Amy Ashby
Under Armour
ITAM is a discipline used by organizations with the goal of optimizing the cost, risk, and operational efficiency of IT assets throughout the asset’s lifecycle, which intersects with the FinOps discipline in multiple areas. For an overview of how ITAM intersects with FinOps teams and practitioners, please refer to our documentation on the intersection between ITAM and FinOps.
The following content provides insights where ITAM activities intersect with the various FinOps Framework capabilities and responsibilities of FinOps practitioners. Please use the Table of Contents to navigate the content by FinOps Capability.
Cost Allocation
FinOps Activities
- Participate in developing the strategic use of and naming standards for all required and optional layers of hierarchical groupings and tagging or labeling
- Develop compliance standards for various groups
- Reporting key metrics
- Make decisions on how to allocate cost associated with commitment-based discounts
ITAM Activities
- Use device and other naming standards to determine allocation of licenses. This can be useful when scoping total cost of ownership (TCO) for on-premises migrations
- Use cloud naming standard for allocating bring your own license (BYOL)
- Develop reporting standards for the use of BYOL, etc.
How do FinOps & ITAM intersect and what is the value added by working together?
- Shared understanding and usage of naming standards
- Not an overlap but an identical responsibility of ITAM
- Overlaps with BYOL, cloud service provide (CSP) marketplace
Data Analysis and Showback
FinOps Activities
- Spend a significant amount of effort in collaboration with Engineering/Finance/Procurement/Product Management to build a cost reporting ecosystem which is aimed at helping consumers understand the important aspects of their spend, as well as opportunities to optimize their spend.
ITAM Activities
- ITAM collaborates with Finance, Business and Engineering to ensure appropriate showback can be achieved for licensing costs
- ITAM tools with its repository of entitlement and consumption data assist in providing accurate data and can also provide views of BYOL consumption
- ITAM supports the automation of identifying and tagging non-tagged resources as it pertains to licensing information (such as BYOL), enhancing visibility and improving overall resource management
How do FinOps & ITAM intersect and what is the value added by working together?
- Not an overlap but an identical responsibility of ITAM
- Overlaps with BYOL, CSP marketplace
- Accessing existing vendor dashboards (if available) or creating new dashboards to track consumption-based SaaS usage and drawdown
Managing Anomalies
FinOps Activities
- Establish an anomaly management process for detection, notification, analysis, resolution, and retrospective (including tool selection/configuration as per business requirements) and work with stakeholder teams to establish anomalous detection thresholds and reporting/notifications frequency.
- Document and communicate anomaly detection mechanism and thresholds to all stakeholders
- Ensure that anomaly detection is tied appropriately to cost allocation metadata
- Generate reports that surface all and/or alerted anomalous spending
ITAM Activities
- ITAM conducts regular license compliance reviews
- License shortages are investigated with Business/Engineering to determine whether the changes are accidental vs valid Business Growth
- Underutilized licenses are marked for reduction/retirement, depending on contractual stipulations/allowances
- Unauthorized/unsupported applications referred for uninstallation/upgrade
- License increase/reduction/upgrade or change takes time (not immediate) and depending on agreements may be deferred to a future renewal date (true-ups)
How do FinOps & ITAM intersect and what is the value added by working together?
- License usage management (overage watchout)
- Consumption-based SaaS products can correlate with cloud usage anomalies and action may need to be taken to get costs back in line with what the estimated usage for the contract is
- Unauthorized/unsupported use of services/products (blacklisted products); may be automatically removed
- Right-sizing licensing in response to both overages/underages that ITAM software alerts to
Managing Shared Cost
FinOps Activities
- Identify what kinds of costs are shared
- Work with stakeholder teams to establish mechanism for dividing up shared costs to responsible owners
- Apply Shared Cost Models
- KPIs reporting for shared costs
ITAM Activities
- ITAM works with Finance and other stakeholders to establish an appropriate mechanism/costing methodology to divide/charge shared costs related to licensing
- ITAM and Finance agree on a methodology to distribute monthly cost as a chargeback
How do FinOps & ITAM intersect and what is the value added by working together?
