#09. FinOps Where to Start?

Following the current FinOps framework, it seems we typically start with allocating and understanding costs, then optimize them, and finally deal with execution in the operate phase. While there are valid reasons for this structure, I'd argue it shouldn't always follow this sequence. Instead, we should begin with organizational tasks that define:

what needs to be done and which best practices to follow,

‍who will handle each task,

‍how tasks will be carried out (processes), and

when tasks will be completed or how long they'll take.

Once all of these are in place, you're ready to do FinOps—correctly, at least.

TL;DR

• Start with a FinOps strategy that assesses the organization's current state, defines clear goals, and analyzes the gaps between the two.
• Build a solid organizational foundation by defining your FinOps operating model, which outlines the interactions among people, technologies, and processes.
• Customize the FinOps best practices document to fit your organization's specific needs and align closely with the overall FinOps strategy.

FinOps Strategy

The FinOps strategy is a concise document that defines what we want to achieve with FinOps. Often, organizations randomly start allocating and optimizing costs, calling it FinOps. However, without setting the right purpose and working towards it, this iterative work becomes time-consuming and yields poor results.

The FinOps Strategy should be the starting point for any organization. It consists of the following components:

1. The status quo or current state of FinOps in the organization, also known as the "as-is" state
2. The objectives and goals of FinOps, also known as the "to-be" state or the desired state of FinOps
3. The gap analysis, or how to progress from the current state to the desired state of FinOps
4. A realistic roadmap outlining the milestones to be achieved along the way

FinOps Operating Model

Once we have a clear understanding of what we want to achieve and how, we establish the operating model that will drive FinOps to success. The FinOps operating model is a type of target operating model (TOM) that includes the following components:

1. Organizational design: This shows how the FinOps function interacts with the rest of the organization (e.g., where it sits and to whom it reports).
2. Execution and Rollout: Defines how FinOps tasks will be rolled out and communicated to different stakeholders. Here we also define the KPIs and metrics of FinOps, which align with the FinOps strategy.
3. FinOps Governance: Defines the main domains of FinOps and their respective tasks in terms of processes. Each of these processes should include clear guidelines on who runs it (RACI of responsibilities), how often these processes are carried out, their desired outcome, and how to measure their progress (KPIs and metrics).

FinOps Best Practices

There are many effective ways to accomplish the same capability in FinOps. For example, to allocate costs, we could use tagging, hierarchy structures, or a mix of both. However, the best practices should outline the most suitable approach for your organization and clearly detail the desired outcome when these practices are followed.

Summary

Different Cooks, Different Recipes

There's no one-size-fits-all approach to starting your FinOps practice. The key is to focus on the organizational aspects before diving into operations. Set clear goals and work towards them pragmatically by establishing well-defined structures and processes. Begin with three essential documents: the FinOps strategy, FinOps operating model, and best practices guide. Once these are in place, you're ready to execute.

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