How FinOps and SRE Can Unlock Cloud Operational Success

In the fast-evolving technology landscape, businesses are increasingly rely on cloud-based solutions to streamline their operations and drive innovation. However, the growing reliance on cloud infrastructure has led to a surge in cloud spending, making cloud financial management a pressing concern for many organizations. According to Nutanix’s Enterprise Cloud Index survey, over 85% of respondents identified cloud cost management as a significant challenge.

To rein in their cloud spending yet optimize cloud operations, many companies are adopting a new approach to cloud cost management known as Cloud Financial Operations (FinOps).

FinOps is an operational model that blends technology, business and finance to manage and optimize cloud spending. The FinOps Foundation defines the model as a cultural shift that brings together cross-functional teams to ensure that cloud operations align with financial goals. By fostering communication and collaboration between IT and financial teams, FinOps enables organizations to strike a balance between innovation and cost management. And when you add Site Reliability Engineering (SRE) to your FinOps mix, company performance reaches new peaks. The benefits? Minimized system outages and downtime, increased reliability and service quality, enhanced end-user experience and solid cloud ROI through cloud cost accountability. Developed and popularized by Google, SRE is a band of software tools and services that ensures reliability and availability of IT infrastructure around the clock. It reduces downtimes, prevents system outages and leverages automation to minimize manual effort.

The combination of SRE+FinOps for cloud management is a relatively new concept and successful implementation requires a well-defined roadmap, clearly laid out strategies and proper execution. This article delves into the concept of SRE+FinOps and outlines a roadmap for seamless implementation of this novel discipline as a healthy business practice.

SRE+FinOps in Your Organization: The Road Map

The process of implementing SRE+FinOps involves several key stages, each contributing to the overall success of the initiative. Here is an overview of the steps organizations can take to effectively adopt SRE+FinOps to optimize cloud spending and maximize business value.

Cloud Cost Optimization Framework

Assess

Evaluating present cloud usage and costs is a significant step before implementing SRE+FinOps. This assessment will help organizations understand their present cloud expenses, locate cost optimization opportunities and align their cloud spending with business objectives. The stage can be further separated into two levels:

Level 1: Preparation

Begin by collecting thorough data on your enterprise’s cloud usage, including details on virtual machines, storage, networking, databases and more. Evaluate historical cost data to understand spending patterns and trends. Look for significant spikes in expenditure or recurring wastefulness that need attention.

Level 2: Assessment

Start by benchmarking the organization’s cloud costs against industry standards and best practices. Recognize potential areas for optimizing cloud spending. Identify places where improvement is required and set targets for cost predictability. Use the gathered data to build a budget and plan upcoming cloud spending. Make sure that all cloud resources are properly tagged and categorized. This helps with optimal cost allocation among teams.

Accelerate

By fusing automation, cost monitoring, resource optimization and proactive incident management, companies can accelerate the implementation of SRE+FinOps. This is often achieved by rightsizing resources, leveraging reserved instances or savings plans. This not only helps to significantly reduce cloud waste, but also enhances reliability and performance of cloud-based operations. The key is to foster a culture of collaboration, accountability and perpetual improvement within the organization.

Level 3: Optimization

Optimizing an SRE+FinOps adoption process can be achieved through rightsizing and observability. Let’s evaluate the two key practices:

• Rightsizing
  Rightsizing optimizes cloud resources to match workload, eliminating overprovisioning and avoiding unnecessary costs without compromising performance or reliability. This step is vital as it assists in pinpointing the appropriate resources for your workloads. Use automation to evaluate resource usage and adjust services automatically to match actual demand.
• Implementing observability
  Observability ensures organizations are a step ahead in identifying any potential system outages before they escalate. This ensures any major system health issues are addressed on time, resulting in high reliability and enhanced end-user experience. Observability can also help optimize costs by offering insights into resource utilization, contributing to rightsizing. This also helps identify areas of potential cloud waste.

Level 4: Resilience

Accelerating the implementation of SRE+FinOps through automation will help reduce the wasteful use of resources. This requires a well-defined strategy and a proactive approach within the organization. Implementing automation to monitor cloud costs allows the organization to have real-time visibility into spending. This, in turn, helps identify potential areas of wasteful expenditure. Additionally, it notifies the relevant stakeholders whenever cloud spending reaches a predefined (budgeted) limit and reduces unproductive or inefficient cloud spending. Resilience is critical to both the “Accelerate” stage and the subsequent and final stage, “Administer.”

Administer

Continuous administration is crucial to keep the momentum going. In this stage, the organization focuses on maintaining and improving the implementation of SRE+FinOps to enable cloud cost optimization and reliability. This stage includes “Resilience” and “Excellence.”

Level 5: Cloud Cost Center of  Excellence

By setting up a Cloud Cost Center of Excellence (CoE) and involving business, financial and operational stakeholders, organizations can better predict cloud costs. This kind of alliance ensures cost management efforts match with business objectives, and cloud expenses are aligned effectively while adding to the business’s growth and innovation. It also fosters cost awareness and accountability among various teams in the organization, helping enable cost-conscious decisions when it comes to managing cloud resources.

Here’s a step-by-step guide to establishing a Cloud Cost CoE:

• Select key stakeholders from finance, operations, development and product owners. These stakeholders will play definitive roles in bringing the CoE strategy to life.
• Define clear objectives for the Cloud Cost CoE. These must run parallel to the company’s business goals and may include cost optimization, cost predictability, resource utilization improvement and continuous cost monitoring.
• Create a governance model that considers the CoE’s structure, roles and responsibilities. Develop decision-making processes and make sure the CoE has the authority to implement and enforce cost management policies.
• Allocate key resources to the CoE, like budget, tools and personnel. Dedicate resources that the CoE can effectively implement its initiatives.

Setting up regular meetings and reviews with stakeholders is crucial to discuss progress, roadblocks and opportunities. This also aids in aligning actions with business objectives.

Unlock Cloud Efficiency with Material

Cloud costs aren’t as straightforward as they seem. With different pricing models, contracts and service rates, keeping track of everything can be a hassle. Moreover, getting all the stakeholders on the same page and maintaining effective cost management is a significant challenge. Adopting SRE+FinOps offers a solution to streamline the process. This blend empowers businesses to strike the right balance between innovation and cost control, unlocking efficiency and maximizing savings. By adopting the SRE+FinOps roadmap, organizations can pave the way for sustainable growth and success, truly harnessing the power of the cloud.

Ready to unlock your cloud potential? Engage with us today for an expert consultation with one of Material’s SRE+FinOps specialists.