FinOps, ITAM and the Shift to Cloud

01 November 2022
IaaS Management

FinOps, ITAM and the Shift to Cloud

01 November 2022

This article was co-written by Rob Martin, Director of Learning at the FinOps Foundation and Brian Adler, Governing Board member at the FinOps Foundation and Sr. Director of Cloud Market Strategy at Flexera.

Rob Martin, FinOps Foundation

As the worlds of FinOps and ITAM continue to converge around the common goal of taming the SaaS/cloud, the FinOps Foundation is engaging with ITAM to examine integrations and overlap between the two disciplines. This article is one of the outputs from this community engagement.

Mike Fuller, FinOps Foundation Ambassador, will also be speaking at this year’s Wisdom APAC conference. Check out his session “What is FinOps and how it collaborates with ITAM” on Thursday, 17th November at 12.15.

FinOps, ITAM and the Shift to Cloud

The past few years working in Cloud have taught me not to trust future estimates of spend. So far, they’ve all been too low.

Whether 2025 public cloud spending reaches $917 Billion (Gartner), $809 Billion (IDC), or a mere $692 Billion (Veritis) there’s no arguing the shift to public cloud and away from owned data centers is changing the face of IT everywhere. It’s not an exaggeration to say that nearly every organization in the world will be impacted by the shift to cloud. And to a greater or larger degree, all will need to take action to adapt.

Access to an almost unlimited supply of cloud services fuels exciting new opportunities to deliver value more quickly, to innovate, and to scale like never before. But the granularity and scale of the cloud assets we now use, and the speed with which we must account for them, deliver new challenges as well.

Using public cloud removes many of the supply constraints we have managed over the past 30 years of IT, and makes every asset in our inventory more ephemeral. We are moving from a world where we centrally procure, own and optimize our finite IT resources, to one where any of our engineers can lease any of hundreds of thousands of resources that might suit their needs, bypassing traditional checks & balances. And we can use those resources for as short a time as we’d like.

A significant and permanent shift in how IT is delivered

For IT Asset Managers responsible for tracking the lifecycle of every IT asset, and the value each creates, what a challenge. This is not a small shift in how IT is delivered, nor is it temporary.

Indeed, a new collaborative discipline has formed to help companies work across technology, finance and business disciplines to get better visibility and make better decisions about cloud spending and use. That emerging discipline is Cloud FinOps.

FinOps allows companies to better manage this shift from central IT purchasing to distributed decision making about IT asset use that supports the model where individual engineers or engineering teams create infrastructure as code, and commit our organizations to spending. Gaining insights into that spending, and creating transparency to all, and optimizing the use of resources we use are key functions a FinOps team supports.

The FinOps Foundation’s State of FinOps report has for two years documented maturing FinOps practices in every industry, every geography and every organizational demographic. The FinOps practitioner community is expanding rapidly as a result, from fewer than 3,000 members last Fall to nearly 8,000 in September 2022.

When using cloud, FinOps practitioners deal with many of the same challenges ITAM teams do. Data collection, normalization, reporting, cost analysis, utilization, unit metrics, all are complicated by the sheer volume and complexity of the data coming in from cloud providers in different formats and with different terminology.

But there’s good news here, in addition to the challenges. FinOps and ITAM are both on the same team.

To set the stage a bit, the FinOps Foundation defines “FinOps” as:

FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.”

If that sounds a little bit like what you, as an ITAM practitioner do, good! It should. Because FinOps is intentionally defined to allow close interaction with ITAM (and other IT resource and cost management functions). As FinOps continues to evolve, mature, and adapt it will not displace ITAM functions. FinOps is a new discipline which must maintain a constant focus on spending that always has the potential to spin out of control, and which is also pulling together siloed disciplines and practices that have become entrenched over time and are not up to the challenge of cloud as they exist now.

Integrating the ITAM and FinOps Frameworks

While FinOps  traditionally has focused on visibility and optimization of cloud infrastructure resources, the keys to doing this work involve having the ability to handle large volumes of resource data, quickly, and consistently. To do this we must evolve the frameworks that have served us well for IT asset management, and intersect them with FinOps practices for identifying, grouping, and allocating the cost of our assets over time.

But FinOps can’t work alone. ITAM teams, ITFM teams, TBM teams, Enterprise Architecture teams, all become even more important in the cloud world. FinOps teams must work with all of these groups – in addition to engineering, finance and product teams – to keep the organization focused on efficiency and value in real time.

The FinOps framework has been developed to highlight integration and collaboration with these other disciplines as cloud use continues. Integration with ITAM is one of the Capabilities of a successful FinOps practice in any organization that has an ITAM practice.

