How ITAM Intersects with FinOps Capabilities

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, 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.

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 costs associated with commitment-based discounts
• 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
• KPI reporting for shared costs

ITAM Activities

• Use device and other naming standards to determine allocation of licenses. This can be useful when scoping the 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
• 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 costs as a chargeback

How do FinOps & ITAM intersect and what is the value added by working together?

• Allocation is an identical responsibility of ITAM
• There are overlaps with shared costs like BYOL, cloud service provider (CSP) marketplace, and support costs (CSP or software)
• Shared understanding and usage of naming standards
• 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.

Reporting & Analytics

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 reporting can be achieved for licensing costs
• Managing ITAM tooling with its repository of entitlement and consumption data to assist in providing accurate data and also provide views of BYOL consumption
• ITAM supports the process of identifying and tagging 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?

•  ITAM and FinOps have similar responsibilities across their respective disciplines
• There are overlaps in public cloud (i.e. BYOL, marketplace)
• Both ITAM and FinOps can work together and access existing vendor dashboards (if available) or create new dashboards to track consumption-based SaaS usage and drawdown

Anomaly Management

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

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 for 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 a result of license entitlement and consumption reviews
• ITAM works with stakeholders to determine license requirements and the 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 and 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

Budgeting

FinOps Activities

• Establish and manage cloud budgets
• Track and analyze cloud spending
• Ensure accountability for financial outcomes
• Collaborate with finance and business teams
• Adjust budgets based on forecasts and actual usage
• Align budgeting with business objectives

ITAM Activities

• Cost visibility into hardware and software expenses, with a focus on identification of cost saving opportunities
• Collaborate with budget owners on software and hardware costs based on what is used and/or forecasted to be used
• Accurately forecast software renewals
• Perform due diligence on renewals to minimize compliance risk
• Support strategic financial planning by aligning IT and software investments with business objectives

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
• Establish regular communication channels between FinOps and ITAM teams to ensure alignment on financial goals, asset management strategies and budget planning
• Exchange data and insights between FinOps and ITAM teams, providing FinOps with detailed asset information and ITAM with financial context. This enables better decision-making and optimization of IT spending.
• Collaborate on budget planning processes, with FinOps providing financial forecasts and ITAM offering insights into asset lifecycle costs, procurement needs, and upcoming renewals where BYOL could have benefits to budgets

Rate Optimization

FinOps Activities

• Understand what the different cloud service providers 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), whether moving to a resource with no additional license cost is an option and whether to use GCP RHEL CUDs.

Unit Economics

FinOps Activities

• Work with relevant stakeholders in developing and reporting unit economic metrics based on variable cloud-based costing models such as subscription fees or pay-as-you-go costs
• FinOps should be aware of executive scope and identify gaps in cost allocation alignment to business strategy
• Use real-time data and analysis to monitor variances and trends in unit economics measures and determine whether remediation/optimization activities are required
• Provide detailed reports to stakeholders to facilitate real-time decision making

ITAM Activities

• ITAM is primarily involved with fixed or depreciating costs of physical and software assets, relying on periodic reviews and static depreciating schedules
• Subscription licenses are mostly fixed for static periods of time with no ability to adjust subscription quantities within the fixed periods of the agreements
• Unit costs are typically made up of large, upfront, one-off capex-related expenditure, with annual maintenance fees (in the case of perpetual licenses) or annual subscription fees
• ITAM evaluates existing use of licenses to identify future underutilization or overuse, thus managing efficient deployment of resources
• ITAM assesses the costs of assets and licenses (including maintenance, where applicable), both for SaaS tools and BYOL situations, as part of the cost-per-customer calculation
• ITAM does not typically calculate the cost of networks, infrastructure and other operational expenditures when evaluating asset or license related costing

How do FinOps & ITAM intersect and what is the value added by working together?

