The FinOps fundamentals: How enterprises reduce cloud costs by 30% with FinOps adoption
- Spencer Liu
- Aug 13
- 4 min read
Updated: Oct 22
Over 30% of cloud expenditures in the enterprises are wasted—effective management can save millions
FinOps goes beyond cost savings—it's about maximizing the return on cloud investments
Enterprises will be able to achieve financial transparency and optimize resource utilization through three FinOps Phases - Inform, Optimize, Operate
Case Study: How a global leading media streaming company improved their cloud operations with FinOps
Why an increasing number of enterprises prioritizing FinOps adoption?
As the digital era advances, companies ranging from tech giants like Google, Amazon, and Microsoft to startups are increasingly transitioning their traditional on-premises infrastructure to the cloud. While this transition has modernized business operations, it has also introduced new challenges in financial management and cost optimization. Prior to the pandemic, the annual growth rate of Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) public cloud utilization reached 43%. The COVID-19 pandemic further accelerated the transition to digital transformation and remote work. By 2030, over $1 trillion in EBITDA value is projected to be generated by Fortune 500 companies through the implementation of public cloud.
Despite the cloud's potential, enterprises are struggling to achieve their short-term cloud migration targets. According to Google Cloud’s report “Maximize Business Value with Cloud FinOps,” in 2020, research indicated that 30-35% of cloud spending was wasted, which aligns with the admission from 80% of CIOs that their cloud migration did not yield the expected business benefits. Challenges encompass resource management, dynamic technical optimization, and accurate expenditure forecasting. To address these complexities in a multi-cloud environment, enterprises must carefully select public cloud services, adopt FinOps principles, and implement the right tools for efficient resource utilization.
An introduction to FinOps: The future of cloud financial management
FinOps, a blend of 'Finance' and 'DevOps,' is also referred to as Cloud Financial Management. It originated from the FinOps Foundation, a nonprofit organization dedicated to cloud cost management and optimization through best practices, education, and standardization. FinOps is an integrated cloud financial management framework that enables businesses to enhance financial transparency, maximize cloud investment returns, and overcome traditional IT financial management limitations.
Leveraging the potential of Artificial Intelligence (AI) and machine learning, FinOps enhances cost forecasting accuracy and delivers intelligent recommendations for resource optimization, thereby improving operational efficiency and financial control.
The importance of FinOps for modern enterprises
The primary objective extends beyond cost reduction is to utilize cloud computing for boosting profitability and business value.
Optimized cloud resource allocation and cost efficiency
FinOps provides enterprises with insight into cloud spending, enabling resource optimization, precise cost management, and the elimination of unnecessary expenses.
Achievement of anticipated business value
By analyzing cloud costs and usage, enterprises can identify key cost drivers and evaluate critical performance indicators to achieve targeted business value.
Fostering interdepartmental trust and collaboration
Close collaboration between finance, information technology, and operations departments is imperative for efficient cloud cost management and resource allocation. FinOps enhance data accessibility, enabling departments to utilize real-time cost reports, detect overspending, and rectify operational inefficiencies proactively.
Effective strategies for implementing FinOps in enterprises
To successfully adopt FinOps, businesses need to establish a clear financial and technical framework and develop a comprehensive cost management strategy.
A leading global streaming platform, launched in November 2019, gained over 10 million users in its first day. This rapid growth required a robust infrastructure to deliver high-quality streaming to massive concurrent viewers without interruption. To tackle this challenge and optimize costs, the company implemented FinOps principles and designed a cloud financial management dashboard that dynamically allocated resources. This successful FinOps implementation has become an industry benchmark.
The FinOps Foundation offers a structured implementation framework that will be able to tailor the FinOps maturity of an enterprise. To achieve effective cloud financial management, this framework guides organizations through three phases — Inform, Optimize, and Operate.
The three stages of FinOps implementation
Inform: Visibility & Allocation
In this stage, the streaming platform identified cloud cost data sources, categorized expenses, and labeled resources. An internal cost dashboard was also created to allow the finance and technical teams to monitor cloud usage in real time, ensuring transparency and alignment with business needs. Additionally, key performance indicators (KPIs) such as "cost per thousand streams" and "cost per execution of the system" were established.
Optimize: Rates & Usage
During the Optimize phase, the company identified inactive cloud resources which led to unnecessary expenditures. The goal at this stage was to reduce costs while increasing resource efficiency. Cloud financial frameworks can be adjusted based on data analysis from the Inform stage. Additionally, enterprises can reduce costs by utilizing cloud provider discounts, such as Reserved Instances (RIs) and Committed Use Discounts (CUDs).
Operate: Continuous Improvement & Usage
The Operate phase integrates FinOps methodologies into business operations, entailing cloud governance policies, regulatory compliance monitoring, and employee training. Through the consistent assessment and refinement of FinOps strategies, corporates are capable of augmenting operational efficacy and long-term sustainability.
LumiTure.ai empowers enterprises to successfully implement FinOps
FinOps aims to optimize cloud cost management and value maximization. LumiTure.ai provides a unified dashboard that consolidates and manages all multi-cloud costs, offering actionable insights into resource utilization and expenses. Users can quickly analyze cloud consumption, optimize resource allocation, and ultimately minimize cloud expenses.
LumiTure.ai provides comprehensive FinOps cloud value assessments and multi-cloud integration management tools, supporting AWS, Google Cloud, and other public cloud services. Tailored cloud operation plans help businesses efficiently manage and optimize multi-cloud investments, increase financial transparency, and improve forecasting accuracy to maximize business value.
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