FinOps – The Evolution of SAM

When we adopt cloud solutions, it’s easy to be captivated by the flexibility that the as-a-service model offers. Where workforces were once tied to their desks, they can now operate with the grace and ease of swans, staying productive even when on the move. Data flows seamlessly, unaffected by whether staff are at their desks or not. However, this newfound mobility—and the infrastructure supporting it—comes with a price. Specifically, a service fee that never stops ticking. Unlike your staff, that service runs 24/7/365.

Approach

To avoid unnecessary financial drain, it’s essential to manage IT cloud resources in a way that aligns with actual needs. Treating cloud infrastructure as if it were traditional on-site software is a mistake. While on-site software typically involves an upfront payment, cloud services operate on much shorter billing cycles. Effective cloud management requires us to keep pace with these cycles.

However, focusing solely on minimizing cloud expenses doesn’t fully capture the essence of FinOps. Consider the retail sector: much of their profit is generated in the lead-up to Christmas. The ability to “flex up” IT resources during this peak period and then scale back down after the January sales allows for optimized IT spending and improved cash flow.

Seasonal trends are critical in retail, but so is the concept of a “product launch.” First-mover advantage not only boosts market capture but also enhances brand retention and loyalty, particularly when it comes to Fast Moving Consumer Goods (FMCG).

To support this agility, it’s crucial that IT/Cloud Architecture and Procurement speak the same language. When these two pivotal parts of the business are aligned, the cost-benefit analysis of scaling cloud services becomes clear. IT architecture teams should be able to demonstrate the fiscal benefits of infrastructure changes, rather than simply asking for more resources. Meanwhile, Procurement must make quick, informed decisions. This shift in culture is vital for success.

Summary

While SAM traditionally takes a vendor-centric view of the IT estate, the future lies in adopting best practices for tagging cloud services and their components. Properly tagged services allow for easy retrieval of financial data—imagine running a SQL query in your SAM suite that pulls up all costs associated with a specific IT service, like “E-Commerce.” By aligning tagging with your request processes, your business gains a clear understanding of IT service costs at every stage of its lifecycle.

This approach not only enhances transparency and control but also positions you as the CFO’s new best friend.