What is FinOps? Why Cloud/DevOps/SRE Engineers Should Care About It!

4 min readJun 16, 2023

You must have heard of Agile and DevOps methodologies, but wait have you been introduced to FinOps Lifecycle?
If NOT read till the end!

What is FinOps:

FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance & business teams to collaborate on a data-driven spending decision.

What is FinOps Lifecycle/Framework:

FinOps, which stands for Financial Operations. It’s just like Agile and DevOps methodologies, the FinOps lifecycle follows a cyclical approach to cloud cost management and optimization.

It involves continuous monitoring, analysis, and optimization of cloud costs throughout the lifecycle of cloud adoption and emphasizes collaboration between finance, technology, and business teams with, iterative improvement of cost management practices.

Or let's say — Collaboration between business and engineering teams.

FinOps isn’t about saving money rather than. FinOps is about making money!

Understanding the FinOps Lifecycle:

The FinOps Lifecycle follows a continuous and iterative process to effectively manage and optimize cloud costs. It consists of three core phases: Inform, Optimize, and Operate.
Let’s delve into each phase:

Inform Phase:

The Inform phase focuses on gathering data, analyzing costs, and providing insights to stakeholders. It involves establishing cost visibility, identifying cost drivers, and promoting a culture of cost awareness.

Examples of activities in the Inform phase include:

Cost Reporting
Cost Allocation
Showback/Chargeback
Cost Optimization Recommendations

Optimize Phase:

The Optimize phase focuses on implementing cost-saving measures and driving efficiency in cloud resource utilization. It involves identifying areas of improvement, implementing optimization strategies, and tracking the impact of those actions.

Examples of activities in the Optimize phase include:

Rightsizing
Spot Instances
Automation and Orchestration
Reserved Instances/Savings Plans

Operate Phase:

The Operate phase focuses on ongoing cost management and governance practices. It involves establishing policies, monitoring costs, and ensuring compliance with cost targets and budgetary constraints.

Examples of activities in the Operate phase include:

Cost Governance
Cost Anomaly Detection
Cost Optimization Reviews
Cost Forecasting

It’s important to note that these phases are not strictly linear, but rather iterative. Organizations continuously cycle through these phases, refining their cost management practices and optimizing their cloud spending over time.

FinOps Principles:

Here are the FinOps Principles!

FinOps Maturity Model:

FinOps Maturity Model is a framework that helps organizations assess their level of maturity in implementing FinOps practices!

[A] Crawl Phase: In the Crawl phase, organizations are in the early stages of adopting FinOps practices. They are focused on establishing cost visibility, gathering data, and building basic cost reporting capabilities. The primary goal is to gain an understanding of cloud costs and begin the journey toward cost optimization.

[B] Walk Phase: In the Walk phase, organizations have made progress in their FinOps journey. They have implemented more advanced cost management practices, such as cost allocation, show back/chargeback, and optimization recommendations. They are actively monitoring and analyzing costs to identify opportunities for optimization.

[C] Run Phase: In the Run phase, organizations have achieved a higher level of maturity in their FinOps practices. They have implemented automation, advanced optimization strategies, and robust cost governance policies. They have established cross-functional collaboration between finance, technology, and business teams to drive cost optimization initiatives.

FinOps Maturity Model is not a one-size-fits-all approach. Each organization’s journey may differ based on their specific goals, resources, and cloud adoption stage.

FinOps Team Structures:

The below diagram demonstrates how organizations operate on the FinOps model!

Why Cloud/DevOps/SRE Engineers Should Care About It:

It helps optimize cloud costs, ensuring efficient resource utilization and eliminating wasteful spending.
It enables better alignment between technology and business goals, leading to more effective decision-making and resource allocation.
It fosters a culture of cost accountability and transparency, empowering engineers to make informed decisions that drive financial efficiency.