Unlocking FinOps: What is it and Why You Should Care

What is the goal of FinOps? 

The goal of FinOps is to help organisations make smart decisions about their cloud spending. That means having the visibility, accountability and strategies you need to optimise your cloud spend - proactively, not just reactively. And that proactive approach should be closely tied to your business objectives.

Why cloud spend gets out of control (and how FinOps fixes it) 

Before adopting FinOps, most organisations that move to or adopt cloud face common problems. Engineers can now spin up services on demand. A single decision can impact your bill instantly, not in weeks or months like before. This shift creates chaos. Procurement, finance, and other stakeholders who once had visibility and control are now sidelined.  

By the time they realise a change has been made, the cost is already there. The lack of real-time insight leads to spending surprises. Projects go over budget. One big spike in cost can trigger leadership to pause or cancel other cloud projects just to regain control. 

Yet, the bigger problem isn’t overspending: it’s not knowing you’re overspending until it’s too late. A low-cost service can scale fast and become a major monthly expense before anyone notices.  

Without accurate forecasting, finance teams struggle to plan or justify cloud spend to stakeholders. This causes trust to drop in cloud adoption and results in delays. Before you know it, the value of the cloud (speed and agility) starts to work against you. 

That’s where FinOps steps in. FinOps restores visibility, creates accountability, and helps organisations manage the speed of the cloud without losing control. And it’s not just about saving money. It’s about making informed decisions in real-time and getting the most value out of your cloud spend. 

6 Core Principles of FinOps 

FinOps is built around six core principles that keep your cloud financial management focused, measurable and collaborative. That means your FinOps efforts will stay on track and deliver value.

Those six principles are what guide you in aligning your cloud spend with your business goals.

Team collaboration 

FinOps works best when teams work together. To really optimise cloud spend, all those cross-functional stakeholders need to be working toward the same goal. When you do that, you break down those silos, eliminate shadow IT spending and give everyone the information they need to make good decisions. 

Ownership of cloud usage 

Accountability is indispensable to FinOps. The goal of FinOps is that everyone takes ownership of their cloud usage. Each team is accountable for optimizing their own cloud usage and controlling costs within their domain. This shared responsibility ensures every stakeholder understands the cost implications of their choices and contributes to efficiency and waste reduction. 

Accessible and timely data 

To make smart decisions, teams need access to real-time cost and usage data. FinOps emphasises making this data available and understandable to all stakeholders – not just finance. When engineers, product owners, and business leaders can all see the same numbers, decisions happen faster and with more clarity. 

Centralised governance  

FinOps encourages a central team to set standards, track progress, and provide tools. But the execution happens in each team. This balance ensures consistency without slowing down teams. It gives engineering the autonomy to act while maintaining oversight. 

Business value of cloud drives decisions 

The goal isn’t just to cut costs – it’s to spend wisely. Every cloud decision should be tied to business outcomes. Whether scaling a service, shifting storage tiers, or provisioning new environments, the focus stays on delivering the most value for every euro spent.  

And when you know your cloud projects' return on investment (ROI) and internal rate of return (IRR), you can see what's really giving your business value. That helps you prioritise your spending. 

Variable cost model 

Cloud is not fixed-cost infrastructure. Costs scale with usage.

FinOps helps shift the mindset from capex (capital expenditure) to opex (operational expenditure). This promotes smarter decisions that match spending with real-time demand. 

What are the 3 pillars of FinOps? 

The FinOps lifecycle is a structured framework for managing cloud spend from start to finish. It outlines three distinct phases, each essential for establishing control and maximising value: 

1. Inform 
2. Optimise 
3. Operate 

Inform

The Inform phase focuses on demystifying the cloud bill and creating financial transparency. In other words, we try to understand the bills and what and who is driving these bills up. We break down cloud spending into clear, actionable insights. This includes custom reports and dashboards built around tags, usage, and business context. You also introduce financial models like: 

• Showback: one team pays the bill and shares cost reports with other departments. 
• Chargeback: one team pays the bill but cross-charges other departments for their actual usage. 

This phase is about giving everyone a shared view of cloud costs, so they can take ownership of their part. 

Optimise 

This phase is about strategic cost reduction and improving efficiency. In the Optimise phase, we identify cost avoidance levers and set the goals to optimise cloud spend. 

So, you’re likely wondering: What do we mean with cost avoidance? Well, it’s a way to reduce the spend on the resource. For example, terminating an instance which is not required or deleting an unattached volume are all avoidance levers. 

Finance and technology teams must collaborate to implement solutions aligned with business goals. 

Operate

The third phase, Operate involves ongoing monitoring and refinement. It’s all about planning and executing any tasks related to Inform and Optimise. Implement organisational changes like automated cloud governance policies to enforce best practices and prevent cost overruns. Conduct periodic reviews to find new optimisation opportunities and adapt to evolving usage patterns.

Examples:

• If a custom report or alert was defined in Inform, you build it here.
• If old snapshots were flagged in Optimise, this is where you automate their deletion. 

