FinOps is a portmanteau of “Finance” and “DevOps”, signifying the importance of close collaboration between the finance and IT teams in a large company or public sector body. It concerns the practice of bringing financial accountability to the variable spend model of cloud computing, enabling distributed teams to make business trade-offs between speed, cost, and quality.
Essentially, finance and IT develop a series of best practice measures to quantify and provide insight into the associated cost of cloud usage. The objective is to create a cloud financial model that balances commitment with agility, delivering the needs of the business whilst continually monitoring and optimizing architectures to ensure performance and availability.
The first steps of cloud migration
Cloud migrations represent a major shift in how an organization enables IT and digital initiatives. And this migration is on a strong trajectory in APAC, with the overall cloud spending expected to reach US$124 billion in the APAC region by 2025, according to an IDC report.
The goal of any cloud migration or adoption initiative is broadly to fuel digital transformation by moving the focus away from running technology and towards innovation through technology. One good example is the deployment of cloud-native application platforms like serverless, microservices, which enables IT staff to focus on application development or more business outcome-focused activities rather than “keep the lights on.”
These dynamic environments mean that automation must play a larger role. In general, organizations should seek to develop programs and utilize tools that allow them to continually improve security, automation, cost management, resource utilization
and compliance concurrently, with each optimization creating multiple benefits whenever possible.
Pooling expertise to unlock the best of cloud
What’s the best way for enterprises to organize their strategies and teams to achieve these objectives? As enterprises continue to increase cloud investments, they should also consider how to grow their cloud expertise. Cloud maturity includes centralization and coordinating decision-making across teams.
This is where the establishment of a Cloud Centre of Excellence (CCoE) may be helpful. The benefits include improved governance, better overall operational efficiency, increased confidence in cloud security, increased accountability, a better understanding of cloud bills, easier auditing processes, and more accurate levels of billing departments for their cloud use.
As more firms invest deeper in cloud and the number of cloud users matures, they must consider the business value gained from these resources.
FinOps is a crucial part of cloud transformation
In any cloud deployment, FinOps teams have to balance the need for speed/performance, quality and cost. Just as a person does not need to drive at race car speed to get to the supermarket, the highest level of performance may not be needed 24/7 for every scenario. FinOps will help organizations optimize and right-size their cloud usage, therefore bringing about greater efficiencies in cloud deployment and overall cost.
The awareness and interest in adopting FinOps have grown quickly in APAC in the last 12 months. This comes as enterprises look to cost management measures on the back of high inflation and increased costs, according to this Forbes report.
So, how should companies establish this practice quickly? Partnering with Managed Service Providers (MSPs) is an effective way to implement FinOps, as many of them offer managed cloud and financial operations as their core services. Through their MSPs, companies can take a more holistic approach to increase control, optimize their IT resources and budgets more effectively, and deliver critical services such as network, application, infrastructure, and security. This, in turn, helps to drive the cloud’s business value over time.
Conclusion FinOps is the relatively new practice of driving visibility and bringing financial accountability to the variable spending model of cloud. As a city with historically strong core competence in finance, it is incumbent on Hong Kong’s business leaders to learn more of the language of cloud and drive the market’s FinOps capabilities. This will help eliminate organizational silos and allow different functions – from IT to finance teams – to operate more cohesively. With cloud becoming the defacto platform for enterprises, the proliferation of FinOps will play a crucial role in enabling the city to retain its status as a technology and business hub in the region.
Related article: Hong Kong reveals new plans to boost its fintech hub status
By Jerry Tang, General Manager, Hong Kong and Macao Region, NetApp