• FinOps may not be aware of excess licenses held by ITAM that can reduce the unit cost of the workload. Effective management of unit cost may be achieved by a hybrid of fixed license and variable cloud operating costs.
• Migrating from on-premises to cloud may involve a shift of expenditure but a short term duplication of costs due to the length of the migration process and existing depreciation/maintenance schedules. These costs should be reflected in the unit costs of the workload to ensure the total cost of ownership of the workload is well understood and managed.
• ITAM needs to ensure a full inventory and clear understanding of BYOL licenses used in the cloud. Failure to do so may cause risk to the organization in the form of license overuse which will increase the unit cost of the workload due to audit-related penalties and fees.

Data Ingestion

FinOps Activities

• Identify data sources based on requirements of Reporting & Analytics and Unit Economics.
• 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 updated as new data is available, is appropriately sized, backed up, spot checked for accuracy and managed throughout its 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?

• There has not typically been an overlap, but as the FinOps Framework expands to be inclusive of Licensing and SaaS there is bound to be a duplication of efforts ingesting License, SaaS and cloud billing and usage data. FinOps and ITAM teams should strive to create/share one source of truth for data and avoid duplicating the effort and cost of maintaining multiple repositories of the same data.

Invoicing & Chargeback

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.

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 estimated costs

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

  Workload Optimization

  FinOps Activities

  • Monitoring workloads in the cloud environments for optimization opportunities such as right-sizing, shutdown, and spot instances. Analyzing overall cloud usage for optimization with Reserved Instances and Savings Plans.
  • 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
  • Seek a comprehensive understanding of CSPs services and how they are charged to inform utilization and cost efficiency analysis
  • 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 a database on PaaS instead of IaaS)

  ITAM Activities

  • Up to date knowledge of software publisher BYOL rules and other licensing changes that may impact what licenses can/can’t be used in cloud environments
  • Assisting in negotiating with software publishers at contract renewal
  • ITAM establishes protocols for regular communication of performance metrics related to resource usage and the impact of automation, ensuring transparency and accountability
  • 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?

  • Constant knowledge sharing will enable organizations to take advantage of a wide range of optimization opportunities
  • 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
  • ITAM helps assess and adjust licensing requirements as part of the right-sizing process

  FinOps Practice Operations

  FinOps Activities

  • Establish a decision and accountability structure as it pertains to FinOps activities and decisions
  • 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

  • Understand the ITAM role in the FinOps decision and accountability structure
  • 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?

  • 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.
  • 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

  Licensing & SaaS

  FinOps Activities

  • Report on the use and allocation of cloud software licensing options (on-demand, BYOL, marketplace, SaaS etc.) by using tags or other methods
  • Understand what cloud resources can leverage alternative software licensing options
  • Utilizing software licenses (i.e. BYOL) and/or SaaS services (i.e. Snowflake) in cloud environments

  ITAM Activities

  • Managing software license agreements, lifecycle, optimization, and monitoring usage across the organization
  • Ensuring compliance with publisher rules and contract terms on-premises and in the cloud
  • Ownership of overall software budgets
  • Investigate methods of license and SaaS procurement and the advantages/disadvantages of each method (i.e. reseller, publisher or CSP marketplace)

  How do FinOps & ITAM intersect and what is the value added by working together?

  • Having a holistic view of software usage across licensing and SaaS is key to true cost management and unit economics
  • Cloud license management and SaaS management are often overlooked by the ITAM and FinOps teams. These teams need to work together and share data to achieve full visibility of what is owned, what is being used, and the terms and conditions of the licenses.
  • Once ITAM and FinOps are sharing data, then the teams can work together ensuring compliance, risk mitigation, optimal purchase method, favorable licensing terms and licensing is optimized for the usage required by the business
  • Collaboration between ITAM and FinOps to ensure that the cost, usage, and decision making on how Saas is selected, used, and ultimately governed in the organization are well understood

  Cloud Sustainability

  FinOps Activities

  • Help collect data around cloud emissions that is meaningful to the organization’s sustainability goals

  ITAM Activities

  • Help collect data around on-premises and SaaS emissions data

  How do FinOps & ITAM intersect and what is the value added by working together?

