational issues, and other challenges that your organization's teams/business units face. Encourage teams to articulate issues in a clear, concise manner, including how they believe other teams affect them.
For instance, finance might complain that engineering provisioned more cloud resources than necessary. Engineering might feel finance only focuses on the money rather than providing redundancy to minimize service disruptions.
Then assemble a pilot team of engineers, finance, and C-Suite representatives to brainstorm a vision of what you’d like to accomplish. It is okay to ask an external consultant for guidance at this point.
Credit: How to plan a FinOps adoption - FinOps Foundation
The next step is to vividly communicate how adopting a FinOps framework works so you can foster goodwill. You're also trying to prepare all involved mentally about what they'll have to improve in terms of their values and routines to start seeing progress (a cultural shift).
How to promote a cultural shift to FinOps in your organization
You can use this phase to establish your key performance indicators (KPIs), which you’ll use to measure your FinOps progress.
You can also create a roadmap, defining the progression of your FinOps adoption journey: Crawl (starting), Walk (scaling), Run (mature, full-blown cost-conscious operations).
Preparing for FinOps adoption
After laying down the fundamentals, both theoretically and in terms of infrastructure changes, it is time to implement FinOps best practices at a sustainable pace.
Change the basics first. Getting the simple things right will help your team develop the enthusiasm and momentum needed to build more complex workflows.
How to launch a FinOps program in your organization
In this phase, you’ll actively implement several FinOps principles in production. Be sure to compare actual performance against the KPIs you established earlier to gauge progress.
Monitoring continuously will help you identify which areas need more attention to achieve your FinOps goals.
So, what are some FinOps best practices you’ll want to apply right away?
Here are some of the critical FinOps principles to apply right away.
Speaking of FinOps solutions, here are some ways to automate FinOps.
There is a growing number of FinOps tools you can use today. We’ve covered 5 top FinOps platforms you can adopt immediately here. Here are a few you can consider for getting started.
Cost Explorer is available to all AWS customers for free. If your requirements are relatively straightforward, and you don’t need cost visibility across complex, variable infrastructure, Cost Explorer might be enough for you.
Year Founded: 2014
Category: AWS Native Tools
Pricing model: Free with AWS
Best for: Businesses that have relatively straightforward billing and spending patterns
ProsperOps autonomously orchestrates your instances to take advantage of the most cost-effective Savings Plans and Reserved Instances (RIs) — using algorithms, advanced techniques, and continuous execution.
Another benefit is that ProsperOps only charges you a percentage of the savings it generates you — not a percentage of your spend like other tools do.
Year Founded: 2018
Category: Autonomous Savings Management
Pricing model: (as of 2/2021 according to AWS Marketplace): $0.05 per dollar saved on compute and $0.35 per dollar saved on purchased/optimized convertible reserved instances
Best for: Companies looking for a new, modern approach to AWS savings plans and reserved instances
CloudZero provides accurate, granular, and actionable cost insights for finance, engineering, product teams, C-Suite, the board, and even investors.
Anyone can see where money is flowing using this unit economics approach. So, they can tell exactly where to cut unnecessary spending and where to invest more to maximize ROI.
Year Founded: 2016
Category: Cloud Cost Intelligence
Best for: Companies looking to transform spend into business-centric dimensions
Pricing Model: CloudZero pricing is custom to your environment.
Here are some answers to some frequently asked questions about adopting FinOps.
DevOps, a combination of development and operations, is all about automation, breaking down silos, collaboration, and “shifting left”, which means finding and resolving potential engineering issues before they become problems.
Like DevOps, FinOps aims to transform cultures and practices, and it uses various tools. But while DevOps emphasizes delivering high-quality software at speed, FinOps focuses on optimizing engineering cost efficiency.
The end result of FinOps can be savings — but it doesn’t need to be. As the FinOps Foundation puts it, “FinOps is about making money.” FinOps-based decisions can range from pinpointing where to cut costs to improve overall margins to which high-margin products to invest more money in to maximize ROI.
Cody Slingerland, a FinOps certified practitioner, is an avid content creator with over 10 years of experience creating content for SaaS and technology companies. Cody collaborates with internal team members and subject matter experts to create expert-written content on the CloudZero blog.
CloudZero is the only solution that enables you to allocate 100% of your spend in hours — so you can align everyone around cost dimensions that matter to your business.