Migrate to Cloud with FinOps

This blog summarises the second talk given at our Cloud Cost Management and FinOps event held on 25th February, The talk was given by Ashley Hromatko, Senior FinOps Manager at Pearson and can be watched below.

Ashley delivered a clear and detailed overview of what FinOps looks like in practice within an organisation. Her talk covered the process of migrating an application to cloud with embedded FinOps practices and how this touches every element of the development cycle and decision making process.

Watch the event recording

Pearson's approach to FinOps

Pearson have a mature approach to FinOps, with 10 FinOps members of a team consisting of Practitioners, Analysts, a BI Developer and Engineers. Pearson is one of AWS’s biggest public sector customers and provides a great example of how FinOps transforms business practices; the FinOps team is embedded into the Cloud and Hosting team, which reports directly to the CIO. The team works with SRE DevOps teams to drive accountability in Cloud Spend, collaborating with teams across the business to make decisions on purchases and target cost-optimisation activities.

Why did Pearson adopt FinOps?

From 2014 Pearson experienced rapid growth and this meant that:

• the Engineering team doubled in four years;
• the number of AWS accounts has grown from 6 to 635;
• over 100 applications were migrated to cloud;
• 4 data centers have been decommissioned;
• AWS spend has tripled.

However, Pearson experienced growing pains alongside this and had trouble answering important questions about their resources:

• How much additional staff resource was needed?
• How could spend be attributed when products shared accounts?
• How could migration requests be prioritised?
• How could stakeholders interpret the bills they received at the end of the month?

Pearson also experienced a common side-effect of moving to cloud: stakeholders experienced sticker shock when they received cloud bills, where traditionally those costs would have been handled by  the IT department.

To overcome these challenges, Ashley and her team created a gated process for cloud migrations with FinOps, Security and Cloud Governance at the centre of it. 

A new process

The process below is Pearson's gated cloud migration process.

Engagement

During this phase of the process, the Product Owner engages with the Cloud and Hosting team. Basic information about the project is collected in a standardised form, so the team can assess the information and prepare for the definition meeting.

Definition 

The team then hosts a Definition Meeting to establish SOW with key stakeholders. Representatives from Engineering, Security, Governance and Finance are present for Q&A. The Definition Meeting is followed up by an internal review meeting within the Cloud and Hosting team, who produce a solution diagram incorporating the best practices they want Developers to be using. The team also documents their assumptions and risks. The FinOps team uses the diagram to calculate the costs of running the application along with labour costs for the Product Owner to digest in phase 3.

Commit 

At the Commit Meeting, the Cloud and Hosting team presents the proposed solution, including the costs of running month-to-month. If this solution is revised, the FinOps team will revise the estimated costs. The Security team presents any risk and aversion and the FInOps team presents associated costs, saving opportunities and labor costs. The goal is to have both teams committed to timelines and resources within a few days of the meeting. This ensures that there are no surprises for either team along the way.

Build and Launch

AWS access is not granted to the Product Team until the Build phase. The Product team is provided with a Sandbox account with a spend limit, a non-production and a production environment to work with. 

For monitoring and to assist the Product Team with best practice, the FinOps Team sets budget alerts for each account - if there’s a spending problem, it’s identified early on and the team is given help to improve their practices. Actual spend is monitored alongside forecast spend, giving Product Teams visibility of their activities.  

The FinOps team also provides access to a third party SaaS Cost Management tool and  trains product owners on how to use it. This helps to ensure they are confident to be cost-conscious with Engineers.

Lessons learned

FinOps is cross-functional

Ashley emphasised the cross-cutting nature of the FinOps team and its importance to make sure everyone is aligned and following best practices. The FinOps team needs to be able to talk to Executives, Finance as well as understand the engineering processes.

Overspend isn’t always a bad thing

When it comes to managing spend across multiple products and teams, there are likely to be under/overspends. Pearsons’ products are grouped in teams and this helps underspend and overspend within business units usually balance out. 

It’s also important to note that overspend isn’t always a sign that something is wrong - growth in spend could be due to growth in customers. When speaking to Finance business partners, turn the conversation around to explain why spend has increased and try to focus on value and metrics like Cost per User. You can find a list of common FinOps KPIs here.

Give kudos!

It’s important to get buy-in from across the organisation. A really good way of doing this is to incentivise teams to keep within their budgets through giving kudos and recognition in internal communications. 

Questions to ask your organisation

• What are your requirements to build a product in the Cloud Account? Does your governance protect you financially? How do you catch a mistake?
• Who is accountable both technically and financially for the product? What happens when an issue arises? 
• How close are estimates vs actuals? How do you determine if you are doing ‘good’ in the cloud?
• How does Engineering prioritise optimisation against other priorities?

How do I start?

The FinOps Foundation is a great place to look for resources on getting started. The FinOps Foundation is a community of practitioners, some of whom are accredited to deliver FinOps projects. 

Cloudsoft are a FinOps Certified Service Provider and would be very happy to talk to you about getting FinOps principles established within your organisation. Book a complimentary consultation with one of our Cloud Experts and get started!