If you think FinOps is solely about cost savings, it's time for a paradigm shift. At its core, FinOps is a wealth-building strategy that involves skillful management of cloud expenditures. Not only does it contribute to financial prudence, but it also serves as a driver for increased revenue, signifies burgeoning customer base expansion, facilitates a swifter release cadence for products and features, and may even play a pivotal role in the strategic closure of a data center.
The 2023 State of Cloud Cost Intelligence report by CloudZero revealed that only 13% of companies have allocated 75% of their cloud costs, and 87% are unsure who is responsible for what costs and why. This highlights the need for FinOps to be integrated into the culture of organizations to ensure that cloud spending aligns with business goals and objectives.
The Pitfalls of Not Using FinOps
This section explores the pitfalls associated with the absence of FinOps, including delayed financial management practices, inadequate stakeholder engagement, a skewed focus on tactical activities, gaps in essential skills, and a limited understanding of the relationship between cloud costs and business value. Let's dive into the specifics of these pitfalls and outline the path toward effective cloud financial management.
- Delayed Establishment of Mature Cloud Financial Management Practices
Many organizations procrastinate establishing robust cloud financial management practices until their annual cloud spending skyrockets to $100 million. This procrastination deprives them of opportunities for cost optimization and value realization.
- Inadequate Engagement from Business Leaders
Business leaders often join the cloud conversation only when costs breach the $100 million mark annually. This delayed involvement results in a steep learning curve, hindering understanding of cloud economics and its potential for driving business benefits.
- Prioritization of Tactical Activities Over Strategic Initiatives
FinOps teams sometimes focus excessively on operational activities, neglecting more strategic endeavours like providing unit economics, delivering accurate forecasts, and guiding change management programs based on the most significant value potential.
- Lack of Crucial Skill Sets in FinOps Teams
Traditional FinOps teams comprising cloud architects and financial analysts often lack the diverse skill sets necessary for delivering comprehensive value to the business. Predictive analytics skills become imperative for broader impact.
- Limited Understanding of Cloud Unit Economics
A meagre percentage of enterprises clearly understand the relationship between cloud consumption costs and the business value generated by specific use cases. This understanding is foundational for making informed decisions about cloud investments.
Essential Skills for Cloud FinOps Specialists
Navigating the complex landscape of cloud financial operations requires unique skills to ensure effective management and optimization. This segment examines essential skills that distinguish proficient Cloud FinOps specialists. From fostering cross-functional awareness to seamlessly blending technical and financial acumen, these skills form the bedrock of successful Cloud FinOps practices.
- Cross-Functional Awareness
A FinOps specialist should act as a bridge between finance, technology, and operations, understanding and addressing the diverse needs of these crucial business areas.
- Technical and Financial Acumen
The specialist must seamlessly integrate technical and financial skills, providing insightful reporting and driving best practices within the organization.
- Ownership and Accountability
Proactivity in managing cloud costs, optimizing resource usage, and instilling a sense of accountability within the organization are crucial for a FinOps specialist.
- Collaborative and Communicative
Effective collaboration with cross-functional teams and real-time communication between finance and technology are essential for successful FinOps practices.
- Expertise and Leadership
The specialist must lead the charge in driving best practices for cloud financial management, fostering a cost-conscious culture, and making informed decisions aligned with business value.
Alongside the skills mentioned above, a competent FinOps specialist should possess key certifications and attributes:
- Highly organized
- Detail-oriented
- Math skills or a background in finance
- A love of data and driving business outcomes with it
- Clear, effective written and oral communication
- Experience working with FinOps tools (tailored to the organization's stack)
- A cloud-specific certification based on job requirements (GCP, AWS, or Azure)
Choosing a FinOps tool for your organization can be a daunting task. The next post in the cloud FinOps series will explore the various tools and their capabilities.
Ready to start your Cloud FinOps journey? Embark on your journey to cloud financial excellence with confidence. For personalized guidance tailored to your organization's needs, reach out to our seasoned Cloud FinOps specialists today. Let's navigate the complexities together and unlock the full potential of your cloud transformation.
Reader Questions on Optimizing Cloud Costs: Essential Skills for Cloud FinOps Specialists