How cost optimisation and FinOps are different

Post • 4 min read

How’s your FinOps journey going? 

Are you flying along, only paying for what you need and seeing your teams embrace accountability for their cloud use? 

Or have you stalled? Perhaps dealing with shared costs is problematic. Maybe you’re struggling to get engineers to take action. Maybe the wider organisation isn’t on board. Reducing waste and unused resources might seem like a long-off dream.

These are common problems when you think of cost optimisation and FinOps as being synonymous. 

Often, cost optimisation is the whole story (but it shouldn’t be)

The thing is, when you see cost optimisation as the whole story, it’s very easy to find yourself in a position where you can’t quite realise your cost savings potential. 

For example, you might find yourself undertaking periodic DIY and short-term fixes when you spot easy wins. You might regularly analyse your clouds against hyperscaler best-practice reviews. You might call in consultants to find problems and recommend solutions. But those big-ticket savings don’t seem to materialise.

The key to getting momentum is to see cost optimisation as just part of the story rather than the whole story. Because while cost optimisation is a target of FinOps, it’s not a way of getting to the target.

To move into the FinOps fast lane and truly see sustainable savings roll in, you need an iterative cycle (of which optimisation is only one part):

Many organisations find themselves skipping a detailed Inform phase altogether – or looping between the Inform and Optimise phases. When you’re only working in these two phases, you work reactively and miss out on opportunities for cumulative savings. 

As a result, dealing with shared costs is problematic because the left hand doesn’t know what the right hand is doing. Getting engineers to take proactive action is hard because they’re only focused on tackling the short-term fixes. Getting the wider organisation on board and reducing waste and unused resources is difficult because there aren’t systems and processes in place that make this easy to do day-to-day. 

You can see these struggles played out in the State of FinOps Report 2022, where organisations cite these issues as their biggest challenges, as well as finding it hard to accurately forecast spend, enabling automation and aligning internal teams. These are all symptoms of an approach where the Operate phase is missing. 

When you add the Operate phase into the mix, you embed ways of working that make cost optimisation part of the day-to-day. And that’s when you turbo-charge your FinOps.

The Inform phase gives you full visibility

It’s the first step because you need to make sure you can see the whole picture of optimisation opportunities. 

You need the right tools for this. We work with leading cloud management tools that give you a complete view of all your resources and spend across all public clouds and on-prem VMware. You can allocate 100% of costs with automatic showback, and get an easy way to search all your resources and find owners, plus savings recommendations, gamification and benchmarking to get people to act on them.

You also need the right people to help you set KPIs and establish processes, so you have a FinOps vision people can get on board with.

The Optimise phase kick-starts the savings

You have KPIs and savings recommendations, so you can start taking the right steps to reduce costs.

The Operate phase makes cost optimisation part of your culture

This is where theoretical cost savings potential becomes a reality – where everyone can take ownership and responsibility every time. 

Let’s take one chemical company we’re working with. They’d been doing FinOps for some time, and the data told them there were 6-figure savings to be had. But they couldn’t seem to make those savings happen. We helped them diagnose and address issues with the Operate phase. This involved structuring and translating their data into concrete actions that can be done every month. In the process, they’re achieving the incremental benefits that FinOps can bring.

Or take the automotive company we’re working, which is at the very start of their FinOps journey. We’re helping them integrate the operational elements right from the start so they can maximise the returns from day one.

Remember, FinOps is about making money

In short, knowing there are cost reductions on the table is very different from realising them. The key to translating those reductions is to embrace all 3 FinOps phases, not just the cost optimisation. 

And when you do, you unlock more value potential from cloud. Because as the FinOps Foundation says: “If it seems that FinOps is about saving money, then think again. FinOps is about making money.”

To learn more about the FinOps issues that could be slowing you down – and how to fix them, get your copy of our guide Strategic Ways to Cut Cloud Spend (So You Save Serious Money).

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Ilja Summala
Ilja’s passion and tech knowledge help customers transform how they manage infrastructure and develop apps in cloud.
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Group CTO