This integration is still in early days, but ITAM practitioners can bring great value to the FinOps discipline with their knowledge and expertise. As an example, FinOps practices focus on optimization and service usage in the cloud, recommending workload placement or service selection. But those recommendations may be made without consideration of software packages used by that infrastructure and the licensing implications of moving or changing resources. This is where the knowledge and experience of ITAM practitioners can pay huge dividends to an organization’s IT resource cost optimization. ITAM team members are aware of the organization’s software, and can weigh in on a potential workload placement that may result in a few cents savings on infrastructure, but may incur huge cost penalties from a licensing perspective if a workload is moved to an unlicensed cloud instance.

This example illustrates just one situation in which a collaboration between ITAM and FinOps can reap financial benefits for the organization.  ITAM teams may lack visibility into the cloud at a time when Software Asset Management (SAM) activities are growing in importance and complexity.

Giving ITAM a seat at the table

Brian Adler, Flexera

Software license reconciliation in cloud creates potential compliance and security exposures. At the same time, FinOps teams are focused on cloud value and may have limited visibility into software costs, be they on-premises, used in the cloud, or via the consumption of SaaS services.

This disconnect is further illustrated in the following graphic from the Flexera 2022 State of the Cloud Report which shows that for core cost saving functions such as optimizing SaaS usage and costs, as well as governing the software licenses used in IaaS and PaaS, the SAM team is rarely participating.

Luckily, more organizations are deploying centralized teams to govern the use and adoption of cloud. Often called “Cloud Centers of Excellence”, or CCOEs they usually embody the technical, financial and other governance of cloud use. FinOps teams are intimately involved in CCOEs, and ITAM teams are too. 69% of ITAM practitioners reported that their organization had a CCOE, and for those who did, 83% had a member from the SAM team.

It’s important for ITAM practitioners to have a seat at the table in the CCOE and with the FinOps team, to get visibility into cloud usage and spend, and to provide key information for good decision making. Or if your organization is still planning your move to cloud, ITAM practitioners can help now to get off on the right foot.

ITAM and FinOps working together add value and context to the organization’s cloud use. Here are some of the key ways that these disciplines can work together to support this shift to cloud. We’ll align them with the three phases of the FinOps lifecycle:  Inform, Optimize, and Operate.

  • Inform
    • Share Taxonomy – both teams will be focusing on categorizing, tagging and labeling the elements that we are using. Share those keys so allocation can be consistent
    • Share Reporting – It is likely your ITAM team has been around longer and may have established reporting on asset usage and value. Reuse it when possible, to coordinate messaging, terminology, and the number of reports leadership need to peruse.
    • Share Data – FinOps teams will be expert at the big data exercise of summarizing the vast cloud cost and usage data coming in each day. ITAM teams will be expert at looking broadly at all asset costs across the organization. Team up to create common data lakes.
  • Optimize
    • Create transparency – licensed software will impact public cloud adoption. Ensure everyone understands licensing mobility models available when making decisions to avoid (or at least understand) triggering contractual penalties.
    • Coordinate reviews – In the cloud, everyone must be accountable for their cloud use. Engineering teams, however, often need guidance and visibility to help determine how their architecture or design decisions impact cost. FinOps and ITAM teams can both support engineering decision making by providing reviews and input into optimization that can take place.
  • Operate
    • Scale your Processes – ITAM practitioners can work with FinOps teams to adapt organizational processes to the scale, speed and granularity of cloud.
    • Support One Another – the last thing but the first step. If you are on a FinOps or ITAM team and you don’t know your counterpart, find them and begin to break down any silos that exist within the IT group itself. To be successful, both ITAM and FinOps rely on good, consistent communication between disciplines across the organization. Make this happen in your own group to model this behavior.

FinOps practitioners appreciate the value that the ITAM teams bring to an organization, and need to be strongly allied to help manage the broad adoption of public cloud use. Both disciplines are focused on helping leadership understand the total cost of our IT environment, and the value that it creates for ourselves and our customers. ITAM and FinOps provide a richer understanding, and ultimately allow us to achieve better value working together.

If you’re interested in learning more about the FinOps Foundation or FinOps practice, please consider visiting where you can join the community, learn more, and engage with others who are doing this important work. You will have the opportunity to get training, participate in our many events and meetups, and even contribute to the FinOps Framework to help further define how ITAM and FinOps can work together.

FinOps needs you! Can you contribute to the ITAM Integration wiki?

As part of the continual development of the FinOps Framework, the FinOps Foundation has an online wiki which provides guidance to the various IT capabilities that engage with, and support the goals of, FinOps. The FinOps Capabilities seeks to represent the different functional areas of activity within an organization. Members of the ITAM community are encouraged to contribute to the IT Asset Management Integration wiki.

More on FinOps from the ITAM Review

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