  • FinOps and ITAM will work together to support the creation of a holistic view of emissions data for the organization

  FinOps Tools & Services

  FinOps Activities

  • FinOps shall be responsible for speaking to all stakeholders (including ITAM) in the requirements gathering process for the tools/services
  • FinOps shall be responsible for supporting all personas (including ITAM) to onboard the tooling and be trained on its workings
  • FinOps shall be responsible for collating feedback post onboarding to support ongoing re-evaluation of tooling

  ITAM Activities

  • ITAM teams will require insights and data into certain aspects of the cloud environment(s) including BYOL usage, marketplace usage, and spend trends

  How do FinOps & ITAM intersect and what is the value added by working together?

  • Many ITAM tools are adding FinOps capabilities (often through acquisitions) and so it may be that functionality is already available in existing tools within the organization. This should be considered when scoping requirements and purchasing/renewing tools.
  • Within organizations with closely aligned ITAM & FinOps teams, there will likely be overlap with 3rd-party services, particularly around BYOL implementation and management
  • Sharing and combining data between separate ITAM/FinOps tools may be necessary. If so, this process should be assigned a clear owner and automated as much as possible.

  Planning & Estimating

  FinOps Activities

  • Work with Engineering personas to understand the plan and build cost estimates for new cloud workloads and expected changes to environments

  ITAM Activities

  • Empower engineers with relevant licensing context and information to support the creation of accurate estimates
  • Ensure that licensing capacity considerations are included in the planning stages

  How do FinOps & ITAM intersect and what is the value added by working together?

  • Both ITAM and FinOps supporting the planning and estimation processes will enable more accurate estimates and de-risk licensing challenges as part of the planned projects/programs

  Architecting for Cloud

  FinOps Activities

  • Work with Engineering personas to build cost as a non-functional requirement in architectures for new cloud workloads

  ITAM Activities

  • Empower engineers with relevant licensing context and information to support that licensing implications are understood on architectural designs
  • Ensure that licensing capacity considerations are included in the designs

  How do FinOps & ITAM intersect and what is the value added by working together?

  • Both ITAM and FinOps supporting the architecting for cloud processes will enable more license-conscious architectures and de-risk licensing challenges as part of the planned projects/programs

  Benchmarking

  FinOps Activities

  • Create utilization and optimization KPIs related to cloud and consumption-based SaaS at various levels (i.e. product, team, business unit)
  • Compare cloud spending against business growth, ensuring alignment and identifying areas of concern and effect on unit economics
  • Compare cloud spending against historic values or industry peers
  • Establish benchmarks using KPIs and unit economics

  ITAM Activities

  • Create utilization and optimization KPIs related to licensing
  • Compare software and hardware spending against historic values or industry peers
  • Establish benchmarks using KPIs and unit economics

  How do FinOps & ITAM intersect and what is the value added by working together?

  • ITAM and FinOps should provide the business with available KPIs and measures of unit economics to help make decisions on what benchmarks can be set both internally and externally
  • ITAM and FinOps should work together to help facilitate making the benchmark data accessible and visible and provide guidance on what good, better and best look like
  • ITAM and FinOps should collaborate to share the information on benchmarks to stakeholders.

   

  Acknowledgments

  The FinOps Foundation would like to thank the members of the ITAM SIG for breaking ground on this work, creating this guide and making improvements. Let’s take a moment to acknowledge the hard work of the following people:

Amy Ashby

Under Armour

Peter Schmidhofer

Oracle

George Arezina

TAKEDA

Colin Jack

Flexera

Salomé Keet

FNB South Africa

Brian McCumber

Tech Money Talks

Rich Gibbons

Synyega

Kris Wong

Surveil

Stephen Old

Synyega

Keith Hiszem

Cardinal Health

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