Dec 06 2023

Use FinOps to Track and Forecast Cloud Costs

Integrate the practice into existing DevSecOps and platform engineering teams to ensure that spending remains in control.

Federal IT managers who move applications to cloud data centers gain a host of benefits, including cost savings — on real estate, utilities, equipment and more. But those savings can be offset by a huge unknown: the monthly bill for cloud services.

If applications in cloud data centers are not right-sized and revamped for an Infrastructure as a Service (IaaS) or Platform as a Service (PaaS)  environment, costs can quickly get out of control. IT managers may have to repatriate applications to their on-premises data centers if they can’t deliver the promised cost savings.

Enter FinOps.

Financial Operations is an emerging practice among federal IT teams who are responsible for optimizing application costs in cloud data centers. Effective FinOps requires a tight integration with application development and operations and bolts directly onto existing DevOps and platform engineering teams. It adds a financial axis to the app creation and deployment process.

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Consider Different Financial Planning for a Fluid Cloud Environment

This new function may sound vague, but the idea behind FinOps is to look at cloud computing environments from a developer’s point of view. The reason is simple: Basic cost controls don’t work in a cloud environment.

When application operations costs are higher than expected, it’s not possible for the finance team to simply say, “Hey, spend less money on that application.” If the application was not designed and deployed with a specific financial model of cloud computing, then there’s no easy way to predict and control costs.

Agencies that have used the lift-and-shift model of cloud migration have learned this the hard and expensive way. An application development and deployment environment designed for on-premises almost never moves smoothly and economically to cloud IaaS and PaaS.

Overcoming this problem requires rethinking application design and deployment, and bringing FinOps to the table early increases the chances of success. For FinOps to succeed, a team must fulfill three major goals.

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Look at Development from the Financial Point of View

The first, and most important, is strong integration into the development process. FinOps can be a part of the platform engineering segment of the program, delivering tools and standards that optimize the best use of cloud computing resources by developers from a financial point of view.

It can also be linked to the development cycle, helping to guide and advise development teams on architectures that make best use of cloud computing environments.

FinOps should have an understanding of the financial implications of application choices, such as whether to use your own database or a database provided by the cloud vendor. Many cloud vendors have extensive libraries of services, and that can dramatically affect not only how much it costs to deploy an application but how scalable it is.

LEARN MORE: A managed service provider can help monitor costs in a multicloud environment.

Strong FinOps brings that development background to the table and helps developers make informed choices. Cost isn’t the only consideration, but if FinOps isn’t there to fill in the background, then financial factors may be ignored, minimized or misconstrued.

The second role for FinOps is visibility and optimization. When an application is running, FinOps should be able to separate out continuing costs for operations as well as for development and testing to give agency IT teams a view on where the money is actually going.

Cloud computing vendors do not have the in-house organizational context to map costs for an agency’s applications. That’s where FinOps comes in, delivering analysis of costs in a way that makes sense to the agency.

> 40 percent

The amount by which early DevSecOps cost estimates are off

Source: Carnegie Mellon University Software Engineering Institute, “Why Your Software Cost Estimates Change Over Time and How DevSecOps Data Can Help Reduce Cost Risk,” September 2023

Use FinOps Early in the Process to Build in Cost Control

Another aspect of this role is to carefully control the cost of running applications. A FinOps deliverable, for example, is detailed insight into where money is going. With that in hand, the agency can make decisions on how to use resources more economically, improve use and get the most bang for its cloud computing buck.

The third aspect of FinOps is budgeting and forecasting. Influencing DevOps at the development and operations levels is one thing, but agency financial teams still need to know what the final cloud computing bill will be every year.

With a solid visibility into where current costs are, FinOps can help the agency plan for future costs as well as expected growth. Unanticipated costs will always be a part of cloud computing, but FinOps can minimize surprises and smooth the budget and resource allocation process.

FinOps isn’t a panacea for unpredictable cloud computing costs. IT teams and agency managers will always find a little chaos in their day-to-day operations, and that translates into financial bumps.

But with FinOps providing input at the development stage, monitoring application deployment and operations, and delivering current and future budget information to executives, cloud computing can deliver on its promise, efficiently and cost-effectively.

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