Future-Proofing the Federal Cloud: Why the Public Sector Needs FinOps

While "cutting edge" and "federal government" may not always go hand-in-hand, multi-cloud adoption in the public sector is gaining traction.

Most public sector CIOs and IT decision-makers expect their use of cloud applications to increase by at least 25% over the next five years. Consequently, the global government cloud market is projected to grow nearly 18% annually, reaching $99 billion by 2030.

This shift is driven by the need for greater flexibility, modernization of legacy systems, and strengthened security. However, agencies must also navigate high operating  costs, complexity, and evolving regulations to realize the full value of going multi-cloud — requiring a structured, continuous approach to managing cloud costs and optimizing resources.

Enter FinOps: The Missing Link

As multi-cloud adoption gains steam, the U.S. Government Accountability Office recommends that federal agencies rigorously report and track cloud-related savings.

Without a structured approach, agencies risk wasting billions of taxpayer dollars through inefficient cloud use. This is where FinOps emerges as an essential framework, bringing much-needed financial accountability to the cloud. By enhancing oversight, governance, and transparency, FinOps ensures that every dollar spent delivers tangible value.

Related:Why FinOps Is Key to Cloud Cost Optimization

For government agencies, FinOps holds the potential for substantial savings and measurable benefits:

Overcoming Federal FinOps Hurdles

Despite its benefits, widespread adoption of FinOps in the public sector won't come easily. Let's be frank: The federal government is notoriously resistant to change.

Cultural hurdles like stakeholder engagement and concerns over risk impede progress. Technical obstacles, including legacy systems and bureaucratic hurdles, further complicate matters.

However, several fundamental strategies are helping agencies navigate these challenges and create a solid foundation to support any potential FinOps mandates.

Related:Cloud Cost Management and FinOps Will Accelerate IT Operations in 2025

The FinOps Foundation's key principles include real-time collaboration among finance and technical teams, prioritizing cloud-related decisions based on business impact, and establishing a centralized FinOps team. The FinOps Open Cost and Usage Specification (FOCUS) provides an open-source standard that simplifies FinOps practices, enabling practitioners to focus on strategic financial management rather than getting bogged down in processes — crucial in the face of the Multi-Cloud Innovation and Advancement Act. The Department of Defense (DoD) reinforces these principles in its recently debuted Cloud FinOps Strategy, with mandates such as standardized cost reporting practices and comprehensive training initiatives to cultivate a culture of financial accountability.

FinOps in Action

Multiple government agencies are already seeing measurable success with FinOps initiatives, underscoring its impact across the public sector. For example, the General Services Administration (GSA) recently launched a pilot program to support federal agencies in implementing FinOps, paving the way for more efficient and accountable cloud spending.

Beginning with five federal agencies — the Department of Veterans Affairs (VA), Department of Energy (DOE), Nuclear Regulatory Commission (NRC), U.S. Army, and Office of Personnel Management (OPM) — which collectively spend $40 million monthly on cloud services, the program has delivered impressive results.

The OPM's implementation led to annual savings of over $500,000 by adjusting storage policy and commitments. Its success hinged on securing senior management buy-in, fostering collaboration among finance, procurement, and IT teams, and documenting decisions through a structured process.

The U.S. Army's implementation led to a significant cultural change and over $11 million in savings. It modernized its IT infrastructure by establishing multi-cloud environments in AWS and Azure, using FinOps principles to create a one-stop shop for planning and procuring cloud services at discounted rates, obtaining insights into usage, and recommendations for optimization.

The Path Forward: Best Practices for Federal FinOps

As the federal government continues to embrace multi-cloud adoption, FinOps is crucial for ensuring effective financial oversight and maximizing the value of these cloud investments. Here are a few tips to guide this journey:

1. Tailor Your FinOps Approach: The path to FinOps is not a one-size-fits-all approach; each agency has unique needs and goals. While some might be best suited to a "Crawl, Walk, Run" model, gradually advancing through stages of FinOps maturity, others need to hit the ground sprinting, adopting tools as quickly and effectively as possible. The FinOps Foundation Public Sector Playbook and Special Interest Groups are good resources to aid your journey.

2. Invest in Training and Development: Providing ongoing, comprehensive training ensures that stakeholders understand the financial implications of cloud usage to make informed decisions, and helps overcome any cultural resistance that might be slowing progress.

3. Embrace a Culture of Accountability: Find those agents of change who will champion FinOps principles, cultivating an environment where teams take ownership of cloud costs and usage to promote responsibility.

4. Integrate FinOps with Existing Processes: Incorporating FinOps practices into current workflows enhances efficiency and makes financial oversight a natural part of everyday decision-making.

5. Think Beyond the Basics: While it's tempting to focus on immediate needs, it is essential to create a foundation that supports ongoing needs. Adopting a scalable FinOps practice reduces disruption, maximizes impact, and positions your agency for long-term success.

6. Choose Solutions Wisely: The right tools are essential for balancing value, impact, and compliance. Augmented, FOCUS-integrated FinOps solutions streamline and automate the management of complex multi-cloud environments. Marketplaces like the AWS Marketplace for the U.S. Intelligence Community (ICMP) offer vetted cloud management tools, giving the public sector greater choice and confidence in their cloud cost management tooling.

As cloud computing continues to evolve within the government sector, FinOps will become all the more critical. Adopting sound FinOps practices sooner rather than later will enhance financial stewardship and ensure your agency's cloud investments yield the greatest possible value now, and for years to come.

About the author:

Shawn Petty is Chief Customer Officer at CloudBolt.