You also set up the onboarding framework: 

• Automate account provisioning from request to delivery.
• Create tickets, route approvals through finance or management, and send credentials once the account is ready. 

Since FinOps is a cycle, insights from Operate flow back into Inform to keep everything aligned. 

What are the benefits of FinOps? 

So, what does FinOps bring to an organisation? Let’s break down some of its benefits: 

• Visibility: That includes what you've spent so far and what you'll pay in the future. That means you can take action before costs really start to add up. 
• Informed decisions: It helps you use data to track past spending and make better decisions about future usage. 
• Cross-team communication: FinOps keeps all teams (operations, finance, etc.) by ensuring cloud decisions are shared early and often. 
• Faster innovation: With visibility and alignment in place, teams can move quicker, respond to market shifts, and innovate without waste. 
• Cost efficiency at scale: It helps reduce unit costs as your cloud usage grows, improving margins without slowing delivery. 
• Data-driven decision-making: FinOps forces transparency and replaces guesswork with real-time cost data. This helps you make informed decisions about whether projects should continue or not. 

Best Practices for FinOps 

Create accountability 

Creating accountability in cloud spend starts with clarity on ownership. Without knowing who owns what, assigning responsibility for managing costs effectively is impossible. To achieve it, follow these three steps: 

• Define ownership: You must identify who owns which resources in your cloud environment. This could be a team, a business unit, or an individual.  
• Allocate every resource: Once you’ve mapped out ownership, allocate every single resource in the environment. Not just some of them — all of them. And only keep what’s needed. This allocation should align with your business's operations: by product, customer, team, or environment (e.g. Dev vs Prod). Use whatever grouping is relevant to your organisation. 
• Align allocations with business context: Allocation means nothing if it isn’t done in a business-relevant way. Assigning infrastructure costs to a generic “IT” cost centre misses the point. Use metadata to tie resources directly to revenue-driving parts of the organisation. That’s where FinOps gets powerful. 

Assign clear ownership 

Ownership is key. Begin by identifying the people who are responsible for budgets – often those who manage a profit and loss (P&L) statement. This can be a business unit leader, a vice president, or, in development and testing environments, someone from engineering like a manager or lead architect. Start with the top-level owners and refine the details over time. 

Tag resources 

Tagging is the foundation of cloud cost allocation. Without it, you won’t know who owns what or how to track spend. But you don’t need to solve it all at once — start simple and build from there. Follow these best practices:

• Tag shared resources as 'shared': Shared costs always cause friction. Don’t waste time trying to split them right away. Just tag them as “shared” so they’re easy to identify and review later. 
• Start with an easy tagging target: Choose something small and self-contained to start — like a dev or sandbox environment. Tag everything in that group. This helps you build tagging discipline and early visibility. 
• Don’t overthink it: You don’t need a perfect tagging strategy on day one. Tag the basics first — like dev, prod, staging — and improve over time. You’ll learn which metadata matters as you go. 
• Tag the unknowns: Not sure where a resource belongs? Tag it as “unallocated” or “uncategorised.” That’s better than leaving it blank, and it tells you to revisit it later. Avoid mixing unknowns with genuinely untagged items. 

Align allocation with the business 

Use ownership data and business context to organise your resources. Think in the same terms your business uses: business units, departments, apps. Show engineers the impact of their decisions by tying cost and utilisation to their part of the environment. 

Build a culture of cost awareness 

One of the most effective FinOps best practices is making cloud costs part of the day-to-day conversation. Everyone (from engineers to finance to leadership) should understand how their actions affect spending. 

• Make cost part of the deployment process. When launching a service or workload, cost should be a consideration, not an afterthought. 
• Show teams the actual costs of what they’re running. Use dashboards or reports tied to their environments or services. 
• Encourage shared responsibility. Engineers should know they’re not just deploying code but also impacting budgets. 

Foster a culture of collaboration 

FinOps only works when everyone plays a role: engineering, finance, product, and procurement. That means moving away from siloed responsibility and building shared ownership.  

• Bring cross-functional teams together with clear, shared objectives around cost, performance, and value. 
• Communicate early and often. Share cost data regularly, involve the right stakeholders, and make cost a visible part of daily decision-making. 
• Break down silos. Get finance and engineering speaking the same language around usage, cost, and efficiency. 

Right size your resources 

Many organisations often pay more than needed for compute, storage, or network capacity.

Regularly review and adjust the size of your cloud resources to ensure they match your workload demands. This helps in avoiding over-provisioning and under-provisioning, leading to cost savings. 

Leverage Discounts and Reserved Instances 

Utilise commitment discounts and reserved instances to optimise costs.

In Azure, for example, you can use Azure Reservations to save money on predictable workloads. By committing to a 1- or 3-year term for specific services you can get discounts of up to 72% compared to pay-as-you-go pricing. But be sure to plan careful, as these savings only pay off if your usage matches the reservation. Overcommitting leads to waste. Also, look at historical usage to decide which workloads are steady enough to reserve.  

That said, there are many more cost optimisation practices you can apply. Read here for more: 12 Azure Cost Optimisation Tips.