Cloud expenses are spread across multiple teams. These include engineers who deploy resources, finance teams who track costs, and leadership who make budgeting decisions. Yet, these groups rarely speak the same language. This disconnect has sparked a growing need for FinOps, a practice designed to bridge the gap between these teams.
In this guide, we’ll explore what is FinOps, its principles, the stakeholders it involves, and much more. Read on.
What is FinOps?
FinOps is a practice that brings financial accountability and efficiency to cloud spending at an organizational level.
The FinOps Foundation defines FinOps as follows:
“FinOps is an operational framework and cultural practice that maximizes the business value of cloud and technology, enables timely data-driven decision making, and creates financial accountability through collaboration between engineering, finance, and business teams.”
That’s the official definition.
But what does FinOps stand for as a term? Turns out it’s not short for “cloud financial operations” (a common mix-up). The FinOps Foundation clarifies that FinOps is short for “Finance” and “DevOps.”
This blend turns FinOps into a practice that emphasizes collaboration between traditionally siloed teams. These include finance professionals who want predictable budgets and engineering teams who need the flexibility to innovate.
FinOps is the translator between them.
By applying financial best practices to the cloud, FinOps helps businesses spend smarter so performance doesn’t take a hit.
The FinOps Foundation emerged, in 2019, to provide a community and framework for companies wanting control of their cloud spending.
The movement rapidly attracted organizations like Spotify, Nike, and MIT. By June 2020, the FinOps Foundation merged with the Linux Foundation and became the standard-bearer for cloud financial management.
The FinOps lifecycle consists of three FinOps Phases that make a complete continuous cycle:
- Inform: This phase centers on gaining visibility into cloud costs to ensure every dollar spent contributes to business value. It also involves forecasting future costs to align with business goals.
- Optimize: Once organizations have a clear view of their spending, the next step is to optimize costs. This can include adjusting resource sizes to match actual needs and removing unnecessary services. Selecting pricing models that reduce expenses without impacting performance can also be a step in this phase.
- Operate: The final phase embeds FinOps principles into everyday operations. Organizations establish policies, automate cost controls, and foster finance, engineering, and business team collaboration to make smarter cloud decisions.
FinOps team and stakeholders: Who is involved in FinOps?
For FinOps to work, several organizational roles need to join hands with the FinOps team.
These related organizational roles are what the FinOps Framework terms as Personas or stakeholders.
FinOps Personas are further classified into Core and Allied Personas:
The Core Personas directly contribute to the practice of FinOps and include:
- FinOps Practitioner: FinOps Practitioners have a working knowledge of the FinOps Framework. They are responsible for establishing a FinOps culture within an organization and building collaboration between other FinOps Personas.
- Engineering: Engineers in FinOps are responsible for designing cost-effective cloud infrastructure that also boosts performance. They need to prioritize security and compliance of these cloud environments as well.
- Finance: Finance experts reconcile historic billing data with cloud provider invoices. Then, they report cloud costs to a higher role in the finance Persona. Based on their analysis of historical data, they also need to budget and forecast cloud costs.
- Product: Product groups include roles like product managers and owners. They work with engineering teams to develop products or solutions that deliver value as well as positive business outcomes.
- Procurement: These teams are responsible for procuring cloud services at the best rates available.
- Leadership: Executives in the leadership persona set the stage for the implementation of FinOps initiatives so they face less resistance.
While Allied Personas don’t directly contribute to FinOps, they may collaborate with FinOps Practitioners as needed:
- IT Asset Management (ITAM): ITAM works with FinOps Practitioners to manage IT assets that impact cloud use.
- IT Financial Management (ITFM): ITFM collaborates with FinOps teams to provide transparency into IT spending and ensure optimal outcomes for the business.
- Sustainability: This Allied Persona monitors cloud use and ensures it is considerate of environmental concerns while also prioritizing business goals.
- IT Service Management (ITSM): ITSM is responsible for improving service quality and ensuring services hit their performance targets per the incurred costs.
- Security: IT Security teams leverage the expertise of FinOps teams to optimize organizational cloud security while optimizing security expenditures.
