FinOps Foundations: Strategies for Cross-Team Alignment

Introduction

The shift to cloud infrastructure has altered how organizations approach IT-related costs and budgets. As software continues to eat the world, understanding the cost of the cloud and its daunting list of enablement services is critical to understanding core business metrics like cost of goods sold (COGS), gross margins, profitability, and much more. Organizations often run complex hybrid cloud environments that may include combinations of public cloud and private cloud services with multiple providers, further complicating the work of cloud cost management for Engineering and Finance teams.

Although hybrid cloud environments offer flexibility, portability, and scalability, understanding and managing all those costs can get extremely complex. One recent survey noted that two-thirds of companies can’t accurately report unit costs. FinOps has emerged as a set of practices surrounding cloud financial management to promote the idea of teams managing and taking ownership of their own cloud costs. The momentum increase behind the FinOps movement signals that businesses are acutely interested in knowing what drives their cloud and Kubernetes spend, and how they can become more efficient.

The FinOps Foundation defines FinOps as “an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value” through collaboration on data-driven spending decisions. FinOps involves cross-team alignment to collectively manage the entire suite of costs associated with cloud software deployments. Often, a central practice group of key team members collaborate to take ownership of their own cloud spend. The goal of FinOps is faster and more efficient product delivery with greater financial control and visibility, and having those improvements help to drive better outcomes for the business. However, FinOps is a journey and a culture change, not a simple flip of a switch.

Understanding the Importance of Cross-Team Alignment

The first step toward effective FinOps practices is recognizing the importance of cross-team alignment. This starts with breaking down barriers between Engineering and Finance teams. Misalignment often leads to cloud cost confusion, where finance teams struggle to understand the technical aspects of cloud spending, and engineering teams find it challenging to translate their needs into financial terms. By fostering a culture of collaboration and communication, both teams can achieve a shared understanding of cloud costs and work together to optimize spending.

Top 5 Pains When Cross-Team Alignment Isn’t There

1. Siloed Communication: Engineering and Finance teams operating in different information silos can lead to communication breakdown. Maybe Engineering doesn’t quite understand the cost implications of their provisioning choices, and perhaps Finance lacks insight into what, technically speaking, actually drives various aspects of cloud spend.
2. Differing Priorities: Engineering teams prioritize performance and innovation, and they measure things like software quality, and development velocity. Finance teams focus on cost control, budgeting, and forecast accuracy (and doing amazing things with spreadsheets). Misalignment in overlapping or pre-requisite priorities can lead to big-time inefficiencies and friction.
3. Data Inconsistencies: Different teams will be using different tools, and probably different metrics, to track cloud usage and costs. It’s unlikely these tools will integrate nicely with each other. This can lead to inconsistent data, making it difficult to have a single source of truth and complicating everything from decision-making to closing the books on a month.
4. Lack of Shared Understanding: Getting Developers to roll up expenses by cost center and finance analysts to speak Kubernetes isn’t in the cards. The lack of a shared understanding of cloud cost drivers is at the heart of Engineers not understanding the financial impact of their decisions, and why Finance can’t understand why so many cores and clusters are needed. Developing a common language, understanding, and toolset is critical.
5. Change Resistance: Implementing FinOps practices requires a big cultural shift, and resistance can come from everywhere and in many forms. Teams get comfortable with the status quo and don’t want “more work”. Engineering may resist increased financial scrutiny, and Finance might be reluctant to adopt new technical tools and learn about the complicated relationships between cloud resources, cost, and performance.

Alignment Insights from the Engineering Perspective

Finance teams must understand the technical intricacies of cloud costs from the engineering perspective. Engineering teams often focus on performance, scalability, and reliability, which can drive up cloud costs for the sake of peace of mind and risk reduction. By understanding these technical requirements, Finance teams can better appreciate the value of these investments and work with Engineering to find cost-effective solutions. This understanding is important for developing a holistic view of cloud spending and making informed decisions. Ultimately this understanding can help both teams work together to strike a balance where application reliability and performance and the cost of achieving it are acceptable and efficient.

