ITAM at FinOps' Core

ITAM News & Analysis

12 November 2024

8 minute read

This article is by Kelly Yip; ITAM Thought Leader and Advisor; ITAM Forum

Managing and optimising cloud has become a strategic priority as organisations increasingly embrace cloud technologies. As a result of this rapidly changing landscape, the FinOps (financial operations) operational framework evolved to help businesses manage the challenges that surround these changes. The FinOps Framework provides a structured approach that empowers organisations to ensure effective Cloud Financial Management.

This article examines the FinOps Operational Framework along with its key principles and considers how this discipline overlaps with the wider field of IT Asset Management (ITAM). It explores how combining these frameworks is becoming an essential practice for managing cloud environments.

But, first things first

The FinOps Definition

FinOps is an operational framework and cultural practice which maximizes the business value of cloud, enables timely data-driven decision making, and creates financial accountability through collaboration between engineering, finance, and business teams. – The FinOps Foundation

The FinOps Foundation

Founded in 2019 as a result of cloud practitioners expressing a need to discuss industry best practices due to a lack of agreement principles, the FinOps Foundation began as a standalone, non-profit trade association. In June 2020, it became part of The Linux Foundation, a large-scale, open-source, non-profit engine.

The FinOps Framework

The FinOps Framework is a continuously evolving operational model, designed to maximise the business value of cloud. Key principles govern the framework to highlight the domains and capabilities needed to effectively and successfully establish the operational model. The framework consists of established Core Personas, Allied Personas as well as phases and maturity levels.

The Framework’s Key Principles

Teams need to collaborate
Decisions driven by the business value of cloud
Everyone takes ownership for their cloud usage
FinOps data should be accessible and timely
A centralised team drives FinOps
Take advantage of the variable cost model of the cloud

How the FinOps Framework and ITAM Intersect

FinOps considers IT Asset Management an “Allied Persona” – a role not directly involved in the practice of FinOps, but rather, one that indirectly intersects with FinOps. The FinOps Foundation considers the below ITAM practices intersection points between ITAM and FinOps.

Asset Discovery and Inventory
Asset Auditing and Compliance
Software License Management
Cost Optimisation
Documentation and Reporting

Inform, Optimise, Operate: The FinOps Phase Model and ITAM’s role

The FinOps Phase Model, comprising of Inform, Optimise and Operate, acts as a roadmap to manage FinOps correctly. Using the Framework across these three phases empowers value-driving changes. By understanding these phases, ITAM can better align to FinOps.

The Inform Phase

The inform phase focuses on visibility into cloud costs and usage This involves collecting and analysing data to gain insights into cloud spending.

How ITAM can help:

Asset Discovery & Inventory: ITAM is responsible for ensuring that all cloud assets are discovered and inventoried, providing an informative picture of assets and where they are located.
Categorising Assets: For FinOps to be able to accurately manage costs, ITAM first needs to categorise assets and allocate those costs as required.

The Optimise Phase

The Optimise phase is based on identifying opportunities for reducing costs and improving efficiency.

How ITAM can help:

License Management: Identifying license requirements of cloud assets, in addition to excluding cloud assets utilising the PAYG model, is vital for optimising license costs. Understanding the most cost-effective license models and aligning the cloud environment to maximise the benefit of those license models can significantly help reduce license costs relating to cloud.
Agreement Management: Ensuring the current software agreements are optimal for both the on-premises and cloud environments. (For example, not all agreements allow for BYOL.)
Rightsizing: Identifying underutilised resources and enabling the FinOps team to take action.
Bring Your Own Licenses (BYOL): ITAM and FinOps must collaborate closely in BYOL scenarios. To maximise the potential benefit, ITAM must have a clear understanding of the types of workloads running.

The Operate Phase

The Operate phase focuses on maintaining the cost-effectiveness achieved in earlier phases. This involves continuous monitoring, reporting, and governance.

How ITAM can help:

Continuous Monitoring: ITAM provides ongoing monitoring and management of IT assets, identifying optimisation opportunities where available. This continuous monitoring acts as a bridge between the gaps of on-premise, SaaS, and cloud, ensuring maximised cloud benefits.
Governance and Compliance: ITAM ensures maintained license compliance, BYOL requirements, and regulatory requirements. This helps to mitigate legal and financial risks.

The Growing Importance of ITAM in FinOps

As the complexity of cloud environments increases, the role of ITAM in FinOps becomes less of an intersecting point and more of a fundamental component of managing cloud environments. We can consider the below scenario as an interesting example of blurred lines:

A large organisation has implemented a SaaS product across its business. This software is accessible online and can be installed locally. The software relies on a database server in the cloud to function. The cloud database server is utilising on-premise licenses (BYOL).

The above scenario is a common one and requires significant collaboration between FinOps and ITAM to optimise it. To understand the requirements of the database cloud server from a FinOps perspective, you must understand what’s installed/used on-premises and what’s accessed online. Additionally, from a licensing perspective, FinOps and ITAM need to collaboratively work to ensure compliance with the Bring Your Own Licenses model, which will likely have limits on core assignment quantities.

Ultimately, for ITAM to successfully manage and optimise software, hardware, and vendor agreements it requires input from FinOps. For the FinOps teams to accurately optimise cloud, they require this input from ITAM. This mutual knowledge sharing is fundamental component for both ITAM and FinOps Frameworks.

The traditional view of ITAM as simply an intersecting discipline within the FinOps Framework may be an understatement. To manage every asset within an organisation effectively, whether it is SaaS, on-premise, or Cloud requires a holistic approach, and this is achievable with ITAM at the FinOps core. As time goes on and the lines become increasing blurry, ITAM and FinOps will likely become more reliant on shared goals and knowledge to achieve operational efficiencies across ITAM and FinOps.

ITAM at FinOps' Core