6 FinOps Principles
All activities in the FinOps Framework are guided by six core principles. They’re a crucial part of understanding what is FinOps. Here’s a quick look at each:
- Teams need to collaborate. All teams, including those that typically aren’t close, work together in near-real time, prioritizing cost reduction.
- Business value drives technology decisions. Every cloud investment must directly tie to measurable business outcomes like revenue, efficiency, or customer impact. Teams should scale what drives profit and kill what doesn’t.
- Everyone takes ownership for their technology usage. Engineers and other teams take direct responsibility for the cost consequences of their cloud decisions. When individual teams have visibility and control over their cloud spend, they proactively cut waste at the source.
- FinOps data should be accessible, timely, and accurate. Teams need immediate, accurate spending data to make smart cloud decisions before inefficiencies snowball. FinOps pipelines cost data to engineers with the same urgency as latency alerts, because both burn money.
- FinOps should be enabled centrally. Amid distributed ownership, a central team should set policies, handling rate negotiations and tooling. That way, engineers and product teams can focus on using resources, not buying them..
- Take advantage of the variable-cost model of the cloud. Teams must actively exploit the cloud’s pay-as-you-go model by continuously rightsizing to match spending with actual demand.
FinOps challenges
As organizations scale their cloud adoption, they often encounter a harsh reality. The goals of different teams clash and lead to inefficiencies. This and other challenges are all symptoms of missing FinOps Principles.
Let’s briefly go through the main challenges.
- Decentralized cloud spending: When every team can spin up cloud resources independently, costs spiral like unchecked tabs at an open bar.
- Siloed teams, disconnected goals: Engineering prioritizes performance, while Finance tracks budgets. Neither talks until the bill shocks because both were optimizing in isolation.
- Lack of real-time cost visibility: Without granular and real-time cost dashboards, teams can’t act on waste (e.g., orphaned storage) until it’s too late.
- Rate vs. usage optimization tradeoffs: Central teams may overcommit to Reserved Instances/Savings Plans for noncritical workloads (e.g., dev environments).
FinOps benefits
All FinOps Personas bring their own benefits to the table. When seen from a high level, though, the following benefits summarize all those individual benefits:
- Cost efficiency through accountability: FinOps flips the script on cloud waste by making cost visibility personal. When engineers see real-time spend tied to their workloads, they instinctively optimize. Therefore, there are no more abstract budgets.
- Resilience without guesswork: Chaotic cloud spending is expensive and brittle. FinOps hardens operations by linking infrastructure decisions to measurable outcomes.
- Velocity by virtue of financial guardrails: Paradoxically, constraints in FinOps breed creativity. Clear cost boundaries (e.g., “this microservice can’t exceed $X/month”) and built-in cost checks free developers to innovate within guardrails.
- Data-driven trade-offs: FinOps equips teams to weigh cost against uptime, speed, or security. Every dollar gets a purpose, not just a price tag.
FinOps Framework: Maximizing the business value of cloud
There are many best practices that maximize the benefits of the FinOps Framework. Here’s an overview of the main ones while we’re exploring what is FinOps:
Know the cloud vendors’ discount models
FinOps requires a deep understanding of each cloud provider’s pricing structures because they differ significantly. Amazon Web Services (AWS), Microsoft Azure, and Google Cloud offer different discount programs. These include Reserved Instances, Savings Plans, or Committed Use Discounts, each with its own rules and benefits.
Without this knowledge, organizations may miss opportunities to reduce costs or commit to unsuitable pricing models. Additionally, cloud providers frequently update their offerings, so teams must stay informed to make cost-effective decisions.
Gain full visibility into cloud costs
True cost control demands full visibility into cloud spending. A high-level monthly invoice tells only part of the story. What matters is understanding who is spending, where, and why.
Effective tagging and cost attribution reveal spending trends by project, team, or workload.
Real-time monitoring tools allow teams to see spending trends, detect anomalies early, and adjust before costs spiral out of control. Without this level of visibility, waste goes unnoticed, and budgets are exceeded without clear explanations.
Rightsize cloud resources continuously
Many organizations either overprovision resources (leading to wasted spending) or underprovision them (causing performance issues).
