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The Three FinOps Operating Stages

13 May 2022

This third and final installment of the Vitado Guide to FinOps series builds upon the stakeholders and requirements for successful FinOps explained in the Certero Guide to FinOps Blog#2 and explores the three operating stages of the FinOps process.

What are the FinOps Stages?

Once you have your FinOps stakeholders selected, it’s time to put them to work. The FinOps framework has three key stages;

1. Inform: Understanding Fully-Loaded Cloud Costs and Benchmarking Performance

2. Optimize: Enabling Real-Time Decision Making for Cost Avoidance and Optimization

3. Operate Right-size, Realign and Review

Inform: Understanding Fully-Loaded Cloud Costs and Benchmarking Performance

The inform stage is around understanding the current state of your cloud environment. For this you need fundamental visibility of cloud, across multiple cloud vendors. Your Multi-Cloud management solution should provide you with the confidence that:

  • All cloud assets are visible
  • Cloud costs are captured
  • You’re informed on the allocation of resources
  • You are aware of the state of cloud governance
  • You are fully informed on cloud cost accountability

The ownership responsibility of cloud assets is increasingly moving closer to the business function driving the requirement. The organizational units – business ‘teams’ or ‘groups’ could be anything – projects, applications, services, business units etc. FinOps process ensures that cloud assets are correctly captured, tagged and are managed efficiently, informing the appropriate business group as to ‘what’ they’re spending and ‘how’, so that the group is accountable for the ‘why’.

 

Set Tagging Strategy, Governance & Compliance

To begin understanding cost ownership you must first implement an effective tagging strategy across your cloud estate, as best practices is to allocate tags to cost-centers. A collaborative approach is needed to define standards in conjunction with a Cloud Asset Management solution, enabling the health and state of these standards to be actively reported upon for continued governance.

 

Align Spend Data to Business Units and Assign Accountability

Once tagging has been implemented you should have the data available to provide transparency and accountability for organizational business units where required. This allows individual business units to understand the cost of their actions in the cloud. With costs assigned to each of the business budgets, department stakeholders will be more inclined to remove resources when no longer needed and manage consumption.

 

Define Budgets & Forecasts

Through their access to accurate cloud data, FinOps teams should be able to accurately create budgets and forecasting for current and future cloud projects, removing some of the unpredictability of the cloud and supporting cost and efficient resource re-allocation through informed decisions.

 

Dynamically Calculate Custom Rates & Amortization Metrics

Enable optimization through the identification of possible discounts based upon volume, usage or reserved-capacity planning.

 

Create ‘Scorecards’, Metrics & KPI’s

The creation of internal cost reports where business units are benchmarked and scored against each other as well as industry peers, can help to provide perspective on how efficiently each unit consumes cloud resources, driving greater accountability.

 

Understating & Allocating Shared Costs

It’s common that a significant portion of any Cloud environment costs are shared across multiple business units, projects or applications. It is therefore important to identify and allocate these costs appropriately, to achieve a true total cost and benchmark shared resource cost for each individual business unit.

 

Operate Cloud: Right-size, Realign and Review

The final \stage in the cycle is the Operate stage which sets us up to act. In this stage you will right-size your applications, realign your goals to suit business needs and review processes, policies and cloud data. This is the time to refine the shared goals of business, technical and financial stakeholders, working towards continuous improvement with continuously tested, evolving processes. Perform the optimization processes on targets identified during the Optimize phase and enabling automation where possible, will not only reduce manual effort but also the risk of human error.

 

Utilize Marketplace

Perform license optimization, balance the use of various rate types, select discounts that match your flexibility, plan and pre-purchase capacity, get custom, volume and sustained usage discounts. This pause and review process allows you to stop and take a fresh look at the way you are purchasing cloud resources.

 

Align Plans to the Business

Create mini-business cases to evaluate cost / benefit analysis and ensure the cloud strategy aligns to the business goals. Develop a framework for decision making that aligns with business drivers. Track and trend cloud assets. Communicate strategy and perform constant reviews with stakeholders on strategies for further optimization.

 

Right-size Cloud Resources

During this phase engineers should take the recommendations that the FinOps team have previously identified and review them, deciding which are suitable to be implemented.

 

Optimize: Enable Real-Time Decision Making for Cost Avoidance and Optimization

The Informing stage is about empowering teams to make the right optimization choices in almost real-time, based on business need and resulting in cost-avoidance as well as cost optimization. Optimization best practices would include:

 

Identifying & Eliminating Underutilized Services

An essential insight from your Cloud Optimization Solution is comprehensive reporting which enables you to quickly identify underutilized resources and through tagging standards, understand who and what these resources are for. The FinOps team can report on this in near real-time, enabling business owners to take fast, appropriate actions and capture cost savings.

 

Provide Timely, Consistent Spend & Usage Data to all Stakeholders

The consistency and regularity of reporting is important to keep stakeholders engaged. Enterprise-level Cloud Optimization solutions, such as Vitado by Certero, open-up the visibility of these reports (as well as the underlying data) to stakeholders across the FinOps technical, operational and financial/procurement functions.

 

Reporting and Analyzing Insights

It should be a live information source that can be readily accessed directly, precisely as needed. This allows for the opening-up of information through collaborative access to a single source of information. This crucial capability frees-up the business to move forward with intelligence and agility.

 

Identifying Anomalies

Quickly identifying and alerting engineers to any unexpected costs or usage spikes is essential to identifying and preventing unnecessary costs – often mistakes that can be quickly addressed. Cloud Management solutions that can proactively alert you, keep you one step ahead and reduce bill shock.

 

Reviewing and Identifying Discounts and Multi-Cloud Advantages

Constant measurement of usage, volume, and reserved capacity planning will enable FinOps to identify advantageous discounts or potentially better commercial and performance models across other cloud providers.

 

Identify Right-sizing, Workload Management & Automation

Efficiently planning, implementing and managing migrations to the cloud and using automation to turn-off unused resources will all help to match cloud resources and costs to the business need and value they are providing.

 

How Vitado by Certero Can Help

Good information, when readily available, enables good, safe decision making. Vitado can help to inform FinOps teams on the status and health of multi-Cloud environments through the Vitado by Certero solution.

Vitado does this across multiple Cloud vendors, enabling teams to ‘see’ the full picture through one solution and be able to report holistically on cost, utilization, potential for optimization and how well governance processes such as tagging standards, are being upheld.

The early identification and alerting stakeholders to any discrepancies, can readily translate to cost-savings in the Cloud, as well as supporting Security and other essential governance processes.

Cloud is also only one element of total IT and the Certero unified platform approach to viewing and managing assets breaks-down frustrating data silos, bringing all your IT asset data and intelligence together into a ‘single source of the truth’, covering full enterprise-wide scope of on-premises hardware, software, devices everywhere, SaaS and, Cloud. All simply unified, giving you the full picture and unity of understanding across operational and leadership teams as everyone can simply work to the same complete information source.

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How Vitado can help

Vitado offer helpful cloud management services and a unified technology platform to provide the full visibility and proactive alerting to gaps in processes and standards as outlined above. To find out more about the Vitado solution, to arrange a demo or to speak to your local Vitado team about any of our services, simply contact us today.

Find out more:

 

Vitado Guide to FinOps Blog#2: How to Gain Sponsorship and Implement a New Structure

 

Complete Guide to Cloud Tagging– Download the e-book

 

Contact Vitado – Vitado has a global team of experts in managing IT costs, so if you want to begin solving your technology challenges, our unique technology and services are here to help.

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