What is FinOps and Why Do Businesses Need It?

In the last few years, we’ve seen a sharp increase in popularity of cloud technology, quickly  superseding all other non-cloud solutions. As of 2022, more than 60% of all corporate data is stored in the cloud, up from just 30% in 2015.

FinOps, short for Financial Operations, is an innovative approach to cloud financial management for businesses, combining finances with state-of-the-art technology to deliver speed, quality, and scalability. Today, we’ll be taking a closer look at what exactly FinOps is and what are its potential benefits.

What is FinOps?

FinOps is an extensive cloud-based framework and methodology, created in response to the rapidly growing market of cloud-based solutions for companies. At its core, FinOps is a set of practices that streamline and optimize the management of financial operations within a business.

The first step is to inform. By implementing direct communication and visibility between team members and stakeholders, FinOps aims to increase project transparency and help share accountability.

Managing company finances takes time – FinOps aims to optimize decision-making by introducing automation in making predictions, planning, and performing operations. As the company grows, the workload increases, and an overabundance of mundane tasks can easily distract team members from important tasks. FinOps focuses on scalability, providing companies with cloud-based solutions that are tailored ‌to your specific company needs.

At the same time, the FinOps process aims to produce insightful data about company operations and its finances, analyzing them to uncover the best potential practices based on your specific business needs. This data allows companies to operate at an optimal level, continuously improving efficiency and cutting unnecessary costs.

To deliver on its promises, FinOps approach relies on a range of advanced tools and technology platforms, providing ready-made solutions for team members to work with, reducing time to market and streamlining workflows.

What makes FinOps so important for businesses?

On-premise solutions are costly – they require a considerable investment to begin with, not to mention maintenance and upgrade costs, making scalability an issue. FinOps, on the other hand, effectively avoid most of these costs and scale as the business grows, with the expenses always optimized to fit your exact business needs.

FinOps is focused on long-term value and reliability. Cloud-based technology shifts most of the operational costs like hardware, hosting, licenses, and maintenance to the service provider, with the company only paying a subscription cost. Software updates are applied on-the-fly, causing no downtime, and unplanned downtime is minimized through data decentralization.

The up-front costs of migrating to FinOps are an investment that will pay itself in short time – by optimizing operations and cutting costs, the implementation of FinOps can raise profits while reducing expenses, helping companies grow in the competitive modern market.

3 benefits of adopting FinOps

Implementing FinOps can bring a range of benefits to small and large businesses alike – let’s take a closer look at some of the most prominent ones:

1. A transparent, unified financial ecosystem

FinOps solutions aim to bring down the barriers between IT and Finance teams, helping all departments work towards a common goal. This increases project transparency, bringing all team members and stakeholders together with a unified cloud-based ecosystem that streamlines communication and ensures effective cooperation.

2. Priority on scalability

As companies grow, the infrastructure needs to be expanded in order to accommodate for the increasing business needs. With on-premise solutions, this generates costs and downtime, and often requires a large restructurization to fulfill all company needs. With FinOps, the extent of cloud-services can be adjusted at any time to scale with the growing needs, requiring no downtime and no extra hardware.

3. Increasing profits and cutting costs through optimization

The FinOps methodology is all about streamlining and optimizing, using automation to improve workflows and reduce manual mundane tasks to an absolute minimum, allowing team members of all departments to focus on key company operations and reduce time to market.

The goal of FinOp is to create an optimized cloud-based environment that implements the best industry practices to lower costs and increase productivity. With the rise in popularity of SaaS, IaaS, and PaaS models, FinOps aims to offer the most cost-effective solution for managing a cloud-based environment.