FinOps addresses this by continuously analyzing workload requirements and adjusting resource allocations accordingly.
For example, a Virtual Machine running at 20% CPU utilization can often be downsized without affecting performance.
Automate cost controls and alerts
Manual cost monitoring is slow and unreliable. FinOps relies on automation to detect and prevent waste. Alerts notify teams when spending exceeds thresholds, and automated policies can shut down unused resources on schedules.
For example, nonproduction environments can be turned off during nights and weekends. This reduces human effort while ensuring cost discipline is enforced consistently.
Foster collaboration between teams
FinOps does not work if finance, engineering, and business teams operate in isolation.
Engineers need to understand cost implications, finance teams must adapt to cloud spending patterns, and leadership should support optimization efforts.
A centralized FinOps team helps align these groups. Without collaboration, cost-saving measures may conflict with performance or innovation goals.
How to implement FinOps step-by-step
FinOps adoption varies by organization, but it typically begins in one of three ways:
- Leadership mandate: A senior executive (e.g., CTO, CIO, CFO) directs the company to implement FinOps. Rising cloud costs or a need for better financial accountability often prompt this shift.
- Grassroots adoption: Engineers or finance teams start using FinOps practices informally (e.g., tagging resources and monitoring costs) before leadership formalizes the effort.
- Individual initiative: A passionate employee (e.g., a cloud architect) pitches FinOps to leadership.
When an organization decides to implement FinOps, it typically follows four stages:
Stage 1: Research
The research stage involves gathering information to build the case for FinOps adoption.
This involves examining the organization’s cloud spending patterns and understanding how cloud cost data is shared and used for decision-making.
Teams need to analyze actual cloud usage data while having discussions with key stakeholders to identify pain points and challenges. These stakeholders include Finance, Engineering, and other groups.
These conversations help establish a baseline of the current state before FinOps implementation. The goal is to collect concrete examples of inefficiencies and determine how FinOps could address them.
During this stage, it’s important to identify potential supporters who can champion FinOps adoption later. The research should engage all core personas. It should pay particular attention to finance and engineering teams, as they are most directly impacted by cloud costs.
Stage 2: Propose
The next step is to propose FinOps adoption to organizational stakeholders. The proposal needs to clearly explain why FinOps is necessary and how it aligns with broader business goals.
Since different groups care about different aspects of FinOps, the proposal should be tailored to each audience. Leadership may need to see high-level strategic benefits, while engineering teams will care more about operational improvements.
The proposal should specify what’s being requested, whether that’s a full organizational rollout or a pilot program to demonstrate value.
For larger organizations, starting with a limited pilot can help prove FinOps’s effectiveness before seeking wider adoption.
Stage 3: Prepare
The preparation stage begins once the proposal has been approved. This phase involves creating detailed operational plans to implement the approved FinOps roadmap.
Teams need to establish concrete processes, set up meeting cadences, define reporting structures, and determine data sources for cost visibility.
For example, say monthly cloud cost reviews with leadership are approved. In that case, this stage would involve scheduling those meetings, designing report formats, and identifying who needs to attend.
The preparation work should focus on the most urgent needs identified during research while building foundational FinOps Capabilities.
Engineering and finance teams remain central during this stage, as their collaboration is critical for designing effective cost management practices.
Stage 4: Launch
The launch stage officially implements FinOps practices across the organization.
This is when preparation becomes action through concrete activities like training sessions, tool deployments, and process rollouts.
Key launch activities include:
- Communicating the start of FinOps operations
- Educating teams on new cost management practices
- Executing quick wins to demonstrate early value
- Beginning regular reporting and optimization cycles
All FinOps Personas become actively involved at this stage. Leadership stays informed of progress while finance, engineering, and product teams start working with the new tools and processes.
The launch establishes ongoing FinOps practice operations where teams continuously monitor costs, optimize resources, and refine processes based on feedback.
