FinOps Foundation: New Trade Group Shares Cloud Cost-Optimization Best Practices

A new nonprofit trade association is launching Tuesday, espousing a codified financial management model for cloud spending that brings together and holds accountable the financial and information technology sides of enterprises.

Portland, Ore.-based Cloudability will announce the FinOps Foundation (F2) with founding members including Atlassian, Autodesk, Here Technologies, Just Eat, Nationwide and Spotify, big cloud spenders that embrace the so-called FinOps operating model.

“They’re coming together to essentially pull together the best practices out there,” said J.R. Storment, co-founder of Cloudability, a cloud financial management platform company.

FinOps for cloud is less about technology and more about people, processes and culture, according to Storment.

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“It’s really about bringing together the tech side—the DevOps side—with the finance teams and the line-of-business owners who now have to be responsible for their lines of business in cloud,” he said. “It’s around codifying and accounting for the cloud spend. There’s a big aspect of benchmarking that’s part of FinOps.”

The model is designed to help all three groups optimize cloud spending for speed, cost and operational quality.

F2 will be unveiled at Cloudability’s Cloud Economic Summit in San Francisco. The shift from fixed to variable, consumption-based IT spending, with cloud engineers swiping corporate credit cards without allocating them to cost centers or understanding the impact to companies’ bottom lines, is front and center as those costs reach material levels.

“FinOps is all about real-time decision-making,” Storment said. “It puts spending information right in front of the teams. It really makes cost a first-class citizen for engineers who traditionally haven’t had to worry or think about costs.”

Most enterprises that spend at least $100,000 per month on cloud expenses—excluding those that budget $1 million-plus per mont—remain unprepared to manage cloud spending, according to a new survey of 300 U.S. and U.K. finance and IT leaders by New York’s 451 Research. The Cloudability-commissioned report is set to be released Tuesday.

Fifty-seven respondents said that poor financial management of cloud costs had negatively impacted their business and worries them daily, but 45 percent said they do nothing for fear of hindering innovation. Seventy-two percent said their companies had no formal reporting capacity between departments for cloud spending, and 58 percent acknowledged overspending.

“Our findings tell us that cloud cost management is about more than saving money, it’s about making a cultural shift internally and enabling the business to move faster with fiscal discipline,” Owen Rogers, 451 Research’s cloud economist, said in a statement. “As we inevitably go through the next stage in the current economic cycle and experience a downturn, IT and finance leaders will begin looking for smarter ways of operating in the cloud since they have no plans to stop investing.”

The FinOps Foundation will allow Atlassian to collaborate with other companies on FinOps and cost-optimization topics, according to Mike Fuller, principal systems engineer at the Australian enterprise software company. Atlassian began its cost-optimization efforts in earnest in 2014, when it formed a cloud engineering cost-optimization team, he said.

“This centralized team was formed to solidify the connection between the engineering and finance teams, so that we could drive better processes and tooling for our cloud investment,” he said. “The team has done exactly that and, today, continues to save our company money each year.”

F2, set up to be vendor- and cloud-agnostic, and funded by member dues, will offer access to FinOps meetup groups, training workshops and events. It will limit its membership initially to professionals working in organizations with overall IT budgets greater than $5 million who are in executive/senior IT or finance, cloud financial/ business analysis or cloud engineering and architecture-related roles.

The trade group plans to later bring on cloud vendors such as Amazon Web Services as non-voting members, according to a source.

ServerCentral Turing Group co-founder Brendan Caulfield sees a definite need for the trade association due to the significant change in technology consumption.

“Middle and upper management in tech have grown accustomed to doing things over the past 20 or 30 years,” said Caulfield, co-founder of the Chicago-based cloud solution provider. “They’re not finance managers. Moving from a Capex to an Opex model is a big change, and having someone who can provide guidance and best practices will be helpful.”

Cloudability will host a three-day CloudyCon FinOps User Conference in September in Burlingame, Calif., that will include FinOps certification opportunities.