Preface
The World Turned Upside Down
Who Should Read This Book
About This Book
What You Need to Know Before Reading On
FinOps Is Evolving
Conventions Used in This Book
O'Reilly Online Learning
How to Contact Us
Acknowledgments
I. Introducing FinOps
1. What Is FinOps?
Defining the Term FinOps
The FinOps Hero's Journey
Where Did FinOps Come From?
Data-Driven Decision Making
Real-Time Feedback (aka the âPrius Effectâ)
Core Principles of FinOps
When Should You Start FinOps?
Starting with the End in Mind: Data-Driven Decision Making
Conclusion
2. Why FinOps?
Use Cloud for the Right Reasons
Cloud Spend Keeps Accelerating
The Impact of Not Adopting FinOps
Informed Ignoring: Why Start Now?
Conclusion
3. Cultural Shift and the FinOps Team
Deming on Business Transformation
Who Does FinOps?
Why a Centralized Team?
The FinOps Team Doesnât Do FinOps
The Role of Each Team in FinOps
Executives and Leadership
Engineering and Developers
Finance
Procurement and Sourcing
Product or Business Teams
FinOps Practitioners
A New Way of Working Together
Where Does Your FinOps Team Report?
Understanding Motivations
Engineers
Finance People
Executives and Leadership
Procurement and Sourcing People
FinOps Throughout Your Organization
Hiring for FinOps
FinOps Culture in Action
Difficulty Motivating People Is Not New
Contributors to Action
Detractors from Action
Tipping the Scales in Your Favor
Conclusion
4. The Language of FinOps
Defining a Common Lexicon
Defining the Basic Terms
Defining Finance Terms for Cloud Professionals
Abstraction Assists Understanding
Cloud Language Versus Business Language
Creating a Universal Translator Between Your DevOps and Finance Teams
The Need to Educate All the Disciplines
Benchmarking and Gamification
Conclusion
5. Anatomy of the Cloud Bill
Types of Cloud Bill
Cloud Billing Complexity
Basic Format of Billing Data
Time, Why Do You Punish Me?
Sum of the Tiny Parts
A Brief History of Cloud Billing Data
The Importance of Hourly Data
A Month Is Not a Month
A Dollar Is Not a Dollar
Two Levers to Affect Your Bill
Who Should Avoid Costs and Who Should Reduce Rates?
Centralizing Rate Reduction
Why You Should Decentralize Usage Reduction
Conclusion
6. Adopting FinOps
A Confession
Different Executive Pitches for Different Levels
Starting Pitch
Advancing Pitch
Sample Headcount Plan for Advancing a FinOps Team
Pitching the Executive Sponsor
Playing to Your Audience
Key Personas That the Driver Must Influence
CEO Persona
CTO/CIO Persona
CFO Persona
Engineering Lead Persona
Roadmap for Getting Adoption of FinOps
Stage 1: Planning for FinOps in an Organization
Stage 2: Socializing FinOps for Adoption in an Organization
Stage 3: Preparing the Organization for FinOps
Type of Alignment to the Organization
Full Time, Part Time, Borrowed Time: A Note on Resources
A Complex System Designed from Scratch Never Works
Conclusion
7. The FinOps Foundation Framework
An Operating Model for Your Practice
The Framework Model
Principles
Personas
Maturity
Phases
Domains and Capabilities
Structure of a Domain
Structure of Capabilities
Adapting the Framework to Fit Your Needs
Connection to Other Frameworks/Models
Conclusion
8. The UI of FinOps
Build Versus Buy Versus Native
When to Use Native Tooling
When to Build
Why to Buy
Operationalized Reporting
Data Quality
Perfect Is the Enemy of Good
Report Tiering
Rolling Out Changes
The Universal Report
Accessibility
Color
Visual Hierarchy
Usability and Consistency
Language
Consistency of Color and Visual Representation
Recognition Versus Recall
Psychological Concepts
Anchoring Bias
Confirmation Bias
The Von Restorff Effect
Hick's Law
Perspectives on Reports
Personas
Maturity
Multicloud
Putting Data in the Path of Each Persona
Data in the Path of Finance
Data in the Path of Leadership
Data in the Path of Engineers
Connecting FinOps to the Rest of the Business
Seek First to Understand
Conclusion
II. Inform Phase
9. The FinOps Lifecycle
The Six Principles of FinOps
#1: Teams Need to Collaborate
#2: Decisions Are Driven by the Business Value of Cloud
#3: Everyone Takes Ownership of Their Cloud Usage
#4: FinOps Reports Should Be Accessible and Timely
#5: A Centralized Team Drives FinOps
#6: Take Advantage of the Variable Cost Model of the Cloud
The FinOps Lifecycle
Inform
Optimize
Operate
Considerations
Where Do You Start?
