FinOps Flops

If you’ve been paying attention, I’ve been writing about profitable product-engineering teams recently. As part of that, some people reached out to me to talk about FinOps. Ostensibly, that’s part of it, right? Well, not really. That’s because focusing on cloud optimization wins does help with the bottom line, but it’s purely cost-centered thinking.

FinOps Sense

First, before you pull out your pitchforks, let’s say what has to be said. Yes, there’s no reason to “leave money on the table” in case your system is clearly suboptimal, and costs have spiraled out of control. Especially given how many companies were blasé about their cloud bills before ZIRP came to an end.

If you can spot a bunch of low-hanging fruit and easy improvements, by all means, go right ahead and save that money. However, don’t allow that to become anyone’s highlight. FinOps is better than tech debt in that it actually does affect the bottom line, but most startups should focus on the top line.

The Squeeze

My main issue is when these sorts of efforts become a team’s main objective for a while. Again, unless there’s a specific business sense behind this, you are probably better off finding something else to do. So, when I talked to a hardware startup with a specific figure in mind to make a product line profitable and viable, that was perfectly sensible. However, I contrast that with another founder who told me that 50% of the engineering team is going to be busy with cloud optimization this year. The bleeding is rarely so bad that, business-wise, it makes sense to dedicate so much time to addressing spending as opposed to value-generating work.

For example, consider 37Signals and DHH’s vocal move off the cloud. Spending so much of the company’s lead tech talent’s time to squeeze what seems to be less than 1% on the bottom line is focusing on the wrong things. An abundance mindset in business is about finding ways to generate more revenue, not squeezing what you’ve already got for every penny possible.

The latter is possible, but that’s precisely what one does in a cost center. Those are areas of the business that don’t generate value and that we try to minimize as much as possible. This goes directly against what leading tech organizations should be: innovation and profit centers. Your long-term goal should be leading a team where each additional person generates more profits. FinOps is the opposite: there’s only so much you can cut, and a team that makes it a leading KPI is just begging the board to consider other ways to cut costs over there. Lay off with the layoffs, create a profitable org.