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Enter Cloud FinOps
As companies enter Level 4 of the Cloud Capability Maturity Model and look to reduce unnecessary costs and make expenditures more predictable (Moonasar, V., & Naicker, V., 2020), they will leverage the practices established by the new discipline of Cloud FinOps. Cloud FinOps, or cloud financial operations, is a set of practices and processes to optimize cloud spending and improve cost efficiency in cloud-based environments.
The primary purpose of Cloud FinOps is to help organizations manage the financial aspects of their cloud deployments and ensure that they are getting the most value for their investment in the cloud.
Optimize cloud spend with FinOps to achieve business objectives
Cloud FinOps is a multidisciplinary approach involving various organizational stakeholders, including finance, operations and IT teams. The goal is to enable these teams to work together to optimize cloud spending and ensure that the organization achieves its business objectives in the most cost-effective way possible (Storment, 2021).
The key objectives of Cloud FinOps include
Cost optimization. Cloud FinOps aims to optimize cloud spending by identifying opportunities to reduce costs and improve efficiency in cloud-based environments.
Cost accountability. Cloud FinOps provides visibility into cloud spending across the organization, enabling finance and operations teams to track and analyze cloud spending and allocate costs to the appropriate departments.
Cost governance. Cloud FinOps provides a framework for managing cloud costs and ensuring that cloud spending is aligned with the organization's overall business objectives.
Continuous improvement. Cloud FinOps is an iterative process that involves ongoing analysis and optimization of cloud spending, enabling organizations to continuously improve their cloud deployments over time.
These Cloud FinOps practices and processes allow organizations to better manage the financial aspects of their cloud deployments and ensure that they are getting the most value for their investment in the cloud. In upcoming blog posts, we will explore hidden cloud costs through the lens of Cloud FinOps.
Cloud FinOps domains
Development
Resilience
Retention
Optimization
A quick look into how Capital One manages its Cloud FinOps
Our tech teams at Capital One put Cloud FinOps processes and practices in place to manage cloud costs. Specifically, we work to:
Understand cloud usage and cost: Through ingestion of the AWS Cost & Utilization Report, Capital One has developed tooling to provide visibility and transparency into cloud spend in a way that makes sense to our business. Used by individual engineers up through the most senior executives, Capital One provides the tooling necessary to create accountability for cloud spend down to the application and resource level.
Track performance: Monthly, a partnership between tech and finance refines the forecast in order to accurately predict any budget variances for problem solving.
Make decisions real-time: Capital One developed real-time machine learning-based anomaly detection process for cloud spend. Which have resulted in anomaly corrections prior to significant financial impact.
Optimize cloud rates: Capital One has implemented an always on process to manage savings plan commitments to maximize value through bulk pre-purchases.
Optimize cloud usage: Capital One uses a set of spend efficiency metrics that allows the central team to communicate with divisions on how well they are using their cloud resources.
Align organizationally: The Capital One CloudX team is made up of a central tech team focused on tools and strategy; a finance team focused on reporting, accounting, forecasting and anomaly detection; and divisional champions who are knowledgeable about their business, opportunities and can influence strategy.
Cloud adoption offers unprecedented capabilities with planning and strategy
The transition to the public cloud offers unprecedented capabilities to the business with the ability to quickly innovate and deliver new products and services to customers. However, it comes at the risk of unexpected costs. To manage these cost challenges, enterprises must carefully plan their cloud adoption strategy, monitor their cloud usage and spending, and take advantage of cost optimization tools and services that cloud service providers offer.
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