FinOps Vs Cost Optimization

 Here's the detailed comparison clearly structured in pointers FinOps Vs Cost Recommendations:

Aspect 1: Scope and Approach

• FinOps: Holistic and ongoing practice involving finance, business, and technology teams to manage and optimize cloud financial operations continuously.

• Cost Optimization: Tactical or operational activity aimed specifically at reducing cloud expenses or eliminating unused/wasted resources.

• Example:

  • FinOps: Setting up monthly cloud financial review meetings with cross-functional teams.

  • Cost Optimization: Rightsizing oversized Azure VMs based on performance metrics.

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Aspect 2: Goal

• FinOps: Focused on long-term financial accountability, creating a culture of responsible cloud consumption across teams.

• Cost Optimization: Focused on immediate cost savings and reducing unnecessary cloud expenses.

• Example:

  • FinOps: Building a chargeback/showback model where each application team sees and owns their cloud costs.

  • Cost Optimization: Deleting unattached managed disks or unused storage accounts.

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Aspect 3: Time Horizon

• FinOps: A continuous, strategic process with regular reviews, forecasting, and improvements aimed at sustained efficiency.

• Cost Optimization: Short-term, project-based interventions to reduce immediate overspending.

• Example:

  • FinOps: Forecasting Azure spend for the next financial year and adjusting team budgets accordingly.

  • Cost Optimization: Moving workloads to Spot VMs to reduce costs quickly for non-critical environments.

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Aspect 4: Team Involvement

• FinOps: Involves multiple teams, including Finance, Cloud Operations, Engineering, and Business Leadership.

• Cost Optimization: Usually driven by Cloud/Infrastructure Operations teams focused on resource cleanup and rightsizing.

• Example:

  • FinOps: Finance and IT collaboratively deciding on Reserved Instances purchases based on projected workloads.

  • Cost Optimization: Cloud Ops team identifies and terminates idle VMs monthly.

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Aspect 5: Metric Focus

• FinOps: Focuses on unit economics, efficiency ratios (e.g., cost per transaction), forecast accuracy, and budget adherence.

• Cost Optimization: Focuses on monthly cost reduction metrics, like reducing wastage, improving resource utilization.

• Example:

  • FinOps: Tracking cost per user on a SaaS application and optimizing based on business growth.

  • Cost Optimization: Reducing VM SKU sizes where the CPU utilization is consistently under 30%.

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Aspect #1: Scope and Approach

• FinOps: Holistic practice involving finance, business, and technology teams
  Example: Monthly cross-team financial reviews

• Cost Optimization: Tactical reduction of Azure costs
  Example: Rightsizing Azure VMs

Aspect #2: Goal

• FinOps: Achieve long-term financial accountability and efficiency
  Example: Developing cost-aware culture among developers

• Cost Optimization: Immediate reduction in cloud expenses
  Example: Removing unused Azure storage accounts

Aspect #3: Time Horizon

• FinOps: Long-term, strategic, continuous
  Example: Yearly Azure cost forecasting

• Cost Optimization: Short-to-medium term actions
  Example: Switching Azure VMs to Spot instances

Aspect #4: Team Involvement

• FinOps: Cross-departmental (Finance, IT, Management)
  Example: Finance collaborates with app teams for budget setting

• Cost Optimization: Typically managed by Cloud/IT operations
  Example: IT operations managing Azure resource cleanup

Aspect #5: Metric Focus

• FinOps: Unit economics, forecasting accuracy
  Example: Tracking Azure cost per active user

• Cost Optimization: Immediate spend reduction, utilization
  Example: Monitoring and resizing idle Azure VMs

Aspect #6: Tools Used

• FinOps: Cloudability, CloudHealth, Azure Cost Management
  Example: Using Cloudability for multi-cloud visibility

• Cost Optimization: Azure Advisor, Azure Cost Management
  Example: Using Azure Advisor to identify cost savings

Aspect #7: Governance

• FinOps: Formal governance structure
  Example: Establishing a Cloud Financial Operations Committee

• Cost Optimization: Operational-level governance
  Example: Weekly cleanup of orphaned resources

Aspect #8: Budget Management

• FinOps: Strategic budgeting with periodic reviews
  Example: Quarterly Azure budget reviews

• Cost Optimization: Focused on immediate cost actions
  Example: Monitoring spend limits in Azure subscriptions

Aspect #9: Visibility & Reporting

• FinOps: Centralized visibility across departments
  Example: Monthly financial dashboards for executives

• Cost Optimization: Detailed operational reports
  Example: Weekly Azure cost analysis reports

Aspect #10: Culture Impact

• FinOps: Encourages organizational cultural shift towards accountability
  Example: Training teams in financial literacy

• Cost Optimization: Minimal cultural impact, focused on immediate action
  Example: Resource cleanup guidelines communicated

Aspect #11: Automation

• FinOps: Strategic automation for financial tasks
  Example: Automated chargebacks and showbacks

• Cost Optimization: Tactical automation for immediate tasks
  Example: Azure automation scripts for VM shutdown

Aspect #12: Decision Making

• FinOps: Data-driven strategic decision making
  Example: Cost-benefit analysis for cloud investments

• Cost Optimization: Reactive, operational decisions
  Example: Decision to shut down unused VMs immediately

Aspect #13: Stakeholder Communication

• FinOps: Regular communication with stakeholders
  Example: Monthly cost review meetings with executive teams

• Cost Optimization: Focused internal communication
  Example: Weekly cost optimization emails to IT teams

Aspect #14: Resource Ownership

• FinOps: Clear ownership assigned to teams/business units
  Example: Assigning app owners responsibility for cloud spend

• Cost Optimization: Resource-level ownership
  Example: Operations team handling VM rightsizing

Aspect #15: Continuous Improvement

• FinOps: Ongoing iterative improvements
  Example: Annual review of FinOps processes and frameworks

• Cost Optimization: Periodic operational review
  Example: Monthly check for unused Azure resources