In today's fast-paced business landscape, managing cloud costs efficiently has become crucial. To achieve this, organizations are increasingly turning to Cloud FinOps teams to optimize their cloud spend and help realize value from their investment in the cloud.
Hence, building a successful cloud FinOps team involves careful planning and consideration. In this blog post, we will delve into five key factors to consider when building a successful cloud FinOps team.
1. Define your goals and document them in a cloud FinOps charter
The first step in building a successful cloud FinOps team is to have a clear set of goals and objectives. Without a well-defined purpose, your team may struggle to align efforts and demonstrate value to the organization. This is where a cloud FinOps Charter comes into play. A cloud FinOps Charter is a document that outlines the team's mission, goals, strategies, and responsibilities.
Having a cloud FinOps Charter serves several purposes:
- Guidance in uncertainty: It provides a roadmap for the team, helping them stay on course even when faced with uncertainties or challenges.
- Executive buy-in: A well-documented charter can be a powerful tool to secure executive buy-in. It demonstrates that the team's mission is well-defined and aligned with the organization's objectives.
- Prioritization: It helps in prioritizing initiatives and projects that are in line with the defined goals, ensuring that the team's efforts are focused on the most critical areas.
- Efficiency: With a clear roadmap, your team can move faster and make informed decisions, reducing the time and effort spent on unnecessary tasks.
2. Develop a cloud FinOps lexicon
Effective communication is vital in any team, and FinOps is no exception. Developing a FinOps lexicon, or a shared glossary of terms ensures that everyone on the team speaks the same language, reducing misunderstandings and promoting clarity.
Here's why developing a cloud FinOps lexicon is beneficial:
- Clarity: A common lexicon ensures that terms and concepts are consistently understood across the team. This clarity is especially important when dealing with complex financial and technical concepts.
- Efficiency: Team members can communicate more efficiently when they share a common vocabulary. This leads to quicker decision-making and problem-solving.
- Onboarding: New team members can onboard more smoothly when they have access to a shared glossary. It accelerates their understanding of the domain and helps them become productive faster.
- Cross-functional collaboration: When working with other teams, such as IT and finance, a common lexicon facilitates collaboration. It minimizes confusion when discussing financial and operational matters.
To develop a cloud FinOps lexicon, identify key terms and acronyms relevant to cloud FinOps and your organization, create clear and concise definitions for each term, avoiding technical jargon whenever possible. Share the lexicon with the team and ensure that everyone has access to it. Encourage team members to use the lexicon consistently in their communications, documentation, and reporting. See samples of cloud FinOps lexicons here and here
3. Establish a cloud FinOps culture
Creating a FinOps team is not just about hiring individuals with the right skills; it's about fostering a FinOps culture within your organization. This culture should emphasize cost-consciousness, collaboration, and continuous improvement.
Here are things to consider when building a cloud FinOps culture:
- Cross-functional collaboration: Encourage collaboration between IT, finance, and operations teams. Effective communication and cooperation are essential for identifying cost-saving opportunities.
- Training and education: Invest in training and education for your team members and other relevant stakeholders. Ensure everyone understands the importance of cost optimization and their role in achieving it.
- Continuous improvement: Foster a mindset of continuous improvement. Encourage and incentivize team members to regularly review and optimize cloud resources and cost management processes. Use gamification techniques to make it fun, establish quarterly 'Cost Champion' awards for the teams that deliver the greatest cost-efficiency improvements, and share in town halls so others can learn and be encouraged.
- Democratizing cost visibility: Ensure that everyone who uses cloud resources has some level of visibility into the cost of how much their resources cost. This will instill responsibility and foster a culture of financial accountability across the organization.
4. Define a set of KPIs and metrics to measure progress
"What gets measured, gets managed." This holds true for cloud FinOps. To gauge the success of your cloud FinOps team and its cost optimization efforts, it's crucial to define a clear set of KPIs and success metrics that can accurately measure progress and drive financial accountability and value realization in your organization. When defining cloud FinOps metrics, start with metrics that are readily observable: as your team then matures, you can begin to track unit economic metrics. Ensure that you’re not tracking too many metrics at once — limit to key metrics that matter to the business and establish a cadence for continuous feedback and iterate on the metrics as you go.
Here are some metrics to consider:
- Cloud enablement: This is an important metric as many organizations fail to adopt cloud FinOps because of lack of awareness and training. Cloud enablement is measured by dividing the number of business leaders trained or certified by the total number of cloud learners across the organization.
This will help business leaders better understand the value of cloud and how it can be an enabler to drive sustainable business outcomes.
- Cloud allocation: This metric is measured as the percentage of total cloud costs (taggable resources consumed by individual business units, taggable resources shared across multiple business units, and non-taggable resources) allocated to responsible business owners.This metric can be used to support both Showback and Chargeback models and reflects the underlying effectiveness and accuracy of resource tagging and cost attribution to business units.
- Cloud optimization realized savings: This metric is important as it allows the organization to keep a pulse on inefficiencies that exist in the organization and allows businesses to focus on achieving cost savings, thereby capturing the true value of running their workloads in the cloud. It is measured as the ratio of the total cloud services optimized by the total cloud services optimizable.
- Forecast accuracy: Measuring forecast accuracy enables companies to understand what will happen if they do what they plan, and also allows for better control of cloud spend allocations. Forecast accuracy is measured by getting the ratio of actual cloud spend by the annual forecast cloud spend. An effective forecast is one that avoids surprises to company executives and investors.
- FinOps automation: This is measured by evaluating the number of automated recommendations that have been implemented as a percentage of the total list of automated recommendations generated that results in cost savings.This is important because as the organization onboards new workloads to the cloud environment, lack of robust actionable recommendations and monitoring can lead to increased cloud waste.
Remember that the choice of metric(s) should align with your cloud FinOps team's goals and the unique needs of your organization. You can read more about cloud FinOps key metrics here
5. Choose your tooling strategy carefully and reevaluate it frequently
Selecting the right tools for cloud FinOps is critical. However, the cloud technology landscape is constantly evolving, and new tools and services are introduced regularly. Therefore, it is essential to carefully choose your tooling strategy and be prepared to reevaluate it periodically.
Consider these factors when selecting and reevaluating your cloud FinOps tools:
- Scalability: Ensure that the tools can scale with your organization's growth and changing cloud usage patterns.
- Integration: Look for tools that integrate with your existing cloud infrastructure and other relevant systems.
- Cost and ROI: Some tools increase in cost as your cloud consumption grows, while other tools have a fixed cost. Before making a decision, evaluate the cost of the tools and their potential return on investment. Will they help you save more than they cost?
- Customization: Ensure that your tool allows you to customize and categorize your reports and views to show data that is relevant to your organization.
- Technology: A good tool is one that incorporates the latest technology. For example, tools these days have AI/ML features and capabilities that allow you to get the job done more efficiently.
- User-friendliness: Choose tools that are user-friendly and provide actionable insights for your team.
In conclusion, building a successful cloud FinOps team requires careful planning, and a commitment to a culture of cost-consciousness and continuous improvement. Remember that the cloud landscape is ever-changing, so staying agile and adaptable is key to long-term success in cloud FinOps. To learn more about building your cloud FinOps team, reference our whitepaper here.
At Google, we also have a team of cloud FinOps experts dedicated to helping you build your cloud FinOps team using our trusted Cloud FinOps Operating Model. You can find more information about this offering here.