FinOps is an operating model that promotes collaboration between finance, operations, and engineering teams to increase understanding of cloud costs and make tradeoffs to improve efficiency. It aims to design architectures and systems for elasticity and monitor costs and usage to align spending with business needs. Key aspects of FinOps include budgeting and forecasting, cost optimization through techniques like reserved instances, tagging for cost tracking, and automation of reporting for visibility into cloud expenditures.

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Engineering Operations: FinOps

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OUR MISSION
We are focused on making transportation
smarter, safer, and more useful for everyone

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Why FinOps?
Once again:
Compute cycles matter
Storage volume matters
Network traffic matters
It’s like we went back to the 70’s,
80’s and early 90’s – the days
before code bloat, GHz speed
processors and gigabit data pipes
Resource management
Operational footprint
Campsite rule – leave the
environment as good as or better
than you found it

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Why FinOps?
Highly variable costs require a certain level of active management.
Variable cost = an expense that is proportional to production volume
Fixed cost = an expense that doesn’t change with production volume
If you don’t understand your variable cost drivers, when bad things will happen, you won’t know it
until you log into Cost Explorer or get the AWS monthly bill.
It is a shift toward a manufacturing operations mindset
Understand the drivers of variability
Ensure the product is able to serve its purpose in the market
Work with a wide variety of business units to ensure everyone’s needs are being met
accounting, engineering, product and sales

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Engineers and Developers
Engineers and developer are now key partners in determining gross margin for a product.
Work hand-in-hand with finance to deliver the best solution at the target cost
Accountable for the operational cost of the software that they develop
Driver greater architectural elasticity
Auto-scaling
Predictive scaling
Containers
Spot, spot blocks, spot fleets
Right-sizing EC2 and EBS

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What is FinOps? (My Interpretation)
The intersection of F,P&A, Systems Architecture, Operations and Accounting
F, P & A – Financial Planning and Analysis
How do I expect my system to work?
Forecast cost models based on expected usage patterns
System Architecture
Design for elasticity – ephemeral vs. stateful
Make your architecture as small as possible but no smaller
Operating costs are a factor in design choices
Operations
Measure how the systems actually run
Are they best fit for purpose
Accounting
Measure and report the financial impact of operations
Identify and understand cost drivers

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F, P & A
ArchitectureOperations
Accounting
FinOps:
A full stack
business person*
*I can’t take credit for that phrase

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What is FinOps? (Mike Fuller @ Atlassian)
Goals &
KPIs
Collaboration
Education
Cost
Optimization
Reporting
Automation
FinOps

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What is FinOps? (FinOps Foundation)
FinOps is the operating model for the cloud. FinOps enables a shift – a combination
of systems, best practices and culture – to increase an organization’s ability to
understand cloud costs and make tradeoffs.
FinOps allows companies to build a culture of accountability, to make real-time
decisions related to tradeoffs between cost and speed to improve efficiency and
better align costs to business needs, ultimately leading to better forecasting of
cloud costs.
In the same way DevOps revolutionized development by breaking down silos and
increasing agility, FinOps increases the business value of the cloud by bringing
together technology, business and finance professionals with a new set of capabilities.
It’s a collaborative way of doing business that builds on DevOps to allow Finance, IT
and the Business all manage at the speed of today’s demanding customers.

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What is FinOps and What it isn’t? (FinOps Foundation)
• It is a practice and not a prescription – You don’t do it, finish it and move on.
• FinOps can’t be practiced in a vacuum. It requires collaboration.
• FinOps needs to accommodate a variety of externalities. There is no one size fits all
approach to it.
• FinOps is more than cost management. It is about the value obtained by each unit of cost.

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Six Core Principles of FinOps (FinOps Foundation)
Teams need to collaborate
Business value of cloud drives decisions
Develop unit economics
Cost vs. Quality vs. Speed
Everyone takes ownership for their cloud usage
Teams use the cloud within their budget guidelines
FinOps reports should be accessible and timely
Visibility and fast feedback loops
Establish benchmarks
A centralized team drives FinOps
Rate and discount optimization are centralized – usage optimization is with the product development teams
Governance, reduced duplication of effort
Take advantage of the variable cost model of the cloud
Move in the direction of more elastic and ephemeral

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FinOps Team Capabilities (FinOps Foundation)
• Map spending data to the business
• Create chargeback/showback reports for each team
• Budgets and forecasting
• Set tagging strategy and compliance
• Delivery daily spend to stakeholders
• Identify cost and usage anomalies
• Detect and disposition underutilized services
• Trending and variance analysis
• Scorecards
• Give data driven guidance on rightsizing
• Ensure minimal non-business hours consumption
• Automate reporting and monitoring
• Drive costs down – RIs, spot usage, serverless, EDP, etc.
• Align operations to the business plan

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What are some of the things we’re doing at Arity to lower our
operating costs?
Cloud Cost Optimization is more than just using the least amount of resources
to get the work done and buying RIs for the resources that run more than 65%
of the day.

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Work through the business questions you want to answer:
What team or product is responsible for the resource?
Should the resource be operating off standard hours?
Where does it need to show up in accounting reports?
Tags and tagging taxonomy

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Storage Strategy: Hot – Warm - Cold
(Choose the right tool for the requirement – cost per gigabyte per month)
EBS – io1
+ provisioned IOPS
$0.125 + $0.065
EBS – st1
$0.045
S3
$0.0225
Glacier
$0.004
Glacier Deep Archive
$0.00099

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Storage Strategy and Time to Live
(costs get big, fast)
78 storage months
in a year

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91 storage months
if we add 1 more
month
Storage Strategy and Time to Live
(costs get big, fast)

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Data Footprint Management
Consider storing data in a manner that is “fit for purpose”
GPS Points
41.123456789012345, -86.123456789012345
vs.
41.1234567, -86.1234567

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RHEL requires a technical or business case
RHEL is a per hour fixed cost upcharge
premiums of 677% for a t3.micro to 0.6% for x1e.32xlarge
Premiums are $0.06, $0.13 or $0.15 per EC2 hour – driven by size/family
How is RHEL billed vs. Ubuntu?

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Little things that add up at scale
Move EC2 to the latest generation as soon as possible
Less cost and more performance – don’t wait to take advantage
i2.2xlarge = $1.705/hr  i3.2xlarge = $0.624 (63% reduction)
Lights off in your lower environments off hours
Do your testing and train your ML models on spot instances
Do the math:
RI vs. OD vs. Spot
Understand the additional cost components of AWS resources
GET, PUT, data transfer, minimum storage billing in Glacier
Glacier metadata, etc…

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Resources (www.linkedin.com/in/mike-rosenberg-48171a5 or mikerosenberg@hotmail.com)
Organizations
FinOps Foundation – www.finops.org
Events
CloudyCon – The Conference for FinOps – was September 10th – 12th
Books
Cloud FinOps: Collaborative Real-Time Cloud Financial Management
by J.R. Stormant and Mike Fuller ISBN 978-1492054627
targeted for March 2020 release through O’Reilly - $60
Mastering AWS Cost Optimization: Real-world technical and operational cost-savings best practices
by Eli Mansoor and Yair Green ISBN 978-9655728033
Included with Kindle Unlimited or $40 in paperback