TBM (Technology Business Management) and FinOps intersect in their shared focus on managing technology investments and optimizing financial outcomes. TBM is an IT Financial Management (ITFM) discipline that improves business outcomes by giving organizations a consistent way to translate technology investments to business value.
TBM defines the tools, processes, data, and people needed to manage the business of technology in a standard taxonomy that can be used by technology, finance and business leaders. FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.
Both disciplines prioritize financial transparency, cost optimization, and aligning technology spending with business objectives. Specifically, TBM compliments FinOps by providing a total cost of ownership (TCO) perspective on cloud-related labor, SaaS, management tools, and license spending. FinOps enhances TBM by providing granular insight on cloud service provider (CSP) spending and opportunities to optimize the business value of the organization’s investment in cloud resources. Based on your organization business case, the FinOps and TBM team(s) may be centralized or separate collaborative unit(s).
Both TBM and FinOps disciplines have their individual understanding of how CSP resources are being paid for and consumed. They possess in-depth knowledge of their respective frameworks, information sources, goals, and experiences. They can analyze and assess relevant information to determine outcomes specific to their disciplines. Education takes place to enhance the understanding of the intersections between TBM and FinOps and how they can assist each other in optimizing the business value of CSP investment.
Both TBM and FinOps teams have achieved a shared understanding of CSP consumption costs. They regularly reconcile these costs to provide a comprehensive view of the organization, creating a “single pane of glass” approach. There is also a shared understanding of each other’s framework, allowing for effective communication and analysis. TBM is used in conjunction with FinOps to bring additional transparency and understanding to the organization’s cloud consumption. TBM is also used to compare fixed and variable costs when comparing digital infrastructure and data management solutions. Costs are aligned to TBM Cost Pools and Towers to enhance visibility.
Common Taxonomy, Toolset, and Processes
There is common terminology for cost management across all assets and CSP resources. This shared terminology enables the organization to develop a comprehensive understanding of the TCO and the business value derived from cloud investment. Cloud costs are fully mapped to all four layers of the TBM Taxonomy – Cost Pools, Towers, Solutions, and Business Capabilities – maximizing transparency and understanding. TBM and FinOps practitioners closely align and collaborate to ensure an optimized cloud consumption landscape. The tracking of migrated workloads allows for the measurement of OpEx versus CapEx savings achieved through the utilization of cloud infrastructure.
A common toolset including software applications and methodologies is used to enable either some or all TBM and FinOps processes. Recurring actions are performed consistently in a standardized manner by TBM and FinOps practitioners. An example of a common process may be a chargeback allocation methodology including CSP direct costs (FinOps), as well as indirect labor, SaaS, cloud management tools, and/or license costs (which are applied when using a TBM TCO approach).
As a FinOps Practitioner, I will…
Establish and maintain clear lines of communication with the TBM Office/Practitioner to ensure seamless coordination and prioritization of TBM and FinOps initiatives
Understand how organizational cloud spending aligns with the TBM Taxonomy and overall technology TCO
Ensure the TBM Office has access to all CSP spend data
Define a cloud resource tagging strategy that enables cloud spend alignment to the TBM Taxonomy
Align tools, reports, and data sources between TBM and FinOps for reliability and user-friendliness so stakeholders get harmonious and dependable information from both functions
Align TBM and FinOps cost forecasts feeding into organizational forecast and budget
As a TBM Practitioner, I will…
Establish and maintain clear lines of communication with the FinOps Office/Practitioner to ensure seamless coordination and prioritization of FinOps and TBM initiatives
Understand and communicate the organization’s cloud-related TCO, including direct CSP costs and indirect labor, management tool, SaaS, and license costs
Promote a culture of IT cost transparency and value-based decision-making on CSP investment
Align tools, reports, and data sources between FinOps and TBM for reliability and user-friendliness so stakeholders get harmonious and dependable information from both functions
As an Engineering Manager, I will…
Properly tag resources so TBM and FinOps practitioners can easily align CSP spending to the TBM Taxonomy
Utilize TBM to understand the TCO associated with cloud migration, development, and operationalization, while using FinOps tools for specific deep-dive analytics of cloud expenditure and resource optimization
Distribute cloud costs among TBM towers
Distribute cloud costs among applications, products and solutions, and business capabilities
As a Finance Manager, I will…
Understand how FinOps and TBM enhance IT spend transparency and utilize their insights across the organization
Determine how to identify cloud costs within the accounting system of record and systematically share relevant cloud cost booking with TBM
Collaborate with TBM and FinOps practitioners to establish IT financial governance and policy on cloud consumption
Leverage TBM and FinOps data for budget planning and forecasting
Partner with TBM and FinOps to confirm the accuracy of cost model calculation and reporting
Work with TBM and FinOps practitioners, engineers, and product owners to understand the TCO and return on investment (ROI) of CSP investment
As a Procurement Manager, I will…
Identify cloud contracts within the procurement system of record
Ensure cloud service provider and/or reseller agreements include access to cloud cost data for TBM and FinOps analyses
Use the information from the TBM and FinOps teams to determine the optimal procurement method for public cloud resources
As a Business/Product Manager, I will…
Use information from the TBM and FinOps teams to understand the total cost of ownership (TCO) of my cloud investment decisions
Consult with the TBM and FinOps practitioners before making cloud investment decisions
Enable IT financial governance and policy on cloud consumption within my business unit
Review and validate TBM and FinOps cost reports
As an Executive, I will…
Direct the strategic path for TBM and FinOps, confirming their future roadmap
Serve as the ultimate escalation authority, using insights from TBM and FinOps to steer the organization
Assume accountability for forecasts, budgets, TCO & ROI calculations
Measures of Success & KPI
Measures of Success
Measures of success are represented in the context of cloud consumption and may include one or more key performance indicators (KPIs). These KPIs provide organizations with insight on how they are maximizing the benefits gained from combining the TBM and FinOps frameworks to understand and manage cloud costs.
