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FinOps vs. ITAM

What is FinOps? FinOps is originally focused on Cloud Cost Management and optimization for infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS). But, over time this practice has broadened and the financial management practices of FinOps have expanded into other areas of the IT estate and business.

Many FinOps teams are familiar with enhancing the spend efficiency of their cloud infrastructure resources. However, they are far less familiar with the software that is running on those resources and the licensing restrictions associated with the software. Because of this, as FinOps usage expands, it necessitates the inclusion of IT asset management (ITAM). ITAM practitioners bring years of knowledge and experience on software license mobility to the FinOps discipline, further enhancing efficient cloud spend.

FinOps teams help organizations analyze and reduce their cloud costs by relying on manual and automated policies. Policies can be used, for example, to identify underutilized discounts from cloud providers, rightsize instances, shut down workloads after hours, and strengthen software licensecomplianceinitiatives.

The FinOps Operating model relies on three phases:

  1. Inform: With a focus on visibility and allocation, this phase concentrates on cost visibility across all clouds; currency conversion; chargeback and showback; allocation of costs to relevant dimensions; benchmarking; and budgeting, forecasting and anomaly detection.
     
  2. Optimize: This phase focuses on cloud cost utilization and usage rates. Both the amount of usage (i.e., rightsizing, lights on/off policies, zombie infrastructure, unused volumes, or public IP addresses) and the price (i.e., enterprise discounts, committed use discounts, reserved instances, or storage tiers) are evaluated.
     
  3. Operate: In this phase, FinOps practitioners focus on the continuous improvement of operations. Priorities include defining and executing processes to achieve optimization goals; establishing appropriate metrics and key performance indicators (KPIs); automation and integration of operations; and evaluating unit economics.

ITAM professionals are focused on maximizing the value of investments in technology. Identifying the hardware (hardware asset management, HAM), software (software asset management, SAM), and IT asset disposition (ITAD) of their IT ecosystem, helps drive improved decisions. This is particularly important in hybrid environments that include on-premise, Cloud, and SaaS technologies.

Working together to optimize cost savings

ITAM teams work closely with other functional areas in an organization. Such as infrastructure and IT service management. ITAM can aid decisions about cloud migration, cloud cost optimization, license compliance, rightsizing and reclaiming licenses, and application rationalization.

Today, with public cloud spend (and wasted cloud spend) growing, it is no surprise that optimizing the existing use of cloud is the top cloud initiative. With the ultimate goal to realise cost savings. To help achieve this goal, the majority of organisations (71 %) have either a cloud center of excellence (CCOE) or a central cloud team. They are focused on governance and culture, while prioritizing collaboration and providing centralised tools and controls. Some of the top metrics for assessing progress against cloud goals, include cost efficiency/savings (reported by 74 %) and cost avoidance (48 %) (source: Flexera’s 2022 State of the Cloud Report).

Applying the three phases of the FinOps lifecycle to support ITAM in the cloud:

  • Inform: An ITAM approach prioritizes obtaining visibility into license usage and entitlements for the cloud, including virtual machines (VMs), containers, PaaS services, and considering bare metal infrastructure.
  • Optimize: Optimization efforts include leveraging bring-your-own-license (BYOL) options to reduce cloud infrastructure costs, connecting the instance lifecycle state with compliance calculations, and managing the risk of compliance based on cloud inventory. ITAM can help FinOps practices by optimizing license considerations across cloud vendors (with considerations specific to Amazon Web Services, Microsoft Azure, ...) and for containers.
  • Operate: Gaining clarity into the ever-changing licensing landscape is a priority at this stage, where continuous evaluation and automation are necessary.

FinOps and ITAM practitioners can integrate their efforts by focusing on how they are informed about their initiatives, how they optimise their programs, and how they improve operations.

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