- Overlap, support costs (CSP or software)
- FinOps and ITAM collaborate with application owners to determine how to split/allocate shared costs not only for the cloud resources but also for the licensing (SaaS included)
- SaaS products that are prepaid in a lump sum, but draw down monthly based on consumption will need to be handled differently based on whether or not the shared costs are shown back or charged back. If charged back, the shared costs will need to be determined by their monthly usage as it will vary
Forecasting
FinOps Activities
- Collaborate with Finance, Engineering, Product, and Executive teams to decide on a forecasting methodology and process
- Develop forecasts using the agreed-upon methodology (leverage historical spending data, infrastructure changes and an evaluation of future plans)
- Coordinate with budget leaders tor establishing budgets that align with business goals and forecast
- Fully categorize cloud cost forecasting data sources
- Track & report KPIs
ITAM Activities
- ITAM works with Business/Engineering and Finance to determine and forecast any cost increases/reductions as identified as result of license entitlement and consumption reviews
- ITAM works with stakeholders to determine license requirements and cost of environments’ expansions/reductions
How do FinOps & ITAM intersect and what is the value added by working together?
- ITAM performs forecasting activities but cloud forecasting is out of scope
- Overlaps with BYOL, CSP marketplace, standalone SaaS
- Consumption-based SaaS: Work with engineering to determine the usage forecasted based on trends and planned changes, then FinOps should work with ITAM to determine the best method for acquiring/renewing that is the most cost effective
Budget Management
FinOps Activities
- Work with budget leaders planning
- Track & report KPIs (help monitor cloud spend vs budget)
- Provide reporting on budget vs actual vs forecast
- Alert teams who are projected to materially overspend or underspend
- Work with teams who are forecast to overspend on possible optimisations
- Communicate to appropriate leadership when material underspend to budget is expected so that they can make appropriate decisions
ITAM Activities
- ITAM advises Finance on what the expected budget should be for licensing based on knowledge of what is currently used and forecasted. Accountability remains with the budget owner
- Renewal expenditure is reviewed annually
How do FinOps & ITAM intersect and what is the value added by working together?
- FinOps should work with ITAM to ensure that licenses or consumption-based usage is as expected month over month, and make adjustments where necessary to course-correct if budget is in jeopardy
Workload Management & Automation
FinOps Activities
- Work with application owner to assign the missing tags to the resources
- Automate the communication of the statistics of the affected resources by the automation, non-tags resources
ITAM Activities
- ITAM establishes protocols for regular communication of performance metrics related to resource usage and the impact of automation, ensuring transparency and accountability
How do FinOps & ITAM intersect and what is the value added by working together?
- ITAM continually reviews license usage and engages in optimization and should engage FinOps/Engineering to clean up assets that are temporary or abandoned, or to right-size them
- When an application is designed, ensure elasticity and scaling that involves licensed assets considers the license rights and entitlements
Managing Commitment Based Discounts
FinOps Activities
- Understand what the different cloud services use to offer discounts based on spend commitment
- Apply and manage spend-based and resource-based commitment discounts for the whole organization
- Implement strategies to drive the organization’s Effective Savings Rate (ESR) and measure overall ESR performance
ITAM Activities
- ITAM participates and provides guidance for discounts on software agreements based on a commitment of license quantity and spend
- Licenses used in BYOL or SaaS pre-negotiated agreements are often already discounted as part of existing enterprise license agreements
How do FinOps & ITAM intersect and what is the value added by working together?
- Software purchases made through CSP marketplaces (partially) counts towards overall cloud spend and could affect the amount of enterprise discount that is applied
- ITAM and FinOps should collaborate to determine the best method for licensing based on where it’s hosted, what discounts are available (and related restrictions), what kind of flexibility there is (if any) and whether moving to a resource with no additional license cost is an option
Resource Utilization & Efficiency
FinOps Activities
- Seek a comprehensive understanding of CSPs services and how they are charged to inform utilization and cost efficiencies analyses
- Find and remediate usage inefficiencies, working with other teams to do so as necessary
- High-level check for validity and compliance with cloud policies and governance
- Work with engineering and development teams to identify more cost effective architectures and operations (example: power scheduling or running DB as PaaS instead of IaaS)
ITAM Activities
- FinOps should collaborate with ITAM when right-sizing or cleaning up resources with licensing. Cleaning up resources no longer needed will release a license, while right-sizing may change the licensing (i.e. number of CPUs)
- ITAM participates in discussions related to End-of-Life (EOL), lifecycle events and security, coordinating with FinOps on effective resource management strategies
How do FinOps & ITAM intersect and what is the value added by working together?
