Measuring Success: Key Performance Indicators(KPIs) for FinOps

In the world of FinOps—a combination of finance and operations—there are always new ways to optimize systems, trim spending, and ultimately get more bang for your buck. Blending best practices to understand and manage cloud costs more effectively can seem like a convoluted process. However, knowing what to look for and where to refine systems can make all the difference.

Having clearly defined KPIs, or Key Performance Indicators, can help set a roadmap as you work to orchestrate the FinOps of your business or organization. KPIs define objectives, select relevant benchmarks, and establish a baseline for performance.

Here are some recommended KPIs you could implement into your FinOps thinking:

Cloud Optimization KPIs

These indicators should focus on cost savings and operational improvement. To boil it down to easy-to-read numbers, look for right sizing savings percentage and effective cost per resource. If it’s a component in your cloud spending that isn’t providing fair value, consider dropping it.

Visibility and Control

It’s possible that some of your cloud spending could be wasted on unnecessary user credentials. Does everyone need to be involved in one aspect of FinOps or another? Consider what’s most vital to your FinOps success. It may help to think about spending against cloud resources per team and waste percentages.

Cost Efficiency Metrics

For all the financial data being collected, it is crucial to ensure that everything is tagged properly and compiled accordingly. How are things going compared to your forecast? What’s the total spend against unused resources? These are all important considerations.

The FinOps Journey: Beyond Short-Term Goals

When it comes to FinOps, it’s clear that the journey is as critical as the destination. The implementation of KPIs is not just about achieving short-term financial goals; it's about cultivating a culture of continuous improvement and strategic foresight. The ability to adapt and refine your approach in response to evolving business needs and cloud technologies is vital for long-term success. This journey, while challenging, paves the way for greater efficiency and innovation, ensuring that your organization stays ahead in the dynamic world of cloud computing and accounting.

In the short term, knowing your KPIs can provide useful direction as your organization works towards its financial goals. Setting goals and achieving them through thoughtful and frequent review of your FinOps process can give you the confidence you’re headed in the right direction. In the long term, those wins add up in a big way. You’ll be able to look back and see how far you’ve come, and better understand how your KPIs got you there.

Challenges and Solutions

However, the journey comes with its challenges. Knowing what to aim for, collaborating effectively with your team, and implementing the right tools and coding are vital. Squire’s CPAs, specializing in cloud technologies and finance, stand ready to assist. Learn more about how they can help set your KPIs and streamline your FinOps system.