Build a FinOps Strategy to Enable Dynamic Cloud Cost Management
Maximize cloud value to power exponential technologies.
For many organizations, jumping on the cloud bandwagon has not translated into immediate cost savings. Complex pricing models, misallocation of resources, and other hidden expenses have resulted in soaring cloud costs. Our blueprint provides guidance on building a FinOps strategy to improve cloud cost management and prepare your organization for an exponential IT future.
With the accelerated development of exponential technologies, organizations need a dynamic cloud platform to support an autonomous AI-driven ecosystem. Advanced FinOps will be essential for IT and the entire organization to effectively control and optimize cloud expenditures for maximum value.
1. The cloud isn’t cheap – proactively manage your cloud spend to reap its benefits.
The value of the cloud can be found not in direct cost savings, but in benefits such as flexibility, scalability, and speed of delivery. Cloud costs must be closely managed and right-sized to your needs to ensure that cloud spend delivers maximum value.
2. Get your cloud goals in line with the objectives of your organization.
FinOps is not just about cost management. It helps organizations ensure their cloud spending is aligned with their organizational goals – misalignment of resources with goals will stand in the way of cost savings, agility enhancement, and innovation.
3. Take ownership of your cloud ecosystem with effective governance.
Overcome the challenges of cloud cost management with cross-functional FinOps practices that break down the walls between Finance, IT, and other departments. Develop cost management policies, build budgets and benchmarks, and make users accountable for their cloud usage.
4. You must start with the FinOps basics, but don’t stop there.
To power exponential technologies, you’ll need advanced AI-assisted FinOps practices that will enable and expedite your cloud cost management initiatives. Think predictive data analytics to evaluate expenses and extract metrics, and automated systems to autonomize routine cost management tasks.
Use our framework to build a FinOps strategy that boosts cloud value with advanced analytics, forecasting, and automation
Our research guides you through best practices to build a FinOps foundation that provides visibility into resource utilization and implements benchmarking and budgeting to enable forecasting. It also provides step-by-step guidance to adopting AI-powered technologies for proactive cloud resource and cost management and anomaly detection. Use this blueprint, tools, and templates to:
- Develop a FinOps strategic plan that aligns with your financial goals with our three-phase approach.
- Establish financial transparency with strategy and policy templates to streamline granular tracking and analysis of cloud expenditure.
- Employ advanced and predictive data analytics capabilities to evaluate cloud expenses and extract insightful metrics. Support the process with performance tracking, roles and responsibilities, and roadmap templates.
- Determine selection criteria and use cases for automated systems to autonomize routine cloud cost management tasks. Assess solutions with our vendor evaluation workbook.
Build a FinOps Strategy to Enable Dynamic Cloud Cost Management
Maximize cloud value to power exponential technologies.
EXECUTIVE BRIEF
Analyst perspective
Integrate FinOps practices and adopt advanced technology to drive organizational growth.
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The significant increase in cloud adoption has escalated the complexity of cloud resource management. Engineers are being motivated to be innovative, which adds more costs to cloud resources. Organizations should break the silo between Finance and other departments, provide more visibility into their expenditures, and make stakeholders responsible for their use of resources. FinOps practices help break down silos, improve collaboration across the business, and make users accountable for their cloud usage. Transparency is one of the primary FinOps initiatives. The ability to use advanced data analytics relies on effective tagging, robust cost modeling, and efficient budget management. AI-powered cloud cost management tools can help organizations boost their growth through exponentially improving FinOps practices; however, organizations need to apply the core FinOps practices to implement such automation capabilities. This blueprint provides guidance on applying core FinOps initiatives and using advanced capabilities of cloud cost management platforms, aiming to achieve big milestones throughout the exponential IT framework. Mahmoud Ramin, PhD |
Executive summary
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Your Challenge |
Common Obstacles |
Info-Tech’s Approach |
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Info-Tech Insight
Create a strategy to identify systematic practices that improve cloud cost management, then use advanced strategies to enable and expedite these initiatives. Strategic alignment between FinOps best practices and suitable tooling can help your organization thrive in the Exponential IT future.
