How FinOps and ITAM Teams Can Work Together in Real-Life Scenarios
In today’s rapidly evolving technology landscape, businesses are increasingly adopting cloud services to streamline their operations and reduce costs. However, effective cloud management is a multifaceted challenge that requires close collaboration between Financial Operations (FinOps) and IT Asset Management (ITAM) teams.
In this post, we explore use cases where FinOps and ITAM intersect, providing a comprehensive overview of how they can work together to optimize resource utilization, manage costs, and ensure efficient cloud management. These use cases are from the framework the FinOps Foundation has established on how ITAM intersects with FinOps capabilities.
Resource utilization and efficiency
FinOps activities:
FinOps professionals seek to understand cloud service providers’ (CSPs) and their associated costs to inform utilization and cost-efficiency analyses. They also collaborate with other teams like Finance, Procurement, IT, Engineering and more as needed.
ITAM activities:
ITAM plays a crucial role in assessing and adjusting licensing requirements, working alongside FinOps during right-sizing or resource cleanup efforts. ITAM ensures that resources are used efficiently, licenses are allocated appropriately, and keeps a watch on governance and security to know who is accessing what and if they have the proper rights to do so.
How ITAM and FinOps intersect:
Collaboration between ITAM and FinOps is essential to achieve the right balance between resource utilization and licensing optimization. Together, they can ensure that cloud resources are used efficiently, leading to cost savings and improved management of cloud assets.
Measuring unit costs
FinOps activities:
FinOps professionals work with stakeholders to develop and report unit economic metrics, aligning cost allocation with organizational strategy. They use data and analysis to understand changes in unit economics and assess whether cost variances are favorable or unfavorable. Unit economics in FinOps is a way of measuring the revenues and costs of cloud spending in relation to one unit of business. It helps FinOps teams to correlate cloud spending growth to overall business growth, and to optimize profit based on objective metrics. Unit economics can be applied to different units, such as a customer served, a unit sold, or a feature delivered.
ITAM activities:
ITAM evaluates the use of licenses, identifying underutilization or overuse to manage resource deployment efficiently. ITAM also assesses the costs of licenses, including maintenance, contributing to the cost-per-customer calculation.
How FinOps and ITAM intersect:
Collaboration between ITAM and FinOps is crucial when calculating unit costs. Including licensing costs in unit cost calculations ensures that all aspects of cloud management are considered, promoting transparency and cost optimization.
Chargeback and finance integration
FinOps activities:
FinOps professionals implement systems for expenses, identify costs based on the allocation strategy, and integrate financial data into internal reporting systems. They maintain visibility and accountability for expenses at the department or product level. Accountability for expenses may look different, depending on the organization. The person most likely accountable for expenses is a financial controller, who may or may not be on the FinOps team, or someone who sits elsewhere, not on the cloud team.
ITAM activities:
ITAM oversees license costs to ensure accurate inclusion in the chargeback process. It supports the implementation of tagging strategies to allocate expenses, maintaining visibility and accountability for IT asset expenses.
How FinOps and ITAM intersect:
Collaboration in chargeback processes ensures that licensing costs are accurately allocated, benefiting both ITAM and FinOps. By working together, they can optimize cost allocation and improve financial accountability.
Data ingestion and normalization
FinOps activities:
FinOps professionals determine the necessary data sources for reporting and operations, establish data normalization processes (tagging), reporting and clarifying line items, and maintain the accuracy of cost and usage information. Data ingestion from FinOps revolves around cloud billing services. They work with various teams to define the metrics and metadata required for official output.
ITAM activities:
ITAM ensures that relevant asset data is available for data ingestion and normalization (particularly when it comes to establishing and standardizing cloud and licensing terminology across the organization), contributing to the accuracy of cost management processes. The data ingested by ITAM teams includes software data running on-premises and in the cloud.
How ITAM and FinOps intersect:
Although data ingestion and normalization have traditionally been parallel processes, ITAM and FinOps can work together to consolidate data into a report under a consolidated view. This collaboration enhances the accuracy and efficiency of cloud cost management.
Establishing FinOps culture
FinOps activities:
FinOps professionals establish best practices, benchmarks, and visibility in cloud cost management. They promote a culture of accountability, collaboration and empowerment.
ITAM activities:
ITAM actively participates in the FinOps culture, emphasizing the synergies between ITAM and FinOps practices.
How FinOps and ITAM intersect:
To promote a unified approach, ITAM and FinOps must collaborate transparently and in a centralized way, ensuring that they work together to maximize their impact and cover each other’s blind spots. This joint effort creates a cohesive, centralized, effective cloud management culture.
Onboarding workloads
FinOps activities:
FinOps professionals collaborate with teams to ensure cost visibility during workload onboarding. They monitor new workloads for optimization, incorporate costs into forecasts, and engage in funding review processes.
ITAM activities:
ITAM reviews licensing needs for new workloads, ensuring that the necessary licenses are in place. It checks compatibility with existing IT assets and supports budgeting, license reharvesting and retirement. This also includes hybrid license management, where a bridge between ITAM and FinOps is needed to consult the ITAM team to see what cloud services have already been paid for and can be repurposed.
How FinOps and ITAM intersect:
Consultation between FinOps and ITAM during workload planning ensures that licensing needs are met, and the best procurement methods are selected, reducing unexpected costs and optimizing resources.
Cloud policy and governance
FinOps activities:
FinOps professionals recommend and document cloud usage guidelines, monitor policy and governance, tag cloud resources, and collaborate with stakeholders on established guidelines.
ITAM activities:
ITAM establishes procurement policies, aids in creating unified tagging policies of on-premises hardware and software, and defines governance for policy-compliant actions.
How FinOps and ITAM intersect:
Collaboration between FinOps and ITAM is essential to create and enforce cloud usage guidelines, governance, and procurement policies, ensuring compliance and optimized resource usage.
FinOps education and enablement
FinOps activities:
FinOps professionals educate the organization on FinOps and promote a culture of accountability, collaboration and empowerment.
ITAM activities:
ITAM participates in training programs offered by FinOps and collaborates on education sessions to understand the interdependencies and overlap in their roles.
How FinOps and ITAM intersect:
ITAM and FinOps should conduct joint education sessions for stakeholders, focusing on cloud cost management, software licensing, compliance and asset optimization. A shared understanding and common language improve communication and efficiency.
Exploring the relationship between FinOps and ITAM teams
The intersection of FinOps and ITAM is crucial for effective cloud management. By working together in various use cases, these two disciplines can drive digital transformation, have organizations move quicker, optimize resource utilization, reduce costs, enhance transparency, and foster a culture of accountability. Through transparent collaboration, businesses can unlock the full potential of their cloud investments, boost profits, and drive sustainable success.