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What is FinOps?

FinOps describes operational cloud cost management. You gain transparency over your cloud costs and reduce them sustainably with various FinOps solutions.Get in touch with us
Headerimage Cloud Financial Management (FinOps)
Our FinOps ConsultingOur certified FinOps experts help you to generate the maximum benefit from your cloud costs at any time.Read more
Rising cloud costs chart

Rising costs of cloud usage - what to do?

Based on Gartner, global spending on public cloud services will rise from €270 billion in 2020 to €397 billion by 2022.

On the one hand, this massive growth means jubilation among cloud providers, but on the other hand, companies are spending more and more money on cloud services year after year, which sometimes leads to frustration. This frustration is not caused by the additional expenditure per se, but by the lack of transparency of this additional expenditure and inadequate control. 

Cloud usage challenges:

New models

New subscription models for the procurement of software and services are changing traditional software asset management (license management), away from compliance and towards cost-optimized use.

More offer

New cloud solutions, SaaS, PaaS, IaaS and others are coming onto the market almost daily. Often, the purchase of these solutions is completely bypassed by the company's purchasing department, and a so-called shadow IT is established.

Increasing complexity

Increased use of cloud services also raises complexity to a high level. Costs are broken down to the smallest details and time periods – almost impossible for the end user to understand.

High cost

The cost of cloud services is rising steadily and almost uncontrollably.

Lack of transparency

There is a lack of transparency regarding purchased software services, as some departments purchase software directly without involving IT.

Lack of networking

Networking between business and IT is inadequate and coordination between departments is lacking.

What is FinOps?

Light bulb as a sign for FinOps

According to the FinOps Foundation, FinOps is a methodology for operational cloud cost management. It aims to overcome silos in companies to get maximum value from cloud costs incurred. FinOps combines the expertise of finance, tech and business experts. FinOps is now widely established as the operating model for the cloud.

FinOps thus addresses not only the hard facts such as "what does a VM in the cloud costs me and what benefits does it bring", but also soft facts such as corporate culture or employee collaboration.  

FinOps is literally made up of "finance" and "DevOps". It is a term of art that primarily serves to distinguish it from other, but very similar, topics. Other, far more common terms could be "Cloud Cost Management" or "Cloud Cost Optimization".  

Why FinOps?

To understand why the need and demand for FinOps has arisen in the first place, you have to understand the technical developments and innovations related to cloud usage.

As the chart shows, a lot has changed with the movement towards the cloud, probably changes for many business areas are more comprehensive than they have been for decades. Completely new processes, reporting and, above all, a new understanding of the responsible employees for the changing world must be created.  

Whereas in the "old world" the person in charge in the finance departments and/or controlling departments is the "gatekeepers" for expenditures, this responsibility has shifted to the technical departments simply by ordering cloud services at the push of a button. Thus, it is necessary that the employees from the finance departments learn to understand technical contexts and the employees from the IT departments must now also think about costs.

Simon PletschacherManager IT Performance StrategyTIMETOACT

The three phases of FinOps

Grafik für die drei Phasen von FinOps

The stages of the process are run repetitively and a company's goal should be to improve slightly with each run.

The approach is referred to as "crawl, walk, run." This allows companies to start small and grow steadily, eventually reaching maximum maturity.  

Inform

Ensures transparency in the company by, among other things, allocating costs in the company to the individual teams / cost centers / business units. In this phase, users learn the commercial impact of their actions.

  • Understand Fully Loaded Costs

    • Map spending data to the business
    • Set tag strategy and compliance
    • Create showback and chargeback reporting
    • Define budgets and forecasts
    • Dynamically calculate custom rates and amortization metrics
  • Enable Real Time Decision Making

    • Provide timely and consistent spend/usage data to all stakeholders
    • Identify anomalies
    • Find & remove underutilized services
  • Benchmark Performance

    • Trending & variance analysis
    • Create scorecards, metrics and KPIs
    • Benchmark internally and against "industry" peers

Optimize

In the optimization phase, optimization options are identified, e.g. adjusting the server size to the necessary size (server right sizing).

  • Optimize Usage

    • Rightsizing
    • Workload management
    • Automation
  • Optimize Rates

    • Balance use of various rate types
    • Select discounts that match your flexibility
    • Pre-purchase capacity
    • Custom and volume discounts/sustained usage
    • Utilize marketplace
    • Licensing Optimization

Operate

Creation of the necessary governance and processes to enable the goals of maximizing value. Automations allows efficient and effective repetition of the processes.