- ITAM helps assess and adjust licensing requirements as part of the right-sizing process
Measuring Unit Costs
FinOps Activities
- Work with relevant stakeholders in developing and reporting unit economic metrics
- FinOps should be aware of executive scope and identify gaps in cost allocation alignment to strategy
- Use data and analysis to understand changes in unit economics measures and determine if cost variances are “good” or “bad”
ITAM Activities
- ITAM evaluates existing use of licenses to identify underutilization or overuse, thus managing efficient deployment of resources
- ITAM assesses the costs of licenses (including maintenance, where applicable), both for SaaS tools and BYOL situations, as part of the cost-per-customer calculation
How do FinOps & ITAM intersect and what is the value added by working together?
- FinOps and ITAM collaborate on calculating unit costs as the “all-in” costs for applications should include the costs for licenses used on their resources
Data Ingestion & Normalization
FinOps Activities
- Determine the list of data sources required to fulfill my current reporting and operational needs
- Determine the level of granularity required in each data source
- Establish a data model for normalization, mapping fields from various sources to one another
- Regularly and proactively validate data source content, and clearly understand when changes occur, react to them, adjust and re-document accordingly, and notify all those affected
- Ensure that the data sources and resulting repository of cost and usage information is kept accurately, is appropriately sized, backed up, and managed throughout its useful lifecycle
- Provide and ensure everyone with a need to access information can do so
- Work with every group to determine the right metrics, measures and metadata that should be included in “official” output
- Develop reporting output expectations document (update over time as maturity grows)
ITAM Activities
- ITAM ensures all relevant asset data is available for data ingestion and normalization in the cloud cost management process
- ITAM contributes to the determination of the required level of granularity in each data source, based on the nature and use of IT assets
- ITAM assists in establishing a data model for normalization, mapping fields from various IT asset data sources to one another
How do FinOps & ITAM intersect and what is the value added by working together?
- This has not typically been an overlap, but rather a parallel process for both. As part of the run phase of this capability, we should aspire to pull this data together into a single report
Chargeback and Finance Integration
FinOps Activities
- Implement a system for Chargeback or Showback of expenses
- Identify costs as per the cost allocation strategy at your organization
- Integrate financial data into relevant internal reporting systems if applicable
- Maintain visibility and accountability for expenses at department or product level
ITAM Activities
- ITAM oversees the costs of licenses to ensure they are included accurately in the chargeback process
- ITAM supports the implementation of a tagging strategy to provide visibility into how expenses are allocated, specifically for IT assets
- ITAM maintains visibility and accountability for IT asset expenses at the department or product level, crucial for accurate chargeback or showback processes
How do FinOps & ITAM intersect and what is the value added by working together?
- FinOps and ITAM should collaborate on including licensing costs that are part of chargeback. These costs could be 100% of licensing used or a percentage of licensing they share
Establishing FinOps Culture
FinOps Activities
- Establish FinOps best practices and educate relevant persons on the best practices
- Establish benchmarks for stakeholder teams to use
- Centralize cloud cost management in single cloud or multi-cloud environment
- Create visibility and transparency to cloud cost
- Align accountability to cloud users
- Identify unallocated spend
- Create and contribute to cloud budgets and forecasts
- Create and contribute to showback to increase financial accountability
- Advance communication and socialize FinOps throughout the organization
ITAM Activities
- ITAM actively participates in the FinOps culture within the organization and stresses on the synergies between ITAM and FinOps practices
How do FinOps & ITAM intersect and what is the value added by working together?
- ITAM and FinOps need to work together to ensure each other has a seat at the table in areas where they do not today, but will have an impact and be able to cover each other’s blindspots
- We should deliver a unified campaign to bring visibility to what both FinOps and ITAM can provide
- When working with common stakeholders, FinOps and ITAM should speak with one voice instead of having separate conversations
- ITAM works closely with FinOps to establish best practices for cloud cost management, particularly related to IT assets
Onboarding Workloads
FinOps Activities
- Work with teams to ensure cost visibility throughout the onboarding timeline
- Monitor new workloads (for rate and usage optimization) to ensure effective use of cloud resources to maximize value to the business
- Incorporate the cost of the new workload into forecasts and budgets
- Engage in review or approval processes for funding of new workloads in order to get insights into what is being planned and what estimated costs are
ITAM Activities
- ITAM reviews the licensing needs for new workloads being onboarded, ensuring that all necessary licenses are in place before the deployment
- ITAM checks the compatibility of the new workloads with existing IT assets and licenses, ensuring seamless integration and avoiding unexpected costs
- ITAM supports the budgeting process by providing accurate and comprehensive information about the cost of IT assets and licenses required for new workloads
- ITAM ensures that post-migration the licenses that are no longer used are reharvested or retired
How do FinOps & ITAM intersect and what is the value added by working together?
