Why FinOps Matter
In which Joe explains the spark of why he is energized about FinOps, talks a bit about his new role
Everyone has a passion for something. It’s usually something cool like basketball or biking or coding or gardening or just about anything. Mine is FinOps. If you could choose a passion, I probably would have chosen something else that doesn’t make people try to hide the confused look on their faces when they hear me say that. It’s not my only passion. I’m also really into long-distance running. And yep . . . that gets me the same exact look.
To explain why FinOps is a passion for me, let's go through a theoretical scenario that I may have theoretically experienced a few times.
Let’s just say there is a theoretical market crash, or the market doesn’t crash but your business has a terrible quarter - happens more than we realize. Finance closes the books for the month, gives an update on the financials and decisions have to be made. In order to minimize losses, expenses need to be cut. Expense challenges are issued haphazardly across the business and IT. Then you have the following conversation with a theoretical business leader trying to figure out what expenses they can reduce:
“What the hell is this?” Theoretical Business Leader points to IT Expense Allocation.
“It’s your IT bill,” answers the finance person.
“But what is IN it? It is the largest line item I have.”
“Well . . . I think it’s mostly fixed asset depreciation.”
“Tell me which assets are mine and we can stop using them.”
Finance person hesitates . . . the fixed assets are a mess and it’s embarrassing to admit they don’t exactly understand why. (The reason is virtualization.) Then on top of that, you have accrual accounting rules that spread out depreciation over years, a slow-motion expense realization that once started cannot be stopped. (Accounting’s version of expense virtualization). The finance person has to delicately tell the Theoretical Business Leader that they don’t know which assets they are using and even if they did, they can’t stop the expense from hitting.
Fast forward the conversation (probably only a few minutes ahead) to where the Theoretical Business Leader starts to lose their temper that the largest line item on the P&L cannot be controlled and that they also cannot be shown line-item expense reporting that provides visibility into what the expense is for. The meeting ends with the realization that in order to hit the expense reduction mandates, the only lever that can be pulled is Labor. People will lose their jobs.
This scenario is in a pre-public cloud consumption world. A world where profit and loss statements are highly leveraged with the depreciation of past capitalizations. A world where it's next to impossible to show the exact expense of how each asset ties to the books. I am not purposefully painting it as a dystopia - it’s a method that worked for decades and maybe someday it will come back in vogue. The problem with this world is that when the going gets tough, the only lever you have to pull is to lay people off from their jobs. The work they do doesn’t go away, but they do. So not only are you taking away people’s paychecks, you are hurting your own company by not being able to fulfill your own commitments.
To be clear: going from CapEx fixed assets to OpEx cloud consumption doesn't solve anything on its own. If nothing else changes, the only difference is that you get hit with the expenses faster. FinOps, however, makes a difference. If you implement a FinOps approach to your cloud consumption, you suddenly start to create more levers for the next time business goes in the wrong direction. FinOps gives you choices.
Market crash? Furlough your non-prod environments before your contractors. Miss revenue numbers and need to change course? You can reallocate your cash flow by slowing down work in one project/product and increasing another. That can happen quickly when your IT expenses are OpEx instead of CapEx.
It provides options instead of only being able to cut labor. Cause, after all, labor expenses are people too!
FinOps matters to me because it can help save people’s jobs. I’ve seen it happen.
The New Job
I am starting the role of Director of Community at the FinOps Foundation.
I have watched FinOps gain credibility in the industry at an exponential rate. It started as a task that was thrown to whoever happened to be standing there (ask anyone who got into this cause they were a project manager on a cloud migration). It’s now commonly a fully staffed team at more and more companies.
Each of us faces similar challenges. We’re surrounded by people who have never considered the expense impact of their work before because it’s never been so transparent to the business. We run into people who think we’re some bureaucracy trying to stifle innovation and other buzzwords. We’re faced with cryptic billing calculations that are charged to us by the hour, minute or sometimes tenth of a second.
It can be a challenging world out there, but we have each other. We have each other's backs. We are people who focus on value generation. We are people who understand that it’s not about the lowest rate but getting the most value for the right rate. We are intelligent and good-looking people who are the life of the party, and gosh darn it, people like us!
I’m here to support the community and help create points to keep bringing us together. Stay in touch on the FinOps Foundation Slack channel, your local meetup group, and the monthly FinOps Summits to learn more.
So while I get started in this new role, I’m going to put this blog down for a bit. I intend on continuing it, but it will change. Less about my thoughts on implementing FinOps and more about the people practitioning FinOps - at least I’m thinking. We shall see. The playlists will remain.
My Current Favorite Songs
I’m in a good mood. I’m going to my On Repeat Spotify playlist to grab some of the songs I’m listening to most right now:
Up on Cripple Creek - The Band. (If only I could sing AND play drums at the same time like Levon Helm. Unbelievable.)
Making A Fire - The Foo Fighters - Mark Ronson Re-Version
Can You Get To That - Mavis Staples
I Might - Wilco (Fun Fact: Wilco is technically my favorite band of the 2000s)
What If I - Nathaniel Rateliff & The Night Sweats (Additional fun fact: The Night Sweats have been my favorite band since the mid-2010s)