What is FinOps and how to apply it if you already have cloud services

Migrating to the cloud is, in most cases, a good decision. But there is a moment that many companies do not anticipate: the month when the first public cloud invoice arrives and the number is considerably higher than calculated.

It is not a technology problem. It is a management problem. The cloud can be efficient or it can be a generator of costs that are difficult to control, depending on how it is managed. And the discipline that deals with correctly managing cloud costs is called FinOps.

Why cloud costs skyrocket (and no one sees it coming)

The billing model for the cloud is very different from that of traditional infrastructure: instead of purchasing capacity upfront, in the cloud you pay for what you consume in real time. When unmanaged, consumption can grow silently and steadily.

The most common factors that skyrocket cloud costs without control:

Unused resources

Virtual servers, databases, or development environments that are created for a project and never decommissioned. They keep billing even if no one uses them. In companies with multiple teams with access to the cloud, this multiplies.

Overprovisioning

The natural tendency is to provision more capacity than necessary "just in case." A server with 16 vCPUs and 32 GB of RAM that in practice only uses 20% of its capacity is paying 80% for nothing.

Unanticipated data transfers

Major cloud providers charge for the volume of data leaving their infrastructure (egress). This cost is easy to ignore when designing the architecture and can be significant when volumes grow.

Duplicate environments

Development, testing, or staging environments that replicate the production environment but are only used occasionally, paying as if they were running continuously.

Unused commitments

Major providers offer significant discounts in exchange for usage commitments (Reserved Instances in AWS, Committed Use Discounts in GCP). Many companies pay list price when they could pay up to 40–60% less with the right commitment.

The result of all this is what in the industry is known as cloud sprawl: a proliferation of uncontrolled resources that generate an invoice that is increasingly difficult to understand and justify.

What is FinOps

FinOps (a portmanteau of Finance and DevOps) is a financial management practice applied to the cloud that seeks to maximize the value of cloud spend through collaboration between business, technology, and finance teams.

In more direct terms: FinOps is the set of processes, tools, and organizational culture that allows a company to know exactly what it is spending in the cloud, why, who is spending it, and what can be done to optimize it.

FinOps is not just a savings tool. It is a practice of visibility and decision-making. The objective is not to spend less in the cloud, but to spend well: making sure that every dollar invested in the cloud generates the business value that justifies that expense.

The three phases of the FinOps cycle

Phase 1 — Inform

The first step is to have complete visibility over cloud spending: who spends, on what service, for what purpose, on what project. Without this visibility, any optimization attempt is blind.

In this phase, resource tagging tools, consumption dashboards, and cost attribution reports by team, project, or business area are implemented.

Phase 2 — Optimize

With visibility over spending, optimization opportunities are identified: unused resources, overprovisioning, opportunities to use Reserved Instances, services that can be resized without impacting performance.

Phase 3 — Operate

FinOps is not a one-time project. It is an ongoing practice that requires processes, owners, and organizational culture. In this phase, periodic cost review rituals, optimization owners per team, and metrics to be monitored continuously are established.

How to get started with FinOps without being a large company

FinOps principles are applicable to any enterprise that has cloud services, regardless of size. For a medium-sized company wanting to get started:

• Step 1: Make an inventory of everything you have in the cloud: what services, what resources, how much each one costs.

• Step 2: Tag all cloud resources with project, team, or responsible department information.

• Step 3: Identify active but unused resources and decommission them.

• Step 4: Analyze if there are overprovisioned resources and resize those that operate far below their contracted capacity.

• Step 5: Evaluate usage commitments. If you have stable workloads, commitment discounts can represent significant savings.

• Step 6: Set budget alerts. It is the bare minimum to avoid surprises on the invoice.

The role of the technology partner in FinOps

For most medium-sized companies, implementing FinOps requires a partner that combines technical knowledge of the cloud environment with financial analysis capability. It is not just an IT problem, nor just a finance problem: it is a joint problem.

DITESA IT Solutions accompanies its clients in optimizing their cloud environments, from the implementation of visibility and tagging to the identification of savings opportunities and the implementation of ongoing FinOps practices. More information at:

https://www.grupoditesa.com.mx/it-solutions

Signs that your company needs to apply FinOps

• The cloud bill grows month after month and no one knows exactly why.

• You do not have visibility into which service or team is generating each part of the spend.

• There are resources in the cloud that no one knows what they are for.

• Instance types and usage commitments have never been reviewed.

• Completed projects continue to leave active resources in the cloud.

• The IT team and the finance team do not have regular conversations about cloud spend.

Want to know how much you could optimize on your cloud bill?

At DITESA we conduct an analysis of your current cloud consumption and identify key optimization opportunities, with no obligation.

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