Introduction: What is Exponential IT?
- The technology curve has recently bent exponentially.
- Generative AI has been the catalyst for this sudden shift, but there are more and more new technologies emerging (e.g. quantum computing, 5G), putting significant pressure on all organizations.
- All IT leaders and organizations are at risk of falling behind if they do not adopt new technologies fast enough.
- Exponential IT is a framework defined by Info-Tech Research Group to instruct IT leaders across all IT domains on how to transform their organization and elevate their value creation capabilities to close the gap between the exponential progression of technological change and the linear progression of IT’s ability to successfully manage that change.
- This blueprint provides guidance on establishing a FinOps strategy by evolving a more dynamic and coordinated approach to cloud cost management.
- CIOs/delegates can use this blueprint to partner with business unit leaders to enable an Exponential IT future in infrastructure and operations.
Your Exponential IT Journey
To keep pace with the exponential technology curve, adopt an Exponential IT mindset and practices. Assess your organization’s readiness and embark on a transformation journey.
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Adopt an Exponential IT Mindset |
Explore the Art of the Possible |
Gauge Your Organizational Readiness |
Build an Exponential IT Roadmap |
Embark on Your Exponential IT Journey |
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Info-Tech resources: Exponential IT Research Center, Research Center Overview, and Keynote |
Info-Tech resources: Exponential IT research blueprints for nine IT domains |
Info-Tech resource: Exponential IT Readiness Diagnostic |
Info-Tech resource: Develop an Exponential IT Roadmap blueprint |
Info-Tech resources: Build a FinOps Strategy to Enable Dynamic Cloud Cost Management |
To access all Exponential IT research, visit the Exponential IT Research Center
Go to this link
Cloud’s value over traditional on-premises computing is not in cost savings
In fact, cloud usually costs more. Its value is in realizing increased value through cloud characteristics.
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Two essential characteristics of the cloud are on-demand self-service and measured service. No longer do infrastructure resources have to be provisioned in advance through spending capital budgets to procure hardware. Cloud is almost pay-as-you-go, meaning you pay as you use resources, whereas on-premises services require a substantial upfront capital expenditure. Cloud services offer dynamic scalability based on real-time demands, while on-premises services do not provide flexible pricing. Cloud enables quicker speed of delivery to reduce time to market. |
Cloud services are very scalable based on demand, providing flexibility. Cloud provides better disaster recovery and business continuity through data backup in multiple locations. Cloud helps with rapid deployment of applications, reducing time to market. Security and compliance in cloud is higher than those of on-premises systems, using state-of-the-art security services. Cloud significantly improves innovation and experimentation. |
Cloud adoption continues to grow despite concerns about cloud cost management
Organizations are expected to demonstrate their cloud spend is allocated productively
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Info-Tech Research Group’s 2024 Future of IT Survey found 72% of Infrastructure respondents are already invested in cloud computing and plan more investment. The outdated assumption that the cloud saves money has been replaced by the more realistic understanding that cloud costs must be managed and right-sized to need to ensure cloud spend provides maximum value. FinOps can help deal with the reality of the variable cost model of the cloud as the balance of organizational expenditure shifts from CapEx to OpEx. |
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Common cloud cost management difficulties
- Organizations often are not right-sizing their cloud resource needs, leading to overprovisioning and high wastage of cloud spend.
- Engineers and developers continuously come up with innovative ideas, which increases cloud consumption. It’s crucial to manage cloud costs effectively while encouraging innovations.
- IT is siloed from other departments, leading to budget overruns and cloud inefficiencies. Breaking down the silo requires efficient communication, strategic objectives, and integrated planning.
- Cost billing complexities, including various taxonomies such as date formats and tagging practices, complicate cost analysis and management. These elements should be standardized to improve visibility and streamline cost tracking.
