Table Of Contents

What Is FinOps?

A practice, a process, a hub; a central body dissolving barriers between different realms of an organization. The fabled combination of engineering and finance teams. The taming of that resource which no digital-native business can survive without: the cloud. FinOps is a many-splendored thing. 

FinOps is the practice of maximizing the ROI of your cloud investment. 

FinOps’s roots go back to roughly 2012, and it gathered serious momentum toward the end of the 2010s, as cloud usage rose exponentially. It takes cues largely from DevOps, another engineering-oriented discipline that seeks to optimize the development, release, and iteration of digital applications. 

Broad organizational uptake of FinOps was marked by the 2019 founding of the FinOps Foundation, now a division of the Linux Foundation. 

As defined by its namesake foundation: “FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.”

What Does That Mean?

  • Maximizing the ROI of your cloud investment. Executives estimate that around30% of their cloud spend is wasted. FinOps seeks to turn every dollar you spend on the cloud into actual business value.
  • Giving different teams a shared language in which to understand and discuss cloud usage. While FinOps primarily centers on aligning engineering and finance teams (the former responsible for building cloud infrastructure, the latter paying for it), the platonic version of FinOps applies to every team in an organization. 

    Given that each team has a different area of expertise, each one has a different lexicon in which they process their work. This produces natural misalignments and gaps in understanding which FinOps fills.
  • Make sure every cloud user in an organization owns and is accountable for their cloud usage. It used to be that a centralized procurement team would review and approve every IT infrastructure purchase. That’s not how it works anymore. Now, IT infrastructure spending is largely decentralized, with purchasing power resting in the hands of everyone who uses the cloud. FinOps makes every cloud user responsible for their cloud usage. 

What Does That Not Mean?

  • Minimizing your cloud spend. A common misconception is that FinOps means spending as little on the cloud as possible. FinOps means spending as little as possible to get the most possible value. It’s an important difference — FinOps aims to quantify the value you get from your cloud spend, not track cloud spend trends in isolation.
  • Only optimizing your cloud spend. Some people conflate “FinOps” and “optimization.” While it’s true that rate optimization — through tools like Reserved Instances (RIs) and Savings Plans (SPs), which all cloud providers offer — is a core domain of FinOps, it’s only one part of a much broader practice.

FinOps is a multifaceted, multidisciplinary process that, in its ideal form, extends to every dimension of your organization. It’s a way for different experts to collaborate over a common, urgent goal: turning cloud spend from an unpredictable liability into a manageable asset.