- FinOps and ITAM should jointly be consulted when new workloads are being planned so that the new workload has licensing it needs and the best procurement method is selected
Cloud Policy & Governance
FinOps Activities
- Recommend and document guidelines and guardrails for cloud usage, train stakeholders on established guidelines
- Develop methods of monitoring cloud policy and governance
ITAM Activities
- ITAM establishes clear procurement policies and guardrails to ensure all software and licensing procurement follows a standardized, controlled process
- ITAM aids in creating a unified tagging policy for on-premises/private cloud resources, closely aligning it with public cloud resources for better cost allocation visibility across business divisions
- ITAM assists in defining governance for policy-compliant actions, possibly setting up processes and consequences for non-compliance
How do FinOps & ITAM intersect and what is the value added by working together?
- FinOps and ITAM could jointly review whether or not users have the ability to procure software/licensing via CSP marketplace and establish policies/guardrails around it to prevent it and force users to use an established process
- Together we can help shape an internal process where the requester must meet certain criteria (i.e. within a budget) and get approvals if there is an exception in order for their resources to be created
- On-Premises/Private Cloud resource tagging policy and governance should be unified across the organization and closely align with Public Cloud resources. It provides a unified view of cost allocation across various logical/business divisions, and also helps in charge-back / showback reporting
- Help create policies/guidelines around how/where resources are created (i.e. what region or CSP) and whether or not they are leveraging existing discounts/licensing
- Assessing total vendor spend for contract negotiations
FinOps Education & Enablement
FinOps Activities
- Educate the organization on “what is FinOps” and the value it provides to the organization
- Help others understand actions they can take to maximize the value of the cloud and provide them with the knowledge and tools to do so
- Building a culture of ACE: Accountability, Collaboration and Empowerment
- Accountability – people take ownership of the cloud resources
- Collaboration – technology, finance, business and ITAM teams working together
- Empowerment – providing these teams information to make the best data-driven decisions
ITAM Activities
- ITAM should be trained on cloud and FinOps practices
- ITAM should participate in training programs offered by FinOps, and vice versa, to understand the interdependencies and overlap in their roles and responsibilities
How do FinOps & ITAM intersect and what is the value added by working together?
- ITAM and FinOps likely have their own education separately with stakeholders, but they should also educate each other and first get to a shared understanding and in a later phase, share common taxonomy, process, etc.
- ITAM and FinOps could conduct joint education sessions for stakeholders, focusing on topics like cloud cost management, software licensing, compliance, and asset optimization
- ITAM and FinOps could work together to establish a common language and definitions to improve communication and understanding across both teams
Establishing a FinOps Decision & Accountability Structure
FinOps Activities
- Establish a decision and accountability structure as it pertains to FinOps activities & decisions
ITAM Activities
- Understand the ITAM role in the FinOps decision and accountability structure
How do FinOps & ITAM intersect and what is the value added by working together?
- Both ITAM and FinOps should have a decision and accountability structure. Each discipline has an obligation to consider where the other would fit into the structure and to understand their role in all activities whether they be ITAM activities, FinOps activities, or an activity which fall under both disciplines
Acknowledgments
The FinOps Foundation would like to thank the members of this Working Group for breaking ground on this work, creating this guide, and making improvements to the FinOps and ITAM Intersecting Frameworks pages. Let’s take a moment to acknowledge the hard work of the following people:
We’d like to thank our Technical Advisory Council (TAC) Liaison, Kim Wier of Target, and our supporters:
- Trent Allgood
- Hrishikesh Sardar
- Kim Wier
- Gregory Brinkerhoff
- Ron Brill
Did we miss some core information in this guide? Have something you want to discuss based on what you see here? Join our chat channel on Slack: #sig-finops-itam