Cloud is a non-negotiable for enterprises, but it’s complex and it’s not cheap. Many companies now operate hybrid setups, blending private infrastructure with public cloud services. The convenience of the cloud also makes it easy for teams to spin up a new environment with just a few clicks. Then you have your non-IT teams, like HR or marketing, that bypass IT and buy cloud apps on their own. Not to mention that the pay-as-you-go model, while flexible, makes cloud spending a moving target.
With slow adoption, a lack of standardized tools across teams, and unpredictable costs, understanding your cloud budget is nearly impossible, let alone calculating ROI. FinOps, however, keeps the cost of the cloud in check. FinOps is a growing discipline that combines financial management with cloud strategies to help organizations optimize costs, improve transparency, and get the most value from their cloud investments. This explains why the FinOps market is projected to grow from $13.5 billion to $23.3 billion by 2029.
What is FinOps?
FinOps is a cloud financial management practice designed to help businesses manage their cloud resources efficiently. It brings together engineering, finance, and business teams under one roof to make smarter decisions about cloud spending. Think of FinOps as the financial cousin of DevOps. While DevOps focuses on improving collaboration and agility in software development, FinOps applies the same collaborative mindset to cloud costs.
At its core, FinOps is about balancing three things: speed, cost, and quality. Organizations gain the flexibility to innovate quickly while ensuring they don’t overspend on unnecessary or underutilized cloud resources. This approach allows for continuous tracking, optimization, and operational visibility of cloud expenditures.
It also has the potential to unlock billions (yes, with a b) of savings. Companies that implement FinOps tools and practices could collectively save approximately $21 billion in 2025 alone, with the potential for greater savings in subsequent years.
Key Principles of FinOps
The FinOps Foundation outlines six guiding principles to set businesses up for success with this approach. Here’s what they are and why they matter:
1. Collaboration Is Key
Effective FinOps requires breaking down silos between teams. Engineering, finance, and business teams need to work together to ensure cloud spending aligns with organizational goals.
2. Cloud Decisions Should Deliver Business Value
Saving money isn’t the only goal. The focus should be on maximizing the business impact of cloud investments. Sometimes, this means deciding to spend a bit more to drive innovation or scale operations.
3. Ownership of Cloud Usage
Teams responsible for spinning up cloud resources should also be accountable for their costs. This builds financial accountability across the organization.
4. Real-time, Accessible Reporting
With cloud usage changing by the second, timely financial reporting is essential. Business teams need dashboards and alerts that provide real-time insights into how their cloud decisions impact the bottom line.
5. A Centralized Team to Drive FinOps
Success often starts with a dedicated FinOps team or working group. By providing structure, guidance, and education, this team ensures everyone does their part.
6. Leverage the Cloud’s Variable Cost Model
Unlike traditional IT infrastructure, cloud services operate on a pay-as-you-go basis. FinOps encourages teams to make the most of this flexibility by scaling cloud resources up or down as needed, ensuring better cost efficiency.
FinOps Benefits That Mean Business
More cloud doesn’t necessarily mean more business value. Cloud usage brings tremendous flexibility, but it can also lead to unexpected costs when mismanaged. That’s where FinOps steps in, helping enterprises get their cloud spending under control while making sure every dollar aligns with big-picture goals. Fabulous, right? Let’s dive into more benefits of FinOps:
1. Improved Cloud Cost Management
Instead of scrambling to figure out cloud bills after the fact, FinOps creates a proactive approach to spending. Teams can monitor their usage in near real-time, identify savings opportunities, and reduce waste. Adjusting the capacity of cloud instances or shutting down idle resources can quickly cut costs.
2. Faster Decision-Making
With FinOps, teams gain instant visibility into cloud spending and their business impact, enabling faster and more informed decisions. Whether it’s deciding to scale a product launch or invest in new infrastructure, FinOps ensures that leaders have the data they need to make the right call.
3. Enhanced Financial Accountability
By spreading financial responsibility across teams, FinOps builds a culture of accountability. Engineering teams, for example, aren’t just focusing on performance; they’re also thinking about the financial impact of the resources they’re using.
4. New Opportunities for Innovation
When businesses optimize cloud spending, they can reinvest the savings into new projects. This creates new possibilities for innovation, helping organizations stay competitive during the wild times we live in.
5. Aligning Value with Business Goals
FinOps doesn’t just focus on cutting costs. Instead, it ensures that every dollar spent on cloud resources delivers value. Investing in high-value cloud initiatives is celebrated, as long as it aligns with the broader business goals.
Cloud Financial Management with IBM Cloudability
IBM Cloudability, part of the Apptio suite of tools, is indispensable for organizations looking to adopt FinOps practices. More than just a cloud cost management platform, Cloudability streamlines how businesses track, optimize, and forecast their cloud spending. Who doesn’t love a tool that does the hard stuff for you? Here's how Cloudability supports FinOps:
Visibility Across Multi-Cloud Environments and Real-Time Insights
Cloudability aggregates billing information from multiple cloud providers, giving businesses a single view of their overall cloud costs. With role-based access to cost data, engineers, financial analysts, and business leaders can view insights tailored to their needs. This type of visibility helps teams allocate spending to the right departments or projects, ensuring everyone understands where money is going.
The cloud cost management platform also provides real-time reporting and dashboards. For example, it can detect anomalies or spikes in cloud costs, so teams can act immediately rather than wait for end-of-month reports.
Forecasting, Budgeting, and Recommendations for Optimizing Cloud Spend
Cloudability uses advanced analytics to identify opportunities for optimization. For instance, it might recommend commitment-based discounts like AWS Reserved Instances or Google Committed Use Discounts to reduce costs without sacrificing performance.
Cloudability also provides tools to predict future OpEx and CapEx spending based on past trends and planned usage. It allows finance teams to build better budgets and avoid surprises when cloud bills arrive.
Support for Kubernetes and Advanced Workloads
For companies using advanced technologies like Kubernetes, Cloudability goes a step further by mapping costs to individual workloads and namespaces. This ensures that even the most complex cloud environments are manageable and transparent.
More ROI, Less WTFs With Your Cloud Spend
FinOps isn’t a one-time fix; it’s an ongoing discipline that thrives on strong collaboration across the entire organization. As cloud adoption continues to grow, especially in multi-cloud setups, the need for FinOps will only increase. Businesses that prioritize mastering this practice are better positioned to maximize their cloud investments and turn their IT departments into profit centers.
Praecipio’s data-driven finance management solutions, paired with Apptio’s industry-leading tools, are designed to keep you ahead of the curve. We don’t just help you lower out-of-control cloud costs; we turn those savings into opportunities to fuel innovation and growth. By combining FinOps principles with our Apptio expertise, you keep your cloud spending in check, putting every dollar to work for the business.
Reach out to our team if you are ready to get rid of guesswork and start slaying your cloud cost management.
