Arguably, the most important cloud computing trend of 2023 isn't a technology or architecture. It isn't even really a specific practice.
Instead, it's cloud FinOps — a strategy that emphasizes cloud cost optimization. As of 2023, FinOps is exerting major influence on the way many organizations approach cloud computing. It has arguably become more important to cloud strategies than concepts like multicloud or hybrid cloud, key trends from years past.
That raises the question: Why FinOps, and why now? Is FinOps just a new buzzword for an old practice — cloud cost management? Or does FinOps represent a novel approach to cloud cost management, one driven by unique factors that have arisen in the past few years?
To find out, let's explore the cloud FinOps phenomenon and its role in the cloud computing industry at present.
What Is Cloud FinOps?
As you may know if you follow cloud computing news, FinOps is the practice of optimizing cloud spending. The goal of FinOps is to enable organizations to achieve each of the following:
- Understand their current cloud spending trends — a task that can be deeply challenging, given the complexity of cloud bills.
- Identify opportunities to reduce cloud spending without compromising on the performance or reliability of cloud workloads.
- Implement changes to optimize cloud spending.
- Keep monitoring and optimizing cloud spending on an ongoing basis as part of continuous improvement initiatives.
To do these things well, you need a team with expertise in both financial operations and cloud operations. You can't optimize cloud spending without compromising performance unless you understand the technical requirements of cloud workloads. And you can't maintain the necessary level of performance without wasting money unless you understand the nuances of finance, cost planning, cost tracking, and so on.
Hence the term "FinOps," which implies that finance and cloud operations teams must work together to achieve the best cloud performance at the lowest cost.
FinOps: A Cloud-centric Trend
If you think the term "FinOps" is a little misleading because it doesn't seem to have anything to do with cloud spending in particular, you arguably have a point. Based on the term alone, it would be easy to assume that FinOps refers to any type of financial operations or cost optimization initiative, not just those linked to the cloud.
But in practice, FinOps is almost always associated with cloud cost management specifically. If you're trying to optimize spending for other types of environments — such as your on-prem workloads — you're not doing FinOps because FinOps is only for the cloud, or so most of the conversations about FinOps would lead you to believe.
Why the Cloud FinOps Trend, and Why Now?
The term "FinOps" was born at the Cloud Economic Summit in 2019. But businesses cared about cost optimization long before then, of course.
So, why did the conversation surrounding FinOps take off over the past several years? Why weren't businesses making cloud cost optimization a key focus before then?
The answer, I think, involves several factors that, when put together, have turned cloud FinOps into the defining cloud computing trend of 2023.
Disillusionment with cloud spending outcomes
One key factor was probably the realization among many businesses that migrating to the cloud — an endeavor that was a key focus for many companies during the 2010s — didn't magically optimize spending. The cloud offers some important financial advantages, like the ability to pay as you go instead of having to invest capital upfront in infrastructure. But that doesn't necessarily mean your total infrastructure bill in the cloud will be lower than the cost of on-prem infrastructure.
Now that the vast majority of businesses have completed their cloud migrations, many are facing the sobering reality that they are not achieving the financial outcomes they were hoping for.
This realization has driven some businesses to repatriate their workloads by moving them back on-premises. For others, it has spawned interest in FinOps as a cloud cost optimization solution.
Cloud billing complexity
Another disillusioning outcome of cloud migrations for some businesses has been the discovery that figuring out what you're actually spending in the cloud can feel nigh impossible, due to cloud vendors' tremendously complex pricing models and billing policies.
Indeed, even if FinOps practices don't end up reducing your cloud spending, they create value as long as they add visibility to cloud spending practices. By combining financial insights with cloud operations insights, FinOps helps businesses figure out what they're paying for in the cloud and whether they're missing out on any cost-savings opportunities.
The influence of DevOps
Another part of the reason why FinOps became a thing is the influence of DevOps on the way businesses think. Because DevOps emphasizes collaboration between distinct functions — specifically, software development and IT — it paved the way for other collaborative, cross-functional concepts to take hold in modern businesses.
FinOps parallels DevOps in the sense that FinOps is also about uniting two otherwise disparate parts of the business — finance and cloud operations.
The post-pandemic economy
The FinOps term emerged before the COVID-19 pandemic, so it would be inaccurate to say that the economic turbulence of the COVID and post-COVID era spawned the FinOps movement. But it is probably accurate to conclude that increased economic pressures over the past couple of years made FinOps more attractive to more businesses.
When money was cheap, inflation was minimal, and widespread mass layoffs hadn't happened since circa 2008, there was less reason to worry about optimizing cloud spending. But that has now changed, making FinOps a priority for more organizations.
Conclusion
Streamlining costs has long been important to most businesses. But over the past several years, a few key challenges — such as the realization that cloud spending is harder to control than many companies expected, and the turbulence of the post-pandemic economy — have made cloud cost optimization a front-and-center priority for more and more businesses.
Hence why so many people are talking about FinOps today, and will probably continue to do so until cloud cost management becomes less perplexing.
About the author
Christopher Tozzi is a technology analyst with subject matter expertise in cloud computing, application development, open source software, virtualization, containers and more. He also lectures at a major university in the Albany, New York, area. His book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press.
