Balancing Financial Responsibility and Technical Innovation

Imagine increasing developer productivity by 30% while reducing project costs by 25%. While this may seem impossible, it’s a realistic goal for organizations implementing FinOps (financial operations)—a data-driven approach to measuring software lifecycle costs.

If done correctly, implementing FinOps can transform developer productivity and optimize cloud costs. Many have found that using FinOps to establish an overlay between finance, product, and engineering teams allows their CFOs and CTOs to achieve cost-saving goals.

Managing cloud costs is not just a technical challenge – it is also a strategic business imperative, especially as organizations invest more money in the cloud. FinOps brings essential financial accountability to the changing cloud spend model.

Collaboration is key to connecting technical and financial areas
There are two approaches to creating a FinOps model: Offer the age-old carrot-and-stick approach. The first promotes a more collaborative and transparent environment, while chastising development teams for overspending most often leads to process breakdown. You want FinOps to consider what developers need to do their jobs, not just monitor their cloud resource usage and how that impacts the company’s bottom line.

Forrester reports that organizations in Australia and New Zealand are considering implementing FinOps practices that aim to foster collaboration, hold users accountable for spending decisions, and provide visibility into spending initiatives across the organization.

A successful FinOps program does not require a dedicated team of full-time FinOps professionals. FinOps serve as a strategic liaison between teams across the organization, such as finance, product, and engineering. A typical FinOps program includes a variety of job roles and functions. For example, a CFO will often work with a technical leader, such as a CTO or VP of engineering, and one or more engineering leaders who collaborate regularly to assess issues, identify new opportunities for efficiency, and create plans to improve performance.

Aligning technical operations with financial goals helps ensure that cloud infrastructure and software development investments are delivering the highest possible return. This can show DevOps teams how their work directly contributes to increased revenue, how they can reduce costs, or both.

Improving financial management
FinOps monitors resource usage from both a user and operational perspective to help optimize developer workflows. One way to achieve this is by analyzing each Continuous Integration (CI) task to identify those that are disproportionately expensive relative to their value or frequency of execution.

Every software development process contains many tasks, each of which requires an execution resource such as a virtual machine (VM) or container. The longer it takes to complete a task, the higher the cost. Developers tend to ignore refactoring application processes when they are already working on them. They won’t know what to refactor without a FinOps model that helps them see which tasks are performing poorly.

Ideally, FinOps creates a self-service model that frees DevOps teams to do their job within a set of guidelines. For example, a policy might prohibit someone from provisioning $100,000 worth of resources on AWS, but they can spin up an EC2 image to run tests. However, if they can justify why they need to provision $100,000 worth of resources, they first submit a request explaining how the project will potentially generate revenue for the company. If approved, they can start working.

Improve cost control and transparency
It’s important for DevOps professionals to understand that FinOps is not meant to be a monitoring mechanism that impedes innovation. Its mission is to provide full visibility into an organization’s cloud usage and spend to help identify opportunities to improve cloud productivity.

Teams in organizations at the beginning of their FinOps journey should focus on defining baseline metrics, such as cloud spend, and identifying other metrics that drive revenue and reduce costs through value stream management. These conversations are critical for FinOps to assess how teams and resources are organized and allocated, and what processes and tools can be implemented to drive change.

In addition to fostering collaboration between finance, technology, and business teams, FinOps analyzes usage patterns and forecasts demand to predict whether resources will need to be increased or decreased to meet future needs before budget overruns occur.

Release the tension
There’s a constant battle between the engineering and operations teams: Engineering’s mission is to drive innovation that generates new revenue streams while creating great customer experiences. The operations team focuses on maximizing productivity while saving money. FinOps eases the tension between the two sides, striking the necessary balance between increasing developer productivity and reducing project spend to align technical efficiency with financial prudence.

FinOps helps DevOps teams think in precise numbers, not subjective costs. It is essential to approach software development with a clear understanding of its financial impact on the organization in order to make informed decisions about whether to continue the project based on these two key criteria: will the project increase revenue or reduce costs?

FinOps isn’t just about cutting costs; it’s also about optimizing the entire software development lifecycle. The goal is to help engineers and operations consider financial efficiency alongside technical innovation, so they understand how their work translates into improved bottom lines for the organization.