Consistent Reporting: Reporting on CSP consumption is coordinated between TBM and FinOps teams, the same data sources are used, and analytical results are consistent.
Coordinated Policy and Governance: TBM and FinOps teams consult with each other before establishing or changing cloud financial management policies, the governance structure, or products used to manage cloud consumption.
WALK: % of CSP costs aligned with the TBM Towers
WALK: % of CSP costs aligned with the TBM Solutions
RUN: % of CSP costs aligned with the TBM Business Capabilities, Units and/or Products
Supporting KPIs – Related to other FinOps Capabilities
Effective tagging and cost allocation are critical to both TBM and FinOps.
% of Costs Associated with Unallocated CSP Cloud Resources
% of CSP Cloud Costs that are Tagging Policy Compliant
% of Costs Associated with Untagged CSP Cloud Resources
Application Portfolio Master and Service Registry, including application/service owner, demand profile (in period and forecasted)
IT Service Management data, including IT Service Catalog/CMDB/Service Registry, and Service Tickets
IT Asset Management data, including Servers (physical, remote/cloud, and virtual including hypervisor)
IT Vendor Management data, including Vendor Agreements and Contracts (e.g. cloud service providers, as well as consulting, contract, and other related service providers)
IT Technical Inputs from monitoring tools for provisioned/ used storage, CPU/ RAM utilization, etc.
Cloud Consumption Data (e.g. AWS Cost and Usage Report; Azure Cost Management and Billing)
Cloud Commitment Plans and Consumption (e.g. savings plans, reserved instances, other negotiated commitments to consume such as the Microsoft Azure Commitment to Consume Agreement (MACC), AWS Enterprise Discount Plan (EDP), etc.)
Enterprise Cost and Resource Pricing Schedule(s).
Cloud Platform Budgets and related monitoring, alerts, etc.
Related contractual benefits, inclusions, and licensing features (e.g. Azure Hybrid Use Benefits)
Cloud Tagging standards
Chart of Accounts, Cost Centers, Business Unit Codes, Capital Budget Codes, Location Codes
Cost Allocation Model (Actual/Planned Cost to Cost Pools, IT Towers, and Apps & Services/Solutions allocations)
General Ledger; Payables Ledger
Financial Analysis Variables, Rates, and Ratios, including Discount Rate(s) (or WACC), Hurdle Rate(s), Event Horizon, Standard Labor Rates and Burden Rate (Labor; Planning)
Financial Planning and Budgeting data by Ledger Account, Cost Center and by financial period.
Fixed Asset Ledger
Financial Policies, Procedures, Protocols, andPractices, including financial expenditure approval thresholds; depreciation and amortization policy/strategy; capitalization bias/strategy;
Organizational Structure, Human Resources, andLabor data, including internal/external labor cost rates, number of FTEs, standard burden rates; contractual restrictions, limitations, etc.
Benchmark data, including industry/sector specific metrics
Get involved and contribute to the community by sharing your real world experiences related to this Capability in the form of a story or providing a playbook for how you have implemented best practices in your organization. Your real world experiences can be provided in the context of:
one or more cloud providers
the types of cloud services used (compute, storage, database, etc…)
describe a combination of tooling, platform or vendor, and processes including KPIs
the industry the organization belongs to
the complexity of the organization (global enterprise, start-up, etc…)