FinOps & ITAM examines the integrations required/possible between FinOps and IT Asset Management (ITAM). ITAM is an overarching framework/discipline aimed at the management of all IT related assets. ITAM covers Hardware Asset Management (HAM), Software Asset Management (SAM) and management of other IT-related asset subsets, including but not limited to Software License Management (SLM) and Software-as-a-service (SaaS) management.
ITAM is a defined discipline within the ISO/IEC 19770 family of standards and is maintained by working group 21 within the International Standards Organization (ISO).
ISO/IEC 19770-1:2017 defines ITAM as “coordinated activity of an organization (person or group of people that has its own functions with responsibilities, authorities and relationships to achieve its objectives) to realize value from IT assets (item[s], thing[s], or entit[ies] that can be used to acquire, process, store and distribute digital information and has potential or actual value to an organization).
ITAM is a discipline used by organizations with the goal of optimizing the cost, risk, and operational efficiency of IT assets throughout the asset lifecycle. The asset lifecycle consists of various phases as depicted in below diagram:
Widespread use of public cloud creates new challenges for ITAM in organizations:
The number of virtual IT assets created in cloud may be far larger than those on-premises and tracked in the past
Bring Your Own License (BYOL) and other license entitlements are fluid, confusing, and also may be far larger in number which may create compliance risk
Having multiple cloud service providers may make it difficult to provide a comprehensive view of what is in use within an organization due to different terminology used, absence of standardization and treatment/identification of assets, and how this information about the assets is accessed
Virtual cloud assets may be created and destroyed rapidly, making them more ephemeral than physical assets
Cloud assets are often created outside of a structured approval process making them harder to track
An increasing number of cloud services are not composed of “assets” which have real world analogs and as such may be more ambiguous than real-world assets
Software licensing models may differ between cloud and on-premises environments
Software utilized by cloud instances may be wholly or partially bundled as part of cloud payments, making it difficult to track license requirements and manage software licensing compliance.
ITAM may assist FinOps in several regards:
BYOL (“bring your own license”) of traditionally hosted on-premises applications (perpetual/subscription licenses) that are now utilized in the cloud may lead to substantial savings compared to on demand pricing, which will help the organization when making decisions on the resources and licensing to use
Traditional ITAM is well-versed at optimizing according to the use rights specified by Publishers and the business use case; this knowledge may prove beneficial to the FinOps practitioner
Traditional ITAM collaborates with Finance, Procurement, Infrastructure, Architecture, and Executive Committee on traditional IT asset utilization and optimization. FinOps can benefit from using these established communication/collaboration channels.
The ITAM practitioner needs to ensure that all on-premises deployments relating to a migrated application are retired/uninstalled or re-assigned to cloud resources post migration in order to avoid usage/cost duplication
Intersections between the FinOps and ITAM teams in an organization should be complementary.
Introduction & Definitions
Individual Understanding: Individual understanding refers to either the ITAM or FinOps disciplines’ comprehension or knowledge relating to particular concepts, ideas, or situations. Both disciplines have in-depth knowledge of their individual frameworks, information sources, goals and experiences and can analyze and assess relevant information to determine or predict outcomes relevant to their own fields.
Shared Understanding: Shared understanding refers to a mutual comprehension and agreement between the ITAM and FinOps disciplines regarding concepts or information. Everyone involved has a similar understanding of the meaning and significance of FinOps, ITAM and the intersection thereof and can communicate about it effectively.
Shared understanding between the ITAM and FinOps teams is important in various contexts, such as workload scoping, BYOL utilization, contract and discount negotiation, problem-solving, and decision-making. It also helps to avoid waste and with the alignment of expectations towards the common goal of a cost-optimized IT estate.
Common Taxonomy: Common taxonomy between ITAM and FinOps refers to organizing and categorizing information based on a shared set of characteristics or attributes. ITAM and FinOps practitioners classify information into groups or categories in a consistent and standardized manner so that they can be easily identified, understood, and communicated. The goal of the shared taxonomy is to create a common language and understanding among ITAM and FinOps to facilitate the exchange and analysis of information, concepts or ideas.
Common Toolset: A common toolset used by ITAM and FinOps refers to a set of tools, software applications, and methodologies to enable either some or all processes related to ITAM, FinOps and/or the intersection thereof.
Common Processes: Common processes refers to recurring actions performed consistently in a standardized manner by ITAM and FinOps. An example of a common process may be workload assessment to determine most optimal pricing or license utilization.