You Don't Have to Find All the Answers
Conclusion
10. Inform Phase: Where Are You Right Now?
Data Is Meaningless Without Context
Seek First to Understand
Organizational Work During This Phase
Transparency and the Feedback Loop
Benchmarking Team Performance
What Great Looks Like
Conclusion
11. Allocation: No Dollar Left Behind
Why Allocation Matters
Amortization: It's Accrual World
Creating Goodwill and Auditability with Accounting
The 'Spend Panic' Tipping Point
Spreading Out Shared Costs
Chargeback Versus Showback
A Combination of Models Fit for Purpose
Accounts, Tagging, Account Organization Hierarchies
The Showback Model in Action
Chargeback and Showback Considerations
Conclusion
12. Tags, Labels, and Accounts, Oh My!
Tag- and Hierarchy-Based Approaches
Getting Started with Your Strategy
Communicate Your Plan
Keep It Simple
Formulate Your Questions
Comparing the Allocation Options of the Big Three
Comparing Accounts and Folders Versus Tags and Labels
Organizing Accounts and Projects into Groups
Tags and Labels: The Most Flexible Allocation Option
Using Tags for Billing
Getting Started Early with Tagging
Deciding When to Set Your Tagging Standard
Picking the Right Number of Tags
Working Within Tag/Label Restrictions
Maintaining Tag Hygiene
Reporting on Tag Performance
Getting Teams to Implement Tags
Conclusion
13. Accurate Forecasting
The State of Cloud Forecasting
Forecasting Methodologies
Forecasting Models
Cloud Forecasting Challenges
Manual Versus Automated Forecasts
Inaccuracies
Granularity
Forecast Frequency
Communication
Future Projects
Cost Estimation
Impacts of Cost Optimization on Forecasts
Forecast and Budgeting
The Importance of Managing Teams to Budgets
Conclusion
III. Optimize Phase
14. Optimize Phase: Adjusting to Hit Goals
Why Do You Set Goals?
The First Goal Is Good Cost Allocation
Is Savings the Goal?
The Iron Triangle: Good, Fast, Cheap
Hitting Goals with OKRs
OKR Focus Area #1: Credibility
OKR Focus Area #2: Maintainable
OKR Focus Area #3: Control
Goals as Target Lines
Budget Variances
Using Less Versus Paying Less
Conclusion
15. Using Less: Usage Optimization
The Cold Reality of Cloud Consumption
Where Does Waste Come From?
Usage Reduction by Removing/Moving
Usage Reduction by Resizing (Rightsizing)
Common Rightsizing Mistakes
Relying on Recommendations That Use Only Averages or Peaks
Failing to Rightsize Beyond Compute
Not Addressing Your Resource âShapeâ
Not Simulating Performance Before Rightsizing
Hesitating Due to Reserved Instance Uncertainty
Going Beyond Compute: Tips to Control Cloud Costs
Block Storage
Object Storage
Networking
Usage Reduction by Redesigning
Scaling
Scheduled Operations
Effects on Reserved Instances
Benefit Versus Effort
Serverless Computing
Not All Waste Is Waste
Maturing Usage Optimization
Advanced Workflow: Automated Opt-Out Rightsizing
Tracking Savings
Conclusion
16. Paying Less: Rate Optimization
Compute Pricing
On-Demand/Pay-As-You-Go
Spot Resource Usage
Commitment-Based Discounts
Storage Pricing
Volume/Tiered Discounts
Usage-Based
Time-Based
Negotiated Rates
Custom Pricing
Seller Private Offers
BYOL Considerations
Conclusion
17. Understanding Commitment-Based Discounts
Introduction to Commitment-Based Discounts
Commitment-Based Discount Basics
Compute Instance Size Flexibility
Conversions and Cancellations
Overview of Usage Commitments Offered by the Big Three
Amazon Web Services
What Does an RI Provide?
