In the 2000s, DevOps came to disrupt the culture of software development, bringing operations teams closer to engineers. In the mid-2010s, the siloing of IT, finance and procurement created new complexities with the emergence of the cloud. FinOps is needed in organizations facing these challenges.
Scalability, self-service, On-Demand… the demands of the cloud have led to one undeniable fact: today an engineer can buy servers at the click of a button or increase server resources programmatically. All this without going through the purchase validation stage.
In companies, the roles of CIOSs, the CFO and Purchasing have evolved by ricochet.
In the pre-cloud era, the question of costs was not at the heart of the concerns of the CIO. Engineers were looking at the notion of performance as a priority. But they had to buy equipment and could not always get new servers.
Before the cloud, cost was not a major concern for IT departments
Today they can buy power at any time, at very affordable rates without going through the purchasing department. This change has given a new dimension to their work: to be “good soldiers”, they must take into account the costs associated with the choice of infrastructure and its real impact on the business. Not easy when you are mainly concerned with deliverables. But little by little they discover that the notion of cost is also a criterion of efficiency. And engineers hate inefficiency!
In the pre-cloud era, CFOs were focused primarily on quarterly financial indicators, considering IT as a pure cost center. Finance and IT must now work closely together, especially to target the cloud investments that will best support growth and innovation.
Finance and IT must now work closely together.
Financial managers have moved from opaque and rigid Capex reporting to transparent and fluid Opex forecasts. They are now turning to partners who – like Lucernys – fully understand the challenges of the cloud and know how to identify truly strategic IT investments, especially those that generate revenue for the organization. They have a better grasp of the nuances of the cloud environment, which allows them to more finely break down expenses that can affect the company’s results.
In the pre-cloud era, the purchasing department strictly controlled the expenses. He exercised strong power with the sacrosanct validation of purchase orders. From now on the
purchasing
are focusing their efforts on the strategy to follow with the big cloud players such as AWS, Google Cloud or Microsoft Azure to limit “pirate” spending and get the best conditions for what the engineers really need.
Today, jobs related to the capacity management of good old datacenters are joining the functions of
Financial Planning & Analysis
(FP&A). Procurement’s role is to monitor cloud spending, ensure it is optimized, find leverage and be meticulous in making adjustments. This is the right way to do FinOps.
This alliance between the finance, purchasing and IT departments – between which a close collaboration is established – favors an unprecedented integration between the IT and finance teams. The organization is moving from a centralized control model to a shared responsibility model.
Organizations are moving from a centralized control model to a shared responsibility model.
As with DevOps, FinOps requires a new way of doing business and the dissolution of the silos in which services had become locked. Much more than a new framework, FinOps is a cultural shift that has been observed over the past few years. By giving birth to FinOps, the cloud accelerates the transformation that DevOps had initiated in organizations.
FinOps is a true cultural shift.
What are the costs for those who go without FinOps?
If you don’t deploy FinOps, you run the risk of seeing cloud costs soar and IT innovation efforts wasted by poorly controlled spending. In short, it is to impact the company’s margins by letting production costs slip.
Controlling cloud spending requires rigorous management and close collaboration between IT and Finance teams on a daily basis.
The main challenge of FinOps is its novelty, as the skills to deploy it in organizations are scarce, and the recognized implementation procedures are still non-existent.
This article is based on content from the Finops Foundation.
Lucernys has developed a FinOps offer dedicated to cloud computing in order to
optimize the economic performance of the cloud
. Lucernys provides insight into the performance, security and availability of cloud infrastructures, in addition to purely financial analysis. With FinOps lighting, the digital metamorphosis can be mastered.