FinOps and ITAM both have their own individual understanding of what assets / resources are in which cloud and how they are being used, including:
How they are licensed (for ITAM) (PaaS / marketplace vs IaaS plus BYOL)
Which IT / business services the resource / asset supports
Whether there are any associated contracts (i.e. software support and maintenance)
Education of both disciplines takes place regarding intersections of FinOps/ITAM and how each can assist the other in the achieving optimization of investment in IT assets (cloud or use of on-premises licenses)
Both disciplines have a shared understanding of what assets / resources are in which cloud and regularly reconcile them to provide a “single pane of glass” for the organization
ITAM is a key contributor to business case evaluation. Using BYOL is a common input to optimization strategy, architecture decisions and modernization activities
There is a shared understanding of each other’s taxonomy
There is a common taxonomy for the management of costs that is used across all assets and cloud resources to enable the organization to build an understanding of the total cost of ownership (TCO) and return on investment (ROI) of IT and business services
ITAM/FinOps are closely aligned and work together to ensure an optimized IT asset landscape. Tracking of migrated workloads shows savings in IT hardware, infrastructure and licensing costs
Existing license agreements are used across disciplines to ensure the best strategy for the workload
Savings resulting from use of hybrid use rights/existing agreements, or refactoring existing applications to leverage cloud-native technologies instead of traditional licenses, are tracked and reported
Operational tools and processes are scaled to support agility between the two functions
As someone in a FinOps Practitioner role, I will…
Establish and maintain clear lines of communication and coordination with ITAM functions within the organization
Determine which cloud services are billed with software licenses, including bundled with a service or purchased from a cloud provider marketplace, making this information and costs available to the ITAM team to manage
Determine which cloud services have been configured as BYOL, making this information available to the ITAM team to manage
Determine which cloud services are eligible for BYOL to leverage unallocated licenses from the ITAM team
Provide ITAM team with service usage metrics so they can determine which cloud services need further OS or container-level inspection
Track licensing costs and realized savings from BYOL licenses
As someone in an Engineering role, I will…
Properly tag resources so others can determine which are good candidates for BYOL and to facilitate ITAM reporting
Consider current license and asset rights and costs when building resources in the cloud, selecting the appropriate licensed or unlicensed versions of architecture to create such cloud resources, and taking care not to purchase licensed products for which the organization has existing use rights available
As someone in a Finance/Procurement Manager role , I will…
Use the information from the ITAM and FinOps teams to determine the optimal procurement method for cloud resources and licenses
Determine forward use projections by license type to determine longer term strategies for creating, modifying or ceasing to maintain license agreements with other companies outside of the cloud
Leverage FinOps and ITAM information for budget planning and forecasting
As someone in a Business/Product Manager role , I will…
Use the information from the ITAM and FinOps teams to determine the optimal design and architecture to build business solutions
Include license and IT asset costs (including stranded license costs) in calculating product profitability and other metrics
As someone in an ITAM Practitioner role, I will…
Make available a summary of unallocated or hybrid use license entitlements with budget/ownership information that can be used by the FinOps team on cloud services to optimize spend.
Track and manage the license position of cloud resources by using the information provided by the FinOps team
Manage software license renewals and reduce licenses already migrated to cloud and not using BYOL
Use the information from the FinOps practitioner on marketplace software purchased and analyze those against existing entitlements
Measure(s) of Success & KPI
Measures of success are represented in the context of cloud costs and may include one or more key performance indicators (KPI), describe objectives with key results (OKR), and declare thresholds defining outliers or acceptable variance from forecasted trends.
The intersection of FinOps practices with ITAM/SAM has become extremely relevant in modern technology operations. By leveraging some of these intersecting and measurable KPIs, it provides organizations with the tools and insights needed to make informed decisions, optimize resource allocation, control costs, and ensure the security and compliance of their resources in the cloud.
Below are some measures of success along with KPIs that organizations can implement to align FinOps practices with ITAM/SAM:
License Compliance: Monitoring software license compliance works to avoid potential legal and financial liabilities; the objective of this key performance indicator is to maintain compliance with license and contract obligations.
License Optimization: Monitoring software licenses to minimize underutilized licenses or to avoid unused licenses.
Cloud Security and Risk Management: Monitoring cloud security to identify potential risks by configuring and reporting appropriate policies and setting alerts with the objective to ensure the security and protection of cloud resources and to protect data on them (e.g. Cyber Asset Attack Surface Management, or CAASM).
An established (bidirectional) link between ITAM and FinOps to monitor, control and report license demands caused by cloud usage (BYOL) to:
Determine and report licenses required, and take corrective action if necessary such as:
Increase of available licenses
Switching between cloud license models to include necessary licenses
Right-sizing of cloud service volume to potentially decrease license usage
Make sure that these licenses are reserved/blocked for this purpose and not used anywhere else
Take advantage of licenses made available through cloud migrations
% / count of licenses available through cloud migrations caused by:
Smaller target instances
Taking advantage of beneficial cloud license terms if requiring less licenses than on-premises
Caveat: Parallel operations during a migration to cloud might cause additional license demand, depending upon the publishers’ terms.
% of applications moved to a cloud environment
% / amount of support costs for on-premises licenses reduced
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one or more cloud providers
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describe a combination of tooling, platform or vendor, and processes including KPIs
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