FinOps—Lifting the Bar on the Value of Cloud

Despite its promise of efficiency and flexibility, the variable cost model of cloud computing often results in poor financial outcomes. Unused resources, overprovisioning and a lack of cost visibility result in budget overruns and missed opportunities for value creation.

Many organisations struggle to align cloud spending with business objectives, turning what should be a competitive advantage into a financial burden. This is where FinOps comes in—a disciplined approach to managing cloud spending through work practices and behaviours.

By applying FinOps practices, businesses can regain control, reduce waste, and ensure their cloud investments deliver the value they should.

Research shows this is a widespread problem

Market research^1,2 suggests that most organisations could save between 20% and 40% of their cloud spend with improvements to cloud cost management. The inefficiency can be attributed to shortfalls in a range of work practices including:

• failing to optimise workloads
• making decisions without timely, quality and relevant data
• misallocation of spending and inaccurate forecasting
• lack of architecture, policy and governance frameworks and definition
• not following a well-defined RACI structure (Responsible, Accountable, Consulted and Informed)
• neglecting investment in learning and engagement.

The research also shows cloud spending is increasing rapidly, with the use of data analytics, SaaS and AI solutions prominently driving growth. At this growth rate the problem will get significantly worse if it’s not fixed.

We need a new collaborative approach

To truly harness the value of cloud investment, we need to shift from a reactive approach to managing cost, to a proactive strategy. Central to this strategy is how we engage capabilities across the business in good operational and financial work practices.

Let's use reserving cloud resources and savings plans as an example. These pricing mechanisms are used by cloud vendors to motivate customers to make term-based resource and spending commitments. Savings can range between 30% and 70% of the pay-as-you-go (PAYG) price.

Clearly, these plans have the potential to reduce our cloud expenditure and improve value. However, if we over commit to usage, we may end up spending more than the pay as you go price. The key to getting this right, is good planning and forecasting of resource use.

Let's think about the work different people in our organisation do, to build a great forecast.

• Leadership set strategic objectives for cloud use including the value creation expected and how that shows up in budgets, forecasts and value expectations. Leaders oversee governance practices and decisions that guide people's behaviours consistent with architecture, operational and spending expectations.
• Product owners plan new products and services, features and capabilities and forecast the estimated change in user demand over time. They engage with engineers and architects to ensure these expectations are reflected in the solutions we build and maintain. Product owners are often accountable for managing variations in spending, ensuring value is realised and informing future forecasts.
• Architects are scanning the market for new technical approaches to deliver more value while meeting security and compliance mandates. They define the resource standards that allow our engineers to make good resource choices. They work with engineers to project the cost of resources to support new products and services, features and capabilities.
• Engineers configure the right resources with the appropriate tagging ensuring alignment with business use and that usage and spend can be tracked over time. They monitor resource performance and generate estimates of future use based on current trends and customer experiences.
• Operations or finance teams analyse our usage data, identify gaps and errors in the data, remediate issues with engineers and allocate the usage of shared resources. They produce usage, trend and anomaly reports that can be compared to existing usage forecasts including assumptions for reserved instances and savings plans and updating usage forecasts as required.    
• Finance also takes our usage reporting and allocates it to business unit or product budgets, providing financial reporting and trends informing product and business owners decision making and future planning.

We can see from this example, that great forecasting needs people to execute well on a wide range of capabilities and that the collaboration of people in roles across the organisation is critical to solving the puzzle of cloud forecasting.

Introducing the FinOps Framework

This proactive approach of connecting teams and capabilities around work practices has matured into the discipline of FinOps.

The FinOps Framework, developed by the FinOps Foundation has established a standardised approach for managing cloud costs and value. The Framework provides us with practices, tools and processes to manage cloud costs effectively.

Well implemented cloud resources ensure spending is intentional, well-governed and aligned with business objectives.

The Framework acknowledges that cloud cost management requires a broad range of capabilities, from data ingestion, vendor independent reporting and analysis and forecasting to automation and performance optimisation. It defines what good FinOps practices look like. It also recognises that practices and value are unique to each organisation’s cloud use.

Using the Framework as a blueprint, we can define what good FinOps culture and practice should look like for our organisation, understand where we are today, build an analysis of our gaps to get to good and iteratively implement the most valuable, sustainable change.

Rather than focussing on the impossible task of being good at everything, we focus on the change in capabilities and practices that will result in the greatest improvement in the value of cloud to our organisation. It also provides confidence to our CIO and CFO that budgets are appropritely managed and controlled.

We also understand that the culture change required is hard. It requires a mission driven engagement from leadership. The approach establishes an awareness and desire in our people to work together, building work practices towards a common outcome of successful cloud management.

Leading effective change drives a transformational improvement in cloud value

Lifting the bar on cloud value with FinOps formally recognises it as both a culture shift and an enhancement of work practices within our organisations. By following a structured approach, we create a foundation for reducing wasteful spending, improving cloud ROI, and driving better business outcomes—all while balancing innovation with financial accountability. However, embedding FinOps effectively requires the right strategy, expertise, and ongoing commitment.

The FinOps team at Equinox IT specialises in guiding organisations through this journey, improving your practices, optimising cloud investments, and supporting a sustainable FinOps culture. Partner with us to accelerate your FinOps maturity and unlock the full potential of your cloud strategy.

Grant Simpson is a Principal Consultant with Equinox IT and Certified FinOps Practitioner.

¹ Stacklet Usage Optimization Survey - Stacklet

² Unlocking value in cloud sourcing and consumption | McKinsey