  • Align Plans to the Business

    • Mini-business Cases
    • Tracking and trending
    • Communication strategy
    • Ongoing reviews with stakeholders on optimization opportunities
    • Develop a framework for decision making that aligns with the business drivers

FinOps Capabilities

The FinOps Capabilities describe the activities that occur when passing through the three phases. 

Transparency and understanding of the costs involved:

Understanding full costs is always the first step in FinOps adoption and, accordingly, takes place in the "Inform Phase." If an organization does not understand what it is spending, cloud cost optimization cannot occur. In this step, costs are categorized and assigned to the responsible teams. Another important point deals with the tagging of resources. 

Real-time decision making and benchmarking:
Consumption optimization and rate optimization:
Coordination with the business

The FinOps Team

As mentioned earlier, FinOps is a practice that needs to be applied across the company. Different departments use different cloud services, which is why the FinOps team is also made up of stakeholders from different departments. Members could be: Financial Analysts, Developers, Application Managers, Cloud Architects, etc. 

Essential for the implementation of FinOps practices is a central FinOps team that receives support from top management. The central role of the FinOps team should be emphasized; this is necessary in order to be able to compile an overview of all cloud costs incurred in a central location. Organizationally, there is no strict requirement as to where the FinOps team can sit. It makes most sense for the FinOps team to take up its role between Finance and Engineering. 

Headerimage Cloud Financial Management (FinOps)

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Simon Pletschacher
Team Lead SAM & ITAMTIMETOACT Software & Consulting GmbHContact
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Cloud Transformation
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Cloud Transformation

More and more companies turn to Cloud solutions to store their data since they offer more storage space and are accessible from anywhere. Due to the wide range of possible applications, there are different Cloud types: Private, Public, Multi- and Hybrid Cloud.

TIMETOACT
Technologie
Headerbild für IBM SPSS
Technologie

IBM SPSS Modeler

IBM SPSS Modeler is a tool that can be used to model and execute tasks, for example in the field of Data Science and Data Mining, via a graphical user interface.

TIMETOACT
Ansprechpartner
Ansprechpartner

Sascha Wadenpohl

Managing Director

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Anonyme Referenz
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Efficient fleet management due to scalable platform

X-INTEGRATE enables innovative business models for the fleet business by building a transaction-secure and scalable technology platform. Read more.

TIMETOACT
Technologie
Headerbild IBM Cloud Pak for Data System
Technologie

IBM Cloud Pak for Data System

With the Cloud Pak for Data System (CP4DS), IBM provides the optimal hardware for the use of all Cloud Pak for Data functions industry-wide and thus continues the series of ready-configured systems ("Appliance" or "Hyperconverged System").

TIMETOACT
Technologie
Headerbild zu IBM Watson Studio
Technologie

IBM Watson Studio

IBM Watson Studio is an integrated solution for implementing a data science landscape. It helps companies to structure and simplify the process from exploratory analysis to the implementation and operationalisation of the analysis processes.

TIMETOACT
Service
Headerbild zu Application Modernization
Service

Application Modernization

Application Modernization focuses on modernizing existing applications. The key to success in Application Modernization is the strategy and selection of projects.

TIMETOACT
Referenz
Referenz

Flexibility in the data evaluation of a theme park

With the support of TIMETOACT, an theme park in Germany has been using TM1 for many years in different areas of the company to carry out reporting, analysis and planning processes easily and flexibly.

TIMETOACT
Technologie
HCL Digital Xperience
Technologie

HCL Digital Xperience

A portal server is particularly suitable for companies that operate many online services and applications. Several portal pages can be placed and wired together via the "portlet wiring".

TIMETOACT
Technologie
HCL Connections Engagement Center
Technologie

HCL Connections

HCL Connections is a leading social networking platform that lets you get your work done quickly and easily.

TIMETOACT
Service
Headerbild zu Lizenzanalyse und Lizenzberatung.
Service

License analysis and license consulting

Only well-founded information can serve as a basis for meaningful decisions or budgeting. Therefore, we are happy to offer you an inventory of your licenses and our experts will also analyze your infrastructure.

TIMETOACT
Referenz
Referenz

Heras: Microsoft cost savings despite price increase

in order to save costs for Microsoft Azure and Microsoft 365, Heras chose the TIMETOACT cost optimization approach for Microsoft.

TIMETOACT
Ansprechpartner
Ansprechpartner

Christian Luxem

Head of Collaboration Solutions

TIMETOACT
Service
Teaserbild zu IT-Strategie Beratung
Service

IT strategy – A clear goal and the way to achieve it

The IT strategy provides you with the plan for the long-term development of your IT organisation, necessary technologies, processes and digital culture.