Key success metrics to measure FinOps impact
The success metrics or FinOps KPIs are many. Some of the most well-adopted ones are as follows:
Cost efficiency metrics
- Cloud cost per unit (e.g., cost per transaction, user, or API call): measures how efficiently cloud spend translates to business output
- Commitment discount coverage (%): tracks the use of Reserved Instances or Committed Use Discounts (CUDs) compared to running services on demand
- Idle resource savings ($ or %): quantifies cost reductions from eliminating unused instances, storage, or services
Budget and forecasting accuracy
- Budget variance (%): the difference between forecasted and actual cloud spend (e.g., staying within ±5% of projections)
- Forecast accuracy improvements: measures how FinOps improves cost predictability over time
Operational and performance metrics
- Resource utilization rates (%): CPU, memory, and storage usage (e.g., raising average VM (Virtual Machine) utilization from 40% to 70%)
- Auto-scaling efficiency: reductions in manual interventions due to automated scaling policies
Business alignment
- Time-to-market speed: faster deployments due to FinOps-driven resource agility (e.g., 25% shorter release cycles)
- Cloud ROI: revenue or productivity gains per dollar spent
The future of FinOps
The State of FinOps 2025 reveals five key findings about the future of FinOps.
- Over the next 12 months, governance has overtaken workload optimization as the top priority. The latter drops to second priority by a significant 21%.
- Practitioners are increasing their efforts in nearly a dozen different FinOps Capabilities while scaling back in only one or two. This signals a high demand for FinOps expertise but also raises concerns about teams being stretched too thin.
- Teams are taking on broader Scopes of technology spending, with SaaS management leading the way. A striking 65% of respondents reported managing SaaS costs, with an expected increase of 25% in the next year.
![[State of FinOps by FinOps Foundation]](https://lh7-rt.googleusercontent.com/docsz/AD_4nXcvOi7VH8mKro3KtBxzSi2KfWo-Wjuh9pFSEj9RsURh5sttD_NgwlFtzz9Zf5722aZO-LNVwHtdLZ4lMp5lNMY1DZ-OoXRrsFhbvYhD9tpJrlrCmm6ZPqbthwotBONJL47NKkBOaA?key=eE7joDknm-wb4wNSu_s7oUDa)
- A majority (57%) of FinOps Practitioners plan to adopt the FinOps Open Cost and Usage Specification (FOCUS™) billing standard. This will likely be in effect in the coming year, with many aiming for automated integration. However, barriers such as time constraints, technical debt, and limited support from SaaS vendors remain hurdles to widespread adoption.
![[State of FinOps by FinOps Foundation]](https://lh7-rt.googleusercontent.com/docsz/AD_4nXfXhEPYz-5MC2jLb3E3303KOmrYpawAO_TC8daymXsn0Er4wXbpuwZxZKJ1N-8b7USeO6QcVS6NRtz24o-waCpZIdoxyQyPtrQOxfPBuz3LMSmLxQYxxbPWjzuXVcxYpHWvhxtRCw?key=eE7joDknm-wb4wNSu_s7oUDa)
- Organizations are rapidly increasing investments in AI. A reported 69% are allocating funds to SaaS-based AI services, with 30% planning to invest in private cloud or data centers. Notably, 97% of respondents are investing in multiple infrastructure areas for AI.
![[State of FinOps by FinOps Foundation]](https://lh7-rt.googleusercontent.com/docsz/AD_4nXfs5edbN9sfvl_DQu8qdL-S9Z9PLlc7hrJGDDiWul8gWCqpbf7xP4P1jZpSZZ7kpYFtAmmfMdgCmtQZ7Xjhrp2Y4CkmWiimR85nOK8SexBGM2kO-vUqrkjuLprDQoLAei-HWxJhWg?key=eE7joDknm-wb4wNSu_s7oUDa)
FinOps vs. DevOps: How do they compare?
While FinOps and DevOps both emphasize collaboration, they serve different purposes:
- DevOps = Engineering focus → Faster software delivery (CI/CD, automation, reliability)
- FinOps = Finance + Engineering bridge → Cost-efficient cloud usage (budgeting, optimization, accountability)
| DevOps | FinOps | |
| Goal | Ship code faster | Spend cloud $$ smarter |
| Teams | Engineering + Operations | Finance + Engineering + Operations + Product |
| Metrics | Deployment frequency, uptime | Cost per feature, ROI |