- Hidden cloud costs such as premium support, additional features, and data transfer increase cloud cost. Organizations need to have a solid understanding of their cloud cost agreements and improve their usage-tracking strategies.
- Cloud cost management requires top-down support. Lack of executive support impairs policy implementation.
- Committed use discounts can offer significant cost savings for organizations, but not knowing about such options can lead to missed opportunities. Organizations should educate stakeholders about these discounts and incorporate them into their procurement strategies.
FinOps is an emerging practice to enhance business value
FinOps enables organizations to efficiently manage cloud spend. With fast-paced enhancements in cloud computing, it is becoming a pivotal piece, not just for IT, but for the whole organization.
FinOps is a collaborative and cross-functional practice that brings together technology, business, and finance to improve cost efficiency while maximizing cloud values. It helps organizations through continuous monitoring and analysis of cloud expenses and leads to better fulfillment of organizational strategies.
From complexity to clarity: FinOps evolution
Before FinOps, organizations faced big challenges with cloud cost management because of the complexity of and rapid changes to cloud services and the lack of visibility into cloud spend. Businesses didn't have the right strategies and technologies to help them allocate the right cost and optimize cloud expenditure.
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February 2019 |
June 2020 |
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FinOps Foundation was established out of Cloudability's Customer Advisory Board meetings as a response to the requirement for a community of practitioners to discuss best practices for FinOps implementation. |
FinOps Foundation merged with Linux Foundation to enhance FinOps offerings. Linux Foundation provided an open-source engine to support the mission of FinOps Foundation. This merger led to a significant improvement of FinOps to help provide best-practice guidelines and education for cloud financial management. |
Key components of FinOps
Accountability: This component ensures clarity in roles and responsibilities for cloud cost management. Through FinOps, teams take ownership of cloud usage and enforce policies to support cost allocation.
Transparency: Visibility involves tracking cloud expenditures and providing insights into cloud costs and services for each team. It helps ensure the analysis output is understandable for all stakeholders.
Optimization: FinOps helps organizations continuously implement processes to reduce waste and enhance cloud spend efficiency through effective resource allocation, better selection of price models, and removing unnecessary services.
Info-Tech Insight
FinOps is not just about cost management: It enables strategic cloud utilization to boost business value. Through FinOps, organizations make sure their cloud spend is aligned with their business goals, resulting in cost savings, agility enhancement, and innovation.
FinOps Maturity Model
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67% of organizations are at the basic maturity level |
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25.5% of organizations are at the medium maturity level |
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Only 7.5% of organizations are at the high maturity level (Economize, 2024) |
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Build the essentials to improve maturity
The path to success in organizations doesn’t come with shortcuts. Developing FinOps could be a long-term endeavor. It is a comprehensive process of cultural shift, requiring time and patience. Bypassing these improvement initiatives can be counterproductive, causing errors, hindering progress, and incurring unpredicted costs. Embrace step-by-step improvement processes, experience, and cultural shift to help achieve Exponential IT goals.
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Crawl |
Walk |
Run |
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Reporting and Spend Allocation |
Vendor invoices + manual reconciliation |
>1 day lag; partial visibility; limited and/or incomplete use of detailed past billing data |
<1 hour or near real-time; full visibility of all spend; integration of detailed and complete past billing data |
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Showback/Chargeback |
Cannot showback/chargeback accurately |
Showback/chargeback based on estimates |
Showback/chargeback reflects actual usage, and teams understand it |
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Budgets and Forecasting |
No budgets or forecasting at the team level |
Budgets and forecasting at the team level |
Teams actively budget, revise forecast, and track current and projected spend against budgets |
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Discounted Pricing |
0-20% utilization of discounted pricing |
40-50% utilization of discounted pricing |
80-100% utilization of discounted pricing |
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Removal of Idle Resources |
Quarterly or less |
Weekly |
Automated based on defined policies |
Source: Storment and Fuller, 2023
Case Study
An e-commerce group employed FinOps best practices to reduce costs and improve visibility into cloud resources.
