Hybrid FinOps: Uniting ITAM and FinOps teams

Best practice

Hybrid FinOps: Uniting ITAM and FinOps teams

FinOps – it’s a term that we all seem to be a click or two away from across the internet. With most organizations facing tightened or at least much more scrutinized IT budgets given the economic conditions of 2023, it makes sense that cloud cost management is at the top of so many minds. For the first time in a decade, spend has surpassed security as the top cloud challenge according to the 2023 Flexera State of the Cloud report.

FinOps Foundation introduces Hybrid FinOps Framework

In the same spirit of the FinOps Foundation’s lifecycle of constant iteration and improvement, the FinOps foundation has included a new framework to recommend the critical convergence of ITAM and FinOps teams, known as Hybrid FinOps.    

In fact, Gartner has recently estimated that 50% of organizations will unify SAM and FinOps teams into a consolidated discipline by 2025, given the close alignment of organizational goals and wide scope of benefits that can be realized when these teams collaborate.

The need for total cost of ownership (TCO) of the cloud

While FinOps traditionally has focused on optimizing the cost and allocation of cloud resources, a critical part of overall cost is the software and associated licensing running on those resources.  

Without considering licensing costs of software running in the cloud, the true total cost of cloud-based applications can’t be determined. In fact, licensing often outpaces the cost of the cloud infrastructure it’s running on.

In the example below with the Azure pricing calculator, you can see that the cost of SQL server is more than eight times that of the infrastructure that’s running that software. This highlights just how massive of a factor this is when it comes to making cloud decisions.

As just a single example of the impact of priority alignment between teams, when teams are fully aligned and able to share a common taxonomy and data source, they can both realize predictable and sustainable business value through the ability to understand and report costs across both professions, safely minimize consumption through waste minimization and taking advantage of the many available discounting and hybrid licensing benefits available.

Clearly, many organizations can benefit from this necessary broader view of FinOps. By combining the existing core components of the classic FinOps framework and lifecycle with the encompassing of additional cloud costs and compliance considerations, organizations can have a much clearer picture of their true cloud costs and a much more accurate unit cost calculation. Taking a narrow view of cloud cost optimization can have a detrimental effect on the cost implications of applications, resulting in a higher overall cost as well as exposing it to regulatory or security issues. With Hybrid FinOps, teams are enabled to realize true cost optimization of application and workloads, considering optimization of costs that would otherwise go unnoticed or unchecked.

To learn more about Hybrid FinOps and how organizations can navigate the convergence of ITAM and FinOps, view our on-demand webinar here.

For even more on FinOps, be sure to attend Wisdom Unplugged 2023 on September 27th at the London Transport Museum. Click here to learn more and register for FREE.

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