Episode 26: What is FinOps?
- Embedded IT
- Feb 18, 2025
- 2 min read
Updated: Jan 16
This article is part of our Cloud Computing series, exploring the technology, commercial models, and risks organisations need to understand when adopting cloud services.
Let's explore the basics of FinOps, a relatively new discipline designed to help organisations manage cloud costs more effectively. The conversation focuses on how cloud consumption models create financial complexity, and why a coordinated approach across finance, IT, and procurement is essential.
This builds on our introduction to cloud computing, which sets the foundation for this topic.
Understanding what FinOps means
FinOps stands for financial operations. It is not about a single tool or strict methodology, but about creating clear processes, shared information, and defined roles so organisations can manage cloud usage in a more efficient and predictable way.
Because cloud services operate on a consumption-based model, costs fluctuate depending on demand. That creates challenges for IT teams, procurement teams, and finance teams, all of whom are responsible for different parts of the cloud lifecycle. FinOps aims to bring these groups together.
Why cloud consumption makes collaboration essential
Cloud billing can vary week by week. Without communication, departments may make decisions in isolation, which leads to overspend, inaccurate forecasting, or missed commercial opportunities.
A simple model:
IT understands how many units of cloud capacity are needed.
Procurement ensures the right commercial structure is in place based on those needs.
Finance forecasts and budgets according to upcoming usage.
When these three functions work as a team, organisations can scale up or down, pay only for what they need, and negotiate consumption in a commercially sensible way. It becomes a practical “triangle” of shared responsibility, even if that collaboration is rare in traditional IT environments.
Using FinOps to buy only what is needed
Cloud services allow organisations to scale precisely. Instead of buying large, underused servers, teams can choose 50 units one week, 10 the next, and 2,000 during busy periods. FinOps supports this flexibility by ensuring everyone understands what is coming, what it will cost, and how it will be managed.
Even without adopting every formal FinOps framework, building strong relationships between IT, procurement, and finance makes cloud procurement more strategic and avoids unnecessary spend.
FinOps is still a developing discipline, but its core idea is simple: create sensible communication between teams so cloud usage can be forecast, purchased, and managed effectively.
For organisations looking to improve how they manage cloud procurement and consumption, get in touch.
