What Is FinOps?
FinOps, or cloud financial management, is a set of practices and principles that help organizations manage their cloud costs effectively. FinOps brings together teams from finance, operations, and development to collaborate and optimize the financial aspects of cloud usage. It is the financial extension of the DevOps paradigm.
The goal of FinOps is to ensure that organizations can scale their cloud usage while minimizing costs and maximizing value. FinOps achieves this by providing teams with tools, processes, and insights to manage their cloud costs in a more efficient and proactive manner.
Some of the key activities involved in FinOps include tracking and analyzing cloud costs, setting budgets and cost targets, optimizing resource utilization, identifying cost-saving opportunities, and implementing governance and accountability measures to manage costs across the organization.
When using Amazon Web Services (AWS), FinOps best practices can help your organization conserve costs and make the most of your investment in Amazon cloud services.
In this article:
- The Core Principles of FinOps
- 5 Reasons You Should Practice FinOps in AWS
- Free AWS FinOps Tools to Start Your Practice
The Core Principles of FinOps
The core principles of FinOps revolve around collaboration, optimization, and continuous improvement in managing cloud costs and resources. These principles include:
Encourage cross-functional teams to work together in order to align financial goals with operational and technical requirements. Finance, engineering, and operations teams should cooperate to ensure effective cost management, accountability, and better decision-making.
Ensure that all relevant stakeholders have access to real-time, accurate, and comprehensive data about cloud usage and expenses. This enables better decision-making, reduces waste, and helps allocate resources more effectively.
Adopt a continuous and iterative approach to managing cloud costs. Regularly reviewing and analyzing the cost and performance data can help identify areas for improvement and optimization. Teams should incorporate learnings from previous experiences to constantly refine and adjust the cloud infrastructure.
Assign clear responsibilities for cloud cost management across the organization. Prioritizing accountability ensures that there are established mechanisms for measuring and tracking cost performance and that individuals and teams are held accountable for their usage and spending.
Implement a centralized framework for cloud governance, including policies, standards, and guidelines. This ensures consistency in cloud management practices, reduces risks, and facilitates compliance with regulatory requirements.
Leverage automation tools and techniques to streamline cost optimization and management tasks. This reduces manual effort, minimizes errors, and enables teams to focus on higher-value tasks.
Encourage a culture of adaptability and flexibility in managing cloud resources. This involves staying up-to-date with the latest industry trends, cloud services, and pricing models to ensure the organization can quickly adapt and capitalize on new opportunities for cost savings.
5 Reasons You Should Practice FinOps in AWS
Building an AWS FinOps practice is important for several reasons:
- Cost optimization: Establishing an AWS FinOps strategy helps organizations optimize their AWS costs by providing visibility and transparency into AWS expenses, identifying cost drivers, and providing tools to reduce costs. This helps organizations to make informed decisions about their cloud resources and optimize their spending.
- Financial accountability: An AWS FinOps team can help to establish a culture of financial accountability within organizations. This involves collaboration between finance, operations, and technical teams to ensure that cloud resources are used efficiently and that cloud spending is aligned with business objectives.
- Business agility: Bringing FinOps to AWS helps organizations to be more agile by enabling them to quickly adjust their cloud resources based on changing business needs. This allows organizations to rapidly respond to market conditions and to deliver value to customers more quickly.
- Resource optimization: An AWS FinOps practice can enable organizations to optimize their cloud resources by eliminating waste, right-sizing resources, and using reserved instances. This helps to improve the performance and reliability of cloud applications while reducing costs.
- Cost control: To support FinOps practitioners, AWS provides tools and processes for cost allocation, budgeting, and chargeback, enabling organizations to control their AWS costs effectively. This helps to prevent cost overruns and to ensure that cloud spending is within budget.
Free AWS FinOps Tools to Start Your Practice
AWS offers several tools, built into its cloud infrastructure, which can help implement a FinOps strategy.
AWS Cost Explorer
AWS Cost Explorer is a cost management tool that provides AWS users with detailed insights into their usage and cost of AWS services. It allows users to allocate costs to different departments or projects, set budget limits and alerts, and access historical data and forecasts.
AWS Cost Explorer also offers recommendations and insights to help users optimize their spending, such as identifying idle resources and making recommendations on reserved instances. Users can access detailed reports on their AWS usage and cost, including historical data and forecasts.
Additionally, users can set up budget limits and alerts to get notified when their spending exceeds certain thresholds. Cost Explorer provides APIs that allow users to integrate cost and usage data into their own applications and tools.
AWS Budgets is a cost management tool provided by Amazon Web Services (AWS) that helps users to set custom cost and usage budgets for their AWS resources. It enables users to monitor and track their spending against their budget targets, and get alerts when their spending exceeds certain thresholds.
AWS Budgets supports multiple budget types, such as monthly, quarterly, and annual, and can be configured to send notifications via email, SMS, or SNS. It is a useful tool for managing AWS costs and staying within budget limits.
AWS Trusted Advisor
AWS Trusted Advisor is a service that provides recommendations and best practices to help AWS users optimize their AWS infrastructure, improve security, and reduce costs. It analyzes users’ AWS usage and provides actionable insights on areas such as cost optimization, security, fault tolerance, and performance improvement.
Trusted Advisor offers core checks and additional checks for users with Business or Enterprise support plans. By following Trusted Advisor’s recommendations, users can improve the overall efficiency and effectiveness of their AWS resources.
AWS Cost and Usage Reports
AWS Cost and Usage Reports (CUR) is a service that provides detailed information on a user’s AWS costs and usage. CUR generates comprehensive reports that enable users to analyze their AWS costs and usage data, and understand their spending patterns over time.
AWS CUR provides users with a detailed breakdown of their usage and costs, including information on individual AWS services, usage types, and usage dimensions such as region and instance type. It also includes data on reserved instances, discounts, and refunds, and provides users with monthly, hourly, and daily usage data.
Users can access CUR data via Amazon S3, which makes it easy to integrate with third-party tools and services for further analysis and processing. CUR uses the CSV report format by default.
AWS Compute Optimizer
Compute Optimizer analyzes users’ Amazon EC2 and Auto Scaling usage patterns and provides recommendations to optimize their resources for performance and cost. The service uses machine learning algorithms to identify the optimal Amazon EC2 instance type, size, and family to meet users’ specific workload requirements. Compute Optimizer also provides insights into the cost savings and performance improvement that users can achieve by following its recommendations.
AWS Cost Anomaly Detection
AWS Cost Anomaly Detection is a cost management tool that uses machine learning algorithms to identify and alert users to unexpected changes in their AWS costs. The service analyzes users’ AWS usage and cost data to identify anomalies and provides notifications when significant changes occur. Users can set custom thresholds and receive alerts via email, SMS, or SNS. AWS Cost Anomaly Detection helps users to identify and investigate cost anomalies quickly, enabling them to take action to reduce costs and optimize their AWS infrastructure.
Learn more in our detailed guide to FinOps tools. (coming soon)
Support Your AWS FinOps Practice with Spot by NetApp
Free AWS tools can help your organization grow its FinOps practice. However, they may only cover basic cost management capabilities and are siloed to AWS and may not paint a complete picture of your AWS spend.
Spot by NetApp’s portfolio of FinOps products can help provide visibility, actionable insights, and automated cloud cost optimization for single- and multi-cloud environments. Spot Eco can automatically manage, optimize, and purchase reserved instances and Saving Plans, helping to maximize savings and ROI on your cloud spend.
Ready to start building your FinOps practice? Get a free Spot Eco demo to begin saving and optimizing your cloud commitments.