In today’s business landscape, companies are adopting a hybrid infrastructure model, with the public cloud experiencing rapid growth. Spending on the public cloud is projected to increase by 21.7% to $597.3 billion in 2023, up from $491 billion in 2022.
In this hybrid reality, FinOps professionals are tasked to derive the business value of cloud and work with other parts of the business such as engineering, finance, and business teams to collaborate on data-driven spending decisions.
The north star principle1 from the FinOps Foundation is, “Teams must collaborate.” Among those teams and personas are the IT asset management (ITAM) leader and ITAM practitioner, and they lay the groundwork for a successful cloud cost program.
The FinOps Foundation also says that FinOps professionals are coming together with allies such as ITAM leaders in defining a common language, building enablement strategies to elevate business objectives, and developing communication programs.
Gartner talks about combining ITAM and FinOps to create a robust governance framework and iterative optimization activities2. Gartner also says that executives need to create a new operating model to achieve shared objectives of reducing waste and avoiding costly licensing and contracting issues.
Gartner doesn’t stop there, but urges executive leaders for mature software and cloud governance disciplines to, “Create an integrated unit that profits from the synergy of both disciplines to deliver optimum benefit across an increasingly complex technology environment.”
Discovering blind spots and finding a model for working together
In a recent conversation between the FinOps Foundation and Amy Ashby, the FinOps lead at Under Armour, Amy echoes the same thought process saying that senior leadership plays a key role in bringing the two disciplines together:
“[Our processes] naturally put FinOps and ITAM together, and if we can come together and tackle it from being on the same team, then we can do more and optimize more. There are lot of blind spots on both sides and we can help each other. There is so much value in knowing what is in the environment – across cloud, on prem.”amy ashby, finops lead at under armour
To make this a reality, ITAM and FinOps professionals must collaborate to cover the blind spots and work in tandem to close the gaps that exist for each other.
FinOps professionals cannot do the heavy lifting of driving visibility and accountability of cloud costs alone. There aren’t many FinOps professionals around the world and even The FinOps Foundation tells us that 62% of organizations with less than one million dollars don’t have a formal FinOps position3. And even if organizations do have a FinOps person or team, they lean on other teams to drive business value out of cloud.
The blind spot for FinOps is that they ignore software and SaaS applications that are not on cloud and they stick only to assets that appear on the cloud bill. For ITAM, they have limited visibility into the cloud unless they have a SAM tool agent deployed into an instance. The other tricky area is that software license agreements have bring-your-own-license (BYOL) terms that are complex, which need to be carefully read and interpreted to avoid compliance risks. A common software vendor option, BYOL can yield substantial savings over demand pricing when used effectively, and ITAM professionals are well equipped to advise on this.
The ITAM team also does not have a view of containers and newer technologies hosted on cloud. With that said, they have an important, shared goal to pursue: to maximize IT investment. CIOs and CTOs need a single-pane-of-glass view across their entire infrastructure to make data-driven decisions.
The way to progress this relationship depends on the nature of the company, team size, culture and practices. There is no one-size-fits-all solution to solve for this. The ideal way to go is take a slow and steady approach, or follow the FinOps Foundation’s maturity model, called the “crawl, walk and run” approach.
Using the crawl, walk, run approach for better collaboration between FinOps and ITAM teams
A crawl, walk, run approach enables organizations to start small, and grow in scale, scope and complexity. Taking quick action at a small scale and limited scope allows both teams to assess the outcomes of their actions, and to gain insights into the value of taking further action in a larger, faster or more granular way.
|Crawl||FinOps and ITAM both have their own individual understanding of what assets/resources are in which cloud and how they are being used, including:|
— How they are licensed (for ITAM) (PaaS/marketplace vs. IaaS plus BYOL)
— Which IT/business services the resource/asset supports
— Whether there are any associated contracts (i.e. software support and maintenance)
Education of both disciplines takes place regarding intersections of FinOps/ITAM and how each can assist the other in achieving optimization of investment in IT assets (cloud or use of on-premises licenses).
|Walk||Both disciplines have a shared understanding of what assets/resources are in which cloud and regularly reconcile them to provide a “single pane of glass” view for the organization.|
The ITAM team is a key contributor to business case evaluation. Using BYOL is a common input to optimization strategy, architecture decisions and modernization activities.
There is a shared understanding of each other’s taxonomy.
|Run||There is a common taxonomy for the management of costs that is used across all assets and cloud resources to enable the organization to build an understanding of the total cost of ownership (TCO) and return on investment (ROI) of IT and business services.|
ITAM and FinOps are closely aligned and work together to ensure an optimized IT asset landscape. Tracking of migrated workloads shows savings in IT hardware, infrastructure and licensing costs.
Existing license agreements are used across disciplines to ensure the best strategy for the workload.
Savings resulting from hybrid-use rights/existing agreements, or refactoring existing applications to leverage cloud-native technologies instead of traditional licenses, are tracked and reported.
Operational tools and processes are scaled to support agility between the two functions.
If you are an ITAM professional, work with your FinOps professionals on the following recommendations:
- Establish and maintain clear lines of communication and coordination with FinOps professionals or Cloud Center of Excellence (CCOE) within the organization.
- Determine which cloud services are billed with software licenses, including bundled with a service or purchased from a cloud provider marketplace.
- Determine which cloud services have been configured as BYOL.
- Look at software license agreements and determine which cloud services are eligible for BYOL to leverage unallocated licenses.
- Ask for service usage metrics, so that you can determine which cloud services need further OS or container-level inspection.
- Ask FinOps to track licensing costs and realized savings from BYOL licenses.
We’ll be covering how ITAM and FinOps teams can work together in future blogs, including detailed use cases that have proven successful for many organizations. Subscribe to the Snow Software blog to stay in the loop.
 Establishing FinOps Culture
 Target Software and Cloud Costs by Uniting Software Asset Management and FinOps by Gartner
FinOps Foundation April ’23 Summit: State of FinOps Tooling Insights, Normalizing Multi-Cloud Billing Data, and FOCUS