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Cloud Financial Optimisation (Cloud FinOps)

Definition

Cloud Financial Optimisation or 'Cloud FinOps' covers financial management processes and practices for cloud services. In the context of government operations, Cloud Financial Operations, or FinOps, is a strategic approach that aligns cloud spending with public sector objectives and accountability. 

Modern cloud operations provide the opportunity for great flexibility and cost-efficient delivery of services, but also the potential risk of uncontrolled spending. To address this risk, Cloud FinOps blends financial management, cloud expertise, and data analytics to optimise cloud spending whilst ensuring that Commonwealth entities have the resources they need to support business objectives.

Purpose

Cloud FinOps, as a specialised form of portfolio management tailored to cloud resources, is crucial for Commonwealth entities to maintain fiscal responsibility and operate efficiently when it comes to management of cloud computing. By implementing Cloud FinOps, entities can achieve a balance between agility, cost, and mission outcomes, ensuring that cloud expenditures drive meaningful improvements in service delivery and public value. 

The iterative nature of Cloud FinOps process allows for continuous refinement and optimisation of cloud strategies, fostering a culture of financial prudence and strategic investment.

Objective

The objectives of this Australian Government Architecture (AGA) content are to:

  • Facilitate cross-government and internal collaboration: Fin Ops fosters collaboration between various Commonwealth entities, as well as within an organisation in a manner that aligns finance, technology, and project/program management stakeholders to ensure that cloud investments are managed effectively and efficiently.
  • Ensure Public Accountability: Cloud FinOps, in a government context, ensures that cloud spending is transparent and accountable, aligning with the public’s expectation of prudent use of funds.
  • Maintain Budgetary Compliance: Cloud FinOps emphasises compliance with strict budgetary frameworks and fiscal policies, ensuring that cloud expenditures stay within allocated resources.
  • Align Technology with Public Service Goals: Cloud FinOps ensures that cloud technology investments directly support the government's service delivery objectives and mission outcomes.

These objectives reflect the government’s commitment to fiscal responsibility, efficient service delivery, and the strategic use of technology to serve the public good.

Whole of Government Applicability

Cloud FinOps aligns with the evolving needs of Commonwealth entities, offering a more responsive and cost-effective approach for managing technology resources as the trend toward cloud adoption continues. Through its fusion of financial management, operations technical governance, and is tailoring for the dynamic nature of cloud environments, Cloud FinOps provides real time visibility of usage and costs, enabling proactive optimisation of cloud resources. The emphasis on collaboration among finance, operations and other teams ensures a holistic approach to cost management, fostering efficiency and accountability.

The emergence of Cloud FinOps presents a shift in managing resources for the whole-of-government. Cloud FinOps marks a shift from seeing ICT infrastructure as capital expenditure (CapEx) to operational expenditure (OpEx), emphasising the flexibility and scalability of cloud resources over traditional upfront investments, thereby aligning costs more closely with usage and business needs.

Policy Elements

Policy:
POL36
Cloud Financial Optimisation (Cloud FinOps) Policy Mandate:
Endorsed
Status:
Core
  • Comply with legislation

    Establish robust practices that align with acts relevant to the operational context of the cloud environment(s).

  • Research and assess Cloud FinOps practices and solutions

    Entities should thoroughly understand and document their own operational needs, conduct pragmatic research, and determine specific suitability when exploring Cloud FinOps practices and solutions to ensure they optimise their cloud investment, align financial and operational goals, and achieve cost-efficiency and scalability in their cloud operations. 

  • Incrementally improve strategies for Cloud FinOps

    Entities should adopt incremental improvement strategies for Cloud FinOps. A pragmatic, step-by-step approach to refining and enhancing cloud financial operations will allow entities to optimise practices with evolving requirements.

  • Reuse previous Cloud FinOps investment

    When establishing a Cloud FinOps function, entities should reuse existing Cloud FinOps solutions wherever possible, leveraging proven practices and promoting efficiency. As an evolving area, opportunities for reuse are expected to grow. If current Cloud FinOps processes are found inadequate, entities should evaluate the applicability of other relevant processes and practices to ensure maximal effectiveness and efficiency of cloud financial operations.

  • Build for reuse and the long-term

    Where the reuse of existing Cloud FinOps solutions is not possible, entities should ensure new investment can itself be of benefit to other entities seeking similar capabilities. To ensure the ongoing effectiveness of Cloud FinOps solutions, entities must commit to the continuous improvement of processes, features, data, security, technology, skills, and cost management. 

Domains

This capability is part of the following domain.
DOM5

Governance

Policies

The following policies have requirements that impact this capability.

Standards

The following standards support development of digital solutions in this capability.
As Commonwealth entities increasingly adopt Cloud FinOps, it is important that they adopt a strategic approach that outlines a clear vision, a plan for incremental development, and a target to pragmatically achieve their organisational objectives. All Cloud FinOps implementations should take a…

Designs

The following designs include examples of how digital solutions in this capability can be delivered.
Per the FinOps Foundation: The FinOps Foundation is a project of the Linux Foundation, a non-profit that provides a neutral, trusted hub for developers and organizations to code, manage, and scale open technology projects and ecosystems. FinOps is an operational framework and cultural…
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