INDUSTRY: E-commerce
SOURCE: GlobalDots, 2023
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Challenge |
Solution |
Results |
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Following migration to the cloud, a leading
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The organization adopted FinOps best practices to:
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FinOps adoption resulted in the following improvements:
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Info-Tech’s approach
Accountability
Help everyone understand their share of responsibility.
Transparency
Lay the foundation by providing visibility into resource utilization.
Forecasting
Strategize for the future through benchmarking and budgeting.
Implementation
Build an implementation plan for advanced FinOps techniques.
Automation
Optimize efficiency by integrating automation to delve into advanced FinOps.
Info-Tech’s Get Started With FinOps blueprint provides a detailed discussion on breaking down silos and defining responsibilities for a FinOps practice. In this research, we continue with executing FinOps and using automation to streamline FinOps processes.
Info-Tech’s methodology for cloud cost management
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1. Improve Financial Transparency |
2. Enhance Cloud Cost Forecasting |
3. Apply Automation for Operational Agility |
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Phase Steps |
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Phase Outcomes |
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Insight summary
Strategize, innovate, and align
Create a strategy to identify systematic practices that improve cloud cost management, then use advanced strategies to enable and expedite these initiatives. Strategic alignment between FinOps best practices and suitable tooling can help your organization thrive in the Exponential IT future.
Use analytics for a data-driven evaluation
Use advanced data analysis and evaluation to build dashboards for visibility and enable fast feedback loops.
Benchmark for financial forecasting
Use internal benchmarks as a compass to forecast anticipated expenditures and align spending with strategic goals.
Automate to streamline processes
Embrace smart automation to boost operational efficiency and achieve leadership through predictive cloud cost management.
Get detailed insights through precise tagging
Enforce standardized tagging to get a granular visibility into cloud spend.
Go beyond simplification
FinOps process automation is beyond simplifying tasks. It’s a way to proactively analyze cost overruns and acts against inefficiencies.
Blueprint deliverables
Each step of this blueprint is accompanied by supporting deliverables to help you accomplish your goals:
Cloud Cost Management Policy
Use this template as a starting point for addressing policy gaps.
Performance Scorecard Template
Use this template to track and benchmark each team’s cloud performance.
FinOps Vendor Evaluation Workbook
Document your FinOps use cases and features for detailed evaluation of candidate solutions.
FinOps Roles and Terminology Guide
Use this template to document FinOps roles and responsibilities, and catalog common FinOps terms.
FinOps Roadmap
Use this tool to create an actionable plan for your FinOps project.
Key deliverable:
FinOps Strategy Template
Use this template to help visualize and communicate the specifics related to your FinOps practice.
About Info-Tech
Info-Tech Research Group is the world’s fastest-growing information technology research and advisory company, proudly serving over 30,000 IT professionals.
We produce unbiased and highly relevant research to help CIOs and IT leaders make strategic, timely, and well-informed decisions. We partner closely with IT teams to provide everything they need, from actionable tools to analyst guidance, ensuring they deliver measurable results for their organizations.
What Is a Blueprint?
A blueprint is designed to be a roadmap, containing a methodology and the tools and templates you need to solve your IT problems.
Each blueprint can be accompanied by a Guided Implementation that provides you access to our world-class analysts to help you get through the project.
You Get:
- Build a FinOps Strategy to Enable Dynamic Cloud Cost Management Deck
- FinOps Strategy Template
- Cloud Cost Management Policy
- Performance Scorecard
- FinOps Roles and Terminology Guide
- FinOps Roadmap
- FinOps Vendor Evaluation Workbook
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Unlock Sample ResearchContributors
- Angela McCarthy, Senior Manager, Infrastructure and Enterprise Services, NSCC
- Amy Ashby, FinOps Lead, Under Armour
- 6 anonymous external contributors
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Get Started With FinOps
Build a FinOps Strategy to Enable Dynamic Cloud Cost Management
