Maximizing Your Cloud Financial Operations with FinOps Framework
By Chuck Zink, Director of Technical Services, ITC Federal
I have invited ITC’s Director of Technical Services, Chuck Zink, to provide an overview of the ITC FinOps Framework as you consider using FinOps to maximize your cloud governance approach.
Cloud governance involves multiple disciplines, but cost control has been a hot topic inside companies, industry panels, and implementation teams since cloud computing’s inception. According to the Flexera 2023 State of the Cloud Report, managing cloud spend (82%) surpassed security (79%) for the first time in a decade as the number one Top Cloud Challenge1. Its rank may be attributed to companies becoming more adept at cloud security. Still, this raises an interesting question, when did spending become more important than security?
Industry trackers such as TechMonitor report that nearly 30% of all cloud spending in 2022 was wasted from unmonitored resources, over-provisioning of compute resources, and zombie resources, among others. As more customers increase their exposure to cloud technologies, the need to accurately track and forecast cloud spending increases. The Flexera report also mentions that by the end of 2023, 72% of organizations working with public cloud resources will require FinOps support.
So, what is FinOps exactly?
FinOps is a relatively new approach that brings together members of the finance, technology, and business operations teams to optimize cloud financial management. The approach originated through J.R. Storment and Mike Fuller’s work at Netflix and gained steady momentum. In 2019, FinOps Foundation was established as a community to practice cloud financial management through education, best practices, and standards, and is a central body to promote FinOps discipline.
The ITC Federal FinOps service offering is modeled after the FinOps Foundation and its FinOps framework. Our approach involves working collaboratively with stakeholders, using FinOps best practices, to help build teams while assisting with managing and continually optimizing cloud spend. ITC Federal maintains a team of certified FinOps practitioners and experts to ensure all methodologies align with a cloud service provider (CSP) native services, industry best practices, and customer core standards. Based on the FinOps Foundation “Inform, Optimize, Operate” model, ITC Federal has created a tailorable 5-step framework, as shown in Figure 1, to design a FinOps strategy as a service offering for its customers.
A brief description of the ITC FinOps Framework is provided below.
- Discover: ITC begins by identifying the relevant stakeholders in the organizations and works with them to understand the cloud’s needs and goals. ITC documents business objectives and pain points related to cloud spend. As part of this initial assessment, ITC works with stakeholders to accurately identify and catalog current cloud providers, usage, costs, and trends.
- Assess: Once a clear understanding of the customer’s needs and goals is identified and documented, ITC performs a detailed analysis of the cloud spending and trends in historical data. This analysis identifies areas where a customer could be overspending, underutilizing resources, or using inefficient services.
- Develop: Based on the assessment results, ITC works with stakeholders to develop a customized FinOps strategy that addresses customer-specific needs and goals. The strategy includes comprehensive recommendations for optimizing cloud usage, reducing costs, and improving overall efficiency. We also develop an action plan with this strategy that prioritizes the return on investment (ROI) or other factors directed by the stakeholders, including any CSP-native or third-party cost monitoring tools recommendations.
- Implement: Once the customer approves the FinOps strategy, ITC works with all the associated stakeholders to implement the required changes to their cloud infrastructure, processes, or governance. We typically do this by selecting a pilot, monitoring the implementation results, and providing ongoing support to ensure the strategy is effective.
- Optimize: At the optimization stage, we roll out the implementation at the enterprise level for all other in-scope programs. Since FinOps is a cyclical and iterative process, ITC conducts regular reviews of the FinOps strategy to see that it continues to meet the customer’s needs and goals. FinOps is a continuous improvement framework, so adjusting based on changes in the customer’s cloud usage, technology, or business priorities is vital to its success.
Together, these five phases enable organizations to continuously optimize cloud spend and improve the efficiency of cloud operations. By gathering data, analyzing it, and taking action based on the insights gained, organizations can ensure cloud spending remains aligned with business goals, plans, and policies.
Depending on an organization’s maturity in the FinOps space, we work with the customer’s stakeholders to evolve its FinOps practices incrementally. Employing the FinOps organization model, we typically take an organization through three stages of maturity, depicted in Figure 2 below.
- Crawl: ITC’s FinOps-certified practitioners work with an organization by gathering basic information about its cloud usage and spending, which may involve setting up tagging strategies; basic cost monitoring tools; and gathering data on resource usage. The goal of the Crawl stage is to establish a basic understanding of an organization’s cloud spending.
- Walk: We work to assist the organization in moving beyond basic cost monitoring and begin to optimize its cloud spending, which may involve recommendations on rightsizing instances, using reserved instances, or adjusting usage patterns. The primary goal of the Walk stage is to reduce an organization’s cloud costs while maintaining or improving its cloud performance.
- Run: We assist the organization in establishing ongoing governance processes ensuring its cloud spending remains aligned with its business goals and policies. Supporting this alignment includes processes and strategies in setting up automated cost controls, using third-party tools to optimize cloud spending, and regularly reviewing and updating its cloud usage policies and governance framework. The goal of the Run stage is to continuously optimize an organization’s cloud spending and improve the efficiency of its cloud operations.
The “Crawl, Walk, Run” approach enables organizations to gradually implement the FinOps framework and build their capabilities over time. By starting with basic cost monitoring and gradually moving towards more advanced optimization and governance processes, organizations can ensure that their FinOps practices are well-aligned with their business goals and resources.
Cloud FinOps is becoming increasingly critical as more and more organizations move their workloads to the cloud. ITC Federal FinOps Team has been supporting federal agencies in optimizing their cloud spend to get the best value for their money with a clear, sustainable, and actionable roadmap for success. Leveraging best practices of its FinOps Framework, ITC Federal ensures our customers maximize the benefits of the cloud while minimizing costs and improving overall efficiency.
1Flexera 2023 State of the Cloud Report