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FinOps Maturity Model: tracking your cost optimization progress

Yurii Kucherenko

Yurii Kucherenko

In today’s rapidly evolving business landscape, organizations are increasingly adopting FinOps practices to optimize their cloud costs and enhance financial operational efficiency. The FinOps Maturity Model provides a framework to assess an organization’s level of maturity in various FinOps capabilities, enabling them to identify areas for improvement and chart a course towards achieving their financial goals. This article explores the concept of the FinOps Maturity Model and highlights its key characteristics and guidelines.

 

Iterative Nature of FinOps

The practice of FinOps is inherently iterative, emphasizing continuous improvement and learning. It recognizes that the maturity of any process, functional activity, capability, or domain improves with repetition. By embracing a “Crawl, Walk, Run” approach, organizations can start small and gradually expand their FinOps initiatives as the business value justifies the maturing of specific activities.

Crawl: The Starting Point

At the Crawl stage, organizations have limited reporting and tooling capabilities. Measurements provide some insights into the benefits of maturing the capability, and basic key performance indicators (KPIs) are established to gauge success. Processes and policies are defined, but may not be consistently followed across all teams. The focus is often on addressing low-hanging fruit and initiating resource-based commitments. Allocating at least 50% of resources and achieving a forecast spend to actual spend accuracy variance of 20% are indicative goals at this stage.

Walk: Building Momentum

In the Walk stage, the FinOps capability is understood and adopted within the organization. While some difficult edge cases may be identified, the decision to address them might be deferred. Automation and processes cover a significant portion of the capability requirements, and efforts are made to estimate and resolve the more challenging edge cases. Medium to high goals/KPIs are established to measure success, emphasizing progress toward financial optimization. Allocating at least 80% of resources, achieving a forecast spend to actual spend accuracy variance of 15%, and improving resource-based commitments coverage to around 70% are representative goals at this stage.

Run: Striving for Excellence

The Run stage signifies the highest level of maturity, where the FinOps capability is fully understood and followed by all teams across the organization. Difficult edge cases are actively addressed, and automation is the preferred approach for achieving efficiency and accuracy. Very high goals/KPIs are set to measure success, aiming for exceptional financial optimization. Organizations at this stage should be able to allocate over 90% of their resources, attain a forecast spend to actual spend accuracy variance of 12%, and achieve approximately 80% coverage in resource-based commitments.

Business Value as the Driving Force

It is important to note that the goal of achieving a “Run” maturity level in every capability should not be the sole focus for organizations. The FinOps Principles emphasize that business value should drive decision making. Instead, organizations should prioritize maturing the capabilities that provide the highest business value. For example, if a capability is meeting the measurement of success, efforts should be directed toward other FinOps capabilities that can yield immediate benefits.

To assess the state of an organization’s FinOps capabilities, the maturity designations of Crawl, Walk, and Run serve as general guidelines. They allow organizations to identify their current level of operation and pinpoint areas for progression. The development of a FinOps Framework Assessment, along with the use of rubrics, provides a convenient shorthand to communicate effectively and gauge maturity.

chart self reported finops maturity level
Self reported maturity level according to survey from State of FinOps by FinOps Foundation

The FinOps Maturity Model offers organizations a structured approach to continuously improve their financial operational practices. By following the “Crawl, Walk, Run” progression, organizations can start small, learn from their actions, and expand their FinOps initiatives in a manner that aligns with business value. Prioritizing capabilities that yield the highest value while focusing on achieving the outcomes of FinOps principles will enable organizations to optimize their cloud costs, improve operational efficiency, and maximize the benefits of FinOps practices.

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