FinOps Dictionary: The Jargon-Free Glossary
Your friendly translator for all the FinOps terms you'll encounter (without the confusing tech-speak)
How to Use This Dictionary
This isn't your typical technical glossary filled with industry jargon. Instead, we explain each term using:
- •Plain English definition
- •Real-world analogy
- •Why it matters to you
- •Example you can relate to
Think of this as your FinOps translation guide - because nobody should need a PhD to understand cloud costs!
🏛️ Core FinOps Concepts
FinOps
Financial Operations - managing cloud costs through collaboration between finance, engineering, and business teams.
Like having a family budget meeting where everyone (parents and kids) discusses how to spend money wisely on household expenses.
Without FinOps, your cloud costs grow like weeds - fast and without direction.
Instead of finance cutting cloud budgets by 30% without warning, all teams work together to find smart ways to reduce waste while maintaining performance.
Cloud Financial Management
Cost Allocation
Chargeback
Showback
💰 Pricing and Cost Terms
On-Demand Pricing
Reserved Instances (RIs)
Spot Instances
Savings Plans
📊 Monitoring and Analysis Terms
Cost Anomaly Detection
Unit Economics
Cost Visibility
Tagging
⚡ Optimization Terms
Right-sizing
Auto-scaling
Lifecycle Policies
Cloud Waste
🧠 Strategy and Governance Terms
Cloud Cost Governance
FinOps Maturity Model
Cloud Center of Excellence (CCoE)
Cloud Financial Operations Model
🔧 Technical Terms Made Simple
Compute
Storage
Data Transfer
Serverless
📏 Metrics and KPIs
Cost per Customer
Fully Loaded Cost
Utilization Rate
Cost Variance
⚠️ Warning Terms
Shadow IT
Bill Shock
Orphaned Resources
Cost Sprawl
🎓 Advanced Terms
RI Coverage
Commitment-Based Discount
Amortization
Workload Placement Optimization
Quick Reference: The 10 Most Important Terms
If you're just getting started with FinOps, these are the terms you should learn first:
FinOps
Collaborative approach to cloud financial management between finance, engineering, and business teams
Cost Allocation
Assigning cloud costs to specific teams, projects, or business units
Tagging
Labeling resources to track ownership, purpose, and cost attribution
Reserved Instances
Commitments to use resources for 1-3 years in exchange for discounts
Right-sizing
Matching resource size to actual needs to eliminate waste
Cloud Waste
Resources that cost money but provide no value
Unit Economics
Cost per customer, transaction, or business metric
Cost Anomaly Detection
Automated alerts for unexpected spending increases
Showback/Chargeback
Methods for making teams aware of or accountable for their cloud costs
Orphaned Resources
Forgotten resources still running and incurring costs
Conclusion: Speaking the Language of FinOps
Understanding these terms is your first step toward cloud cost mastery. The language of FinOps might seem technical at first, but it's really about translating cloud spending into business value.
Remember that FinOps isn't just about cutting costs—it's about making informed decisions that balance cost, speed, and quality to maximize the value of every dollar you spend in the cloud.
Ready to put these terms into practice?
Check out our FinOps Quick-Start Checklist for a step-by-step implementation guide, or explore our collection of free FinOps tools to start optimizing your cloud costs today.