FinOps: Definition, Principles, Phases and Personas
What the FinOps Foundation actually means by FinOps, and how its framework fits together.
The FinOps Foundation defines FinOps as “an operational framework and cultural practice which maximizes the business value of technology, enables timely data-driven decision making, and creates financial accountability through collaboration between engineering, finance, and business teams.” The name is a portmanteau of Finance and DevOps. The Foundation is explicit that it is not the same thing as saving money: the aim is getting the most value from technology, which sometimes means spending less and sometimes means investing more, with teams knowing which is which.
The framework is no longer cloud-only. The Foundation applies it across technology categories including public cloud, SaaS, licensing, data centers, and data cloud platforms.
The six principles
The Foundation lists six principles, in no particular order:
- Teams need to collaborate. Finance, technology, product, and leadership work together at the speed and granularity each technology category needs.
- Business value drives technology decisions. Unit economics and value-based metrics show business impact better than aggregate spend, and trade-offs among cost, quality, and speed are made consciously.
- Everyone takes ownership for their technology usage. Accountability is pushed to the edge: engineers own cost from architecture design through operations, and cost is a first-class metric from the start of the software lifecycle.
- FinOps data should be accessible, timely, and accurate. Cost data is shared as soon as it is available, because fast feedback loops produce more efficient behaviour.
- FinOps should be enabled centrally. A central function evangelizes and enables practice in a shared accountability model. Rate, commitment, and discount optimization are best centralized, so engineers can focus on usage.
- Take advantage of the variable cost model of the cloud. Consumption pricing is an opportunity, including just-in-time planning and purchasing of capacity.
Principle 5 explains a division of labour: engineers optimize how much they use; a central team optimizes the price paid for it.
Three phases, cycled repeatedly
- Inform: visibility and allocation. Ingest cost and usage data, allocate it to owners, report, forecast, and build unit metrics.
- Optimize: identify improvements. The Foundation separates usage optimization (using fewer resources for an acceptable outcome), which needs engineering, from rate optimization (paying an appropriate amount for what you must use), which needs procurement and leadership.
- Operate: implement the changes and build them into process.
The phases are not a one-way sequence. Practitioners cycle through them repeatedly, and different people can be in different phases at once.
Personas
The Foundation’s core personas are the FinOps Practitioner, Engineering, Finance, Product, Procurement, and Leadership. Allied personas, such as IT asset management, IT financial management, sustainability, security, and ITSM, intersect with FinOps without being core to it.
Domains and capabilities
Work is organized into four domains: Understand Usage and Cost, Quantify Business Value, Optimize Usage and Cost, and Manage the FinOps Practice. Each domain contains capabilities such as allocation, anomaly management, and invoicing and chargeback, and each capability is assessed on the Crawl, Walk, Run maturity scale.
Where a tool fits
Tools serve the Inform and Operate phases most directly. ZopNight covers cost visibility across AWS, Google Cloud, and Azure, attribution by team and tag, recommendations, scheduling, and guided remediation. The principles and personas are organizational work that no tool performs.
Keep reading: FinOps for engineers, FinOps and engineering collaboration, showback vs chargeback, and cost allocation.
Questions we get a lot.
If yours isn't here, email us and we'll answer directly.
Is FinOps the same as Cloud Financial Operations?
The FinOps Foundation says FinOps is sometimes incorrectly called Cloud Financial Operations, a term it describes as falling out of favour because it is easily confused with the traditional financial operations role in Finance.
Is FinOps only about cutting cost?
No. The Foundation describes FinOps as getting the most value out of technology to drive efficient growth. Sometimes that means tightening spend, sometimes investing more.
Who should own commitment purchases?
The FinOps principles recommend centralizing rate, commitment, and discount optimization to take advantage of economies of scale, leaving engineers to focus on optimizing usage.