Translating Technical Data for Finance Teams

This translation involves breaking down complex engineering metrics into key performance indicators (KPIs) that align with financial goals. By creating dashboards and reports that highlight these KPIs, Finance teams can gain visibility into cloud spending patterns and identify areas for cost optimization. Clear communication and data visualization are key in bridging the gap between Engineering and Finance. Finance teams, once they understand the moving parts and cost drivers, are adept at optimizing for things like future anticipated spending, making them powerful allies when negotiating commitments and discounts with a cloud service provider.

Implementing and Maintaining FinOps Alignment

Achieving cross-team alignment is not a one-time effort but an ongoing process that requires robust governance and consistently applied cloud cost management practices. Some strategies to begin implementing these practices include:

• Create Shared Goals: Establish shared financial and operational goals that both teams can work towards collaboratively, with a shared understanding of the details.
• Establish Clear Ownership: Assign ownership of cloud resources to specific teams or individuals to track cloud usage accurately, and ensure they have the right tools to do it.
• Set Budgets and Alerts: Implement budgets and set up alerts to monitor cloud spending in real-time and prevent cloud bill overruns. Set alerts and automated reports to catch mistakes before they become expensive ones.
• Automate Cost Management: Leverage cloud cost management tools to streamline processes and reduce manual efforts and the mistakes that come with human intervention. Guardrails and policy checks for things like overprovisioning can go a long way.
• Foster Open Communication: Conduct regular reviews and audits of cloud costs to identify inefficiencies and areas for improvement. Meet regularly with all stakeholders and adopt a common language for measuring and managing cloud costs.
• Educate and Train: Provide training sessions for both Engineering and Finance teams to enhance their understanding of each other’s domains. Conduct “lunch and learn” events to share knowledge and foster better communication between departments.

Implementing a FinOps approach can help organizations gain greater control and visibility over their overall cloud costs. However, without the right tools and technology, FinOps can become unwieldy. Relying on spreadsheets and other manual processes makes FinOps time-consuming and prone to human error. Streamlining FinOps through automation and technology tools will make the entire cloud cost optimization process more efficient and accurate.

Tools to Streamline FinOps

Tools that make Kubernetes costs more visible and trackable help FinOps teams make accurate decisions. Tracking Kubernetes spending through individual cloud provider billing statements can be difficult, especially when a cloud vendor provides Kubernetes spend as a single line item. This type of statement doesn’t provide enough cost visibility for FinOps teams to gain an accurate view of Kubernetes-related costs.

Further, real-time cost visibility is a key element in FinOps for increasing efficiency and innovation. With real-time cost tracking, monitoring, and visibility, FinOps teams can help applications or product owners, and even engineers take ownership of their cloud spend. Accurate monitoring and metrics make it easier for teams to track resources, performance, and application behavior.

Benefits of Kubecost

Kubecost provides insights to organizations running complex Kubernetes environments by providing real-time data for costs, breakdowns, and operational insights. With Kubecost, FinOps teams can create scalable and more efficient ways of assessing complete, accurate, and transparent cost and operational data across multiple Kubernetes environments.

Kubecost provides FinOps teams with the ability to:

• See allocated spend across all native Kubernetes concepts.
• Break down costs by namespace, deployment, service, and more across any major cloud provider or on-prem Kubernetes environment.
• Allocate costs to organizational concepts like team, individual application, product/project, department, or environment for showback or chargeback.
• View costs across multiple clusters—even in multi-cloud environments—in a single view or via a single API endpoint.
• Real-time alerting capabilities for all teams and stakeholders as needed.

Conclusion

Implementing a FinOps practice and achieving cross-team alignment requires a concerted effort from both Engineering and Finance teams. By fostering collaboration, understanding each other’s perspectives, and implementing robust governance practices, organizations can optimize their cloud spending and drive financial efficiency. Get started on your FinOps journey, install Kubecost and start tracking your real-time cloud costs today.