AWS Commitment Models
AWS Reserved Instance
Member Account Affinity
Standard Versus Convertible RIs
Instance Size Flexibility
AWS Savings Plans
Savings Bundles
Microsoft Azure
Azure Reservations
Instance Size Flexibility
Azure Savings Plans
Google Cloud
Google Committed Use Discounts
Paying for Cores, Not Hours, in Google
Google Billing and Sharing CUDs
Google Billing Account and Ownership
Applying Google CUDs in a Project
Google Flexible Committed Use Discounts
Conclusion
18. Building a Commitment-Based Discount Strategy
Common Mistakes
Steps to Building a Commitment-Based Discount Strategy
Step 1: Learn the Fundamentals of Each Program
Step 2: Understand Your Level of Commitment to Your Cloud Service Provider
Step 3: Build a Repeatable Commitment-Based Discount Process
Step 4: Purchase Regularly and Often
Step 5: Measure and Iterate
Step 6: Allocate Up-Front Commitment Costs Appropriately
How to Manage the Commitment Strategy
Purchasing Commitments Just-in-Time
When to Rightsize Versus Commit
The Zone Approach
Who Pays for Commitments?
Strategy Tips
Conclusion
19. Sustainability: FinOps Partnering with GreenOps
What Are Cloud Carbon Emissions?
Scope 1, 2, and 3 Emissions
Are Cloud Providers Green?
Access
Completeness
Granularity
Partnering with Engineers on Sustainability
FinOps and GreenOps Better Together?
GreenOps Remediations
Avoid FinOps Working Against GreenOps
Conclusion
IV. Operate Phase
20. Operate: Aligning Teams to Business Goals
Achieving Goals
Staffing and Augmenting Your FinOps Team
Processes
Onboarding
Responsibility
Visibility
Action
How Do Responsibilities Help Culture?
Carrot Versus Stick Approach
Handling Inaction
Putting Operate into Action
Conclusion
21. Automating Cost Management
What Is the Outcome You Want to Achieve?
Automated Versus Manual Tasks
Automation Tools
Costs
Other Considerations
Tooling Deployment Options
Automation Working Together
Integration
Automation Conflict
Safety and Security
How to Start
What to Automate
Tag Governance
Scheduled Resource Start/Stop
Usage Reduction
Conclusion
22. Metric-Driven Cost Optimization
Core Principles
Automated Measurement
Targets
Achievable Goals
Data Driven
Metric-Driven Versus Cadence-Driven Processes
Setting Targets
Taking Action
Bring It All Together
Conclusion
23. FinOps for the Container World
Containers 101
The Move to Container Orchestration
The Container FinOps Lifecycle
Container Inform Phase
Cost Allocation
Container Proportions
Tags, Labels, and Namespaces
Container Optimize Phase
Cluster Placement
Container Usage Optimization
Server Instance Rate Optimization
Container Operate Phase
Serverless Containers
Conclusion
24. Partnering with Engineers to Enable FinOps
Integrating Us with Them
What's on the Mind of the Engineer?
Constraints and the Solving of Hard Problems
Principles for Enabling Cost-Efficient Engineering
#1: Maximize Value Rather Than Reduce Cost
#2: Remember That We Are on the Same Team
#3: Prioritize Improving Communication
#4: Introduce Financial Constraints Early in the Product Development
#5: Enablement, Not Control
#6: Leadership Support Isn't Helpful, It Is Essential
Data in the Path of the Engineer
Models for Partnering with Engineering Teams
Direct Contribution
Indirect Collaboration
Indirect Collaboration with Targeted Contribution
Conclusion
25. Connectivity to Other Frameworks
Total Cost of Ownership
Working with Other Methodologies and Frameworks
Find Out Who's Out There
Make Friends and Share Goals
Share Influence, Terminology, and Processes
Share Infrastructure
Share Knowledge
Conclusion
26. FinOps Nirvana: Data-Driven Decision Making
Unit Economics and Metrics
Unit Economics Don't Have to Be About Revenue
Calculating Unit Economic Metrics
Spending Is Fine, Wasting Is Not
Activity-Based Costing
Coming Back to the Iron Triangle
What's Missing from the Equation?
When Have You Won at FinOps?
Conclusion
27. You Are the Secret Ingredient
Call to Action
Afterword on What to Prioritize (from J.R.)
Index
About the Authors
