5 Mistakes to Avoid When Starting FinOps

Just when most organizations start to feel confident with how their cloud operations are paving the path to capability and customer growth, warning bells start to sound from finance executives and board members… “Cloud spending is out of control.” “We need to better understand where our cloud costs are going.” “You need to consider how margins will be impacted as we scale.” While these alarms often leave Finance and Engineering in a standoff, the good news is that your company is asking questions about the relationship between cloud costs and financial return. In other words, you are laying the groundwork for FinOps – the strategic practice of optimizing cloud operations for maximum business value at scale. Common FinOps Mistakes and How to Avoid Them Sounds great, right? Maximum business value? Sign me up. However, when organizations embrace the exciting potential of FinOps, they often make early mistakes that paralyze their progress towards achieving their goals. Here are five of the most common mistakes companies face as they get started: Rallying around a silver cost savings bullet One of the common early wins of a FinOps program is cost reduction realized by right-sizing and better rate management. But, too often, companies discover immediate savings and assume they will translate into long term margin improvement with little additional investment. Unfortunately, these savings are usually transient and are quickly reversed if attention moves to other priorities.Savings need to be sustainable. Changes to how your organization reviews, budgets, and plans for cloud investment on an ongoing basis will be required to maintain the financial, architectural, and scalability benefits of FinOps. Not giving FinOps the right home Cloud cost governance is not just an Engineering problem. Nor is it just a Finance problem. While FinOps creates the need for a tighter working relationship between these parts of your organization, there is often ambiguity about who is in charge.Often, due to the fact that organizations are talking about the Cloud, FinOps responsibilities and expectations get thrust upon Engineering. This leads to loading FinOps work onto already overstretched team members, creates conflicting priorities for your program leaders, and sends mixed signals to others in your organization about the importance of FinOps. While it is true that some of the FinOps functions are technical in nature, rate management, analysis, and reporting should be done by a centralized FinOps team that has a view into financial needs that are generally outside the bounds of Engineering concerns. Many technical requirements of the program will be handled by individual Engineering teams, of course, but it’s important that accountability for those requirements comes from outside the Engineering organization. FinOps has unique goals and expectations. When these goals and expectations get lumped in with other accountabilities, they can be viewed as something outside a team’s “real job”. Having a dedicated and properly positioned FinOps team puts the burden of meeting and measuring FinOps goals in well-defined and capable hands. Not appointing one leader to hold teams accountable Even when organizations give FinOps a […]

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