Financial Operations, or FinOps, is an emerging approach to public cloud-based IT infrastructure management. FinOps is borne out of enterprises’ growing need to keep their cloud processes and applications running, while achieving financial stability and profitability. FinOps is becoming an integral part of an organization’s overall cloud spend optimization strategy.

Operating in the cloud streamlines business processes, accelerates workloads, and improves app performance. But due to the cloud’s flexible nature, users find it easy to consume more cloud resources. Resources equate to money. Uncontrolled consumption of cloud resources is a nightmare for CFOs and finance teams.

FinOps equips enterprises with an aggregation of systems, practices, and culture that allows them to delve deep into their cloud operations and understand cloud costs. This understanding then makes it easy for IT, finance, and business administration departments to work together to meet and address financial and accountability challenges stemming from their cloud spend

The “Inform” Phase

The path towards FinOps maturity comprises three iterative phases — Inform, Optimize and Operate. Diving deep into each phase is essential in truly understanding what FinOps is all about.

An organization can be in various phases of their FinOps journey. Any phase can be repeated again and again, with the goal of improving their FinOps execution. In this article, we are going to dissect the “Inform” phase. To begin implementing FinOps, this phase is your starting point.

In the Inform stage of the FinOps journey, you need to achieve five goals. These are:

  • Visibility
  • Allocation
  • Benchmarking
  • Budgeting
  • Forecasting

Visibility into your cloud infrastructure is essential. Given the flexible and on-demand characteristic of the cloud, as well as customizable pricing schemes and discounts, you need to have visibility to make wise and strategic choices.

Your cloud spend needs to be precisely allocated based on accounts, tags, and business mappings. When you perform allocation correctly, chargeback and showback become quick, simple, and less complicated.

Both your business partners and financial stakeholders look to ensure they are generating ROI without going beyond their budget. This is where budgeting and forecasting spend come in. Information from complete allocation and showback/chargeback fuels both budgeting and forecasting. If you are able to accurately predict your spend, budgeting becomes easy. Thus, surprises are eliminated.

Budget and forecast data are gathered from every iteration. The insights are used to identify benchmarks and success metrics per team.

The Ultimate Goal of the Inform Phase

The Inform phase of the FinOps framework implementation provides you visibility to help allocate cloud spend. Because spending per team and the purpose of their spend becomes transparent, accountability is created. This phase informs individuals on how their spending impacts their cloud bill.

Check out Opsani’s extensive FinOps Guide to learn much more about FinOps.