FinOps in Action

FIA - Business Value & Buy-In Compilation
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Intro: [00:00:00] Welcome to finops in Action. I'm your host, Alon Arvas. Each week I'll sit down with finops experts to explore the toughest challenges between finops and engineering. This show is brought to you by 0.5, empowering teams to optimize cloud costs with tip detection and remediation tools that drive action.

Alon Arvatz: So Emily, why don't you share with us what is the one thing you got wrong when you started FinOps Career?

Emily Cornock: Good question. I think the one thing that I got wrong. When I started FinOps was focusing the conversation on, on saving cost only, and it was largely because of how I got into FinOps to begin with, which was nearly eight years ago before I knew it was even called FinOps. And I just had a growing challenge around cloud costs that I had to solve.

And, uh. Challenge set to me by leadership that we needed to solve our cloud cost problem because it was [00:01:00] growing. And so when I first started looking at FinOps or cloud cost optimization, back then it was purely about saving cost and not about broadening the conversation about the cost is there, but we we actually getting value out of it.

Is this cost logical and optimized? And is it actually generating a good outcome for our business? And so I think that's the biggest issue that I had when I first started with FinOps.

Alon Arvatz: Okay. That's, uh, very interesting and you, you feel like today you drive the conversation a lot more around business value versus cost saving. That's where you're taking things.

Emily Cornock: Yeah, definitely. It's very much more focused on value. Shifting the conversation away from why is it costing so much is something that generates. A culture of, of understanding, uh, and actually making sure that we're getting the value out of something. I think inherently, as soon as you [00:02:00] ask somebody why is it costing so much, there's such negative connotations and that negativity starts to build this culture of, of blame and name and shame.

Which can be really, really easy to build up in, uh, ops when you're looking at the wrong thing. But shifting away from that, why is it costing so much in a negative connotation and trying to understand actually what value is that cost generating and is that the right value for our organization? Starts to build a much better culture and a much better understanding of the cloud.

So I run. The data platforms at Suncorp, that was my core role when I first started at Suncorp. And for anyone who runs data platforms, you will know that they are typically the top of naughty lists when it comes to cloud cost reports. They are very memory intensive. Compute intensive. They love to store data.

The more data, the better outcomes you can generate for your business, but it means that they are often at the top of that list [00:03:00] and focusing only on the costs that they were incurring on. Our general ledger wasn't really focusing on the value that. These platforms were also generating for our organization, our data platforms underpin all decisions that we make.

They underpin the personalization that we put in place for our customer. They now underpin a lot of our AI outcomes, so they generate huge volumes of value for our organization. And as soon as we started to shift the conversation away from man, they cost a lot of money. And why are they costing so much too well?

This is the platform that does all of our predictive modeling for natural hazard events and actually let us know when a natural hazard is going to impact our customer. And this is the cost of that platform. And it increased because we had a natural hazard on it at that time. It became a much more constructive conversation, and frankly, some of the conversations just stopped because it was, this is the cost of the platform and that is the cost of delivering this [00:04:00] outcome for our customers.

And That's okay. That's a cost that we accept.

Alon Arvatz: So how do you look at it today? So it's not about presenting the data and the problems, what else you need to do as a finops leader?

Zach Johnson: Yeah, so I think it's finding the, the right metrics to the audience that you're, you're presenting on. You know, if you're presenting to the C-Suite, they're probably not gonna care about tagging compliance. But they're gonna care a lot about the percent of unallocated spend in the, in their environment.

If they can't attribute, you know, that spend to a business unit, a business service, a business entity, whatever you call it you know that that's a major problem for them. think the second thing is, is connecting. Business value to every action that you're, you're taking, whether it's helping companies, uh, increase their margin, or whether you're talking about they've got, you know, 50 hours of developer time to spin in a sprint.

What makes the most sense to return, the most value to the business? In, in finops, we certainly care very much about, uh, our remit [00:05:00] of, of saving money, but we don't really, a lot of people don't stop and, and take that, what that full picture looks like. Right. Could. Be spending time on developing new features that brings in a lot more revenue than spending time on, on cleaning up resources or idle waste in, in their environment.

So it's really about balancing, know, your priorities with the business priorities and, and come to kind of an alignment on what, what's gonna return the most value for that business unit, that product, or that service.

Alon Arvatz: Yeah. Wow. I have so many questions of what you said right now, but let's take it one by one. Uh, first of all, business value. Let's, let's open it up because a lot of people bring this topic to, to the podcast, and I think there is a lot in there. So when you said business value. did That mean like showing what revenue is generated from, from this, spend, or it's also about other type of value.

You know, for example, um, this, this new feature or new model is [00:06:00] helping us with retention, helping us with position ourselves as innovative. So do you go to revenue or you go beyond to other value you're getting from the cloud investment?

Zach Johnson: Yeah, so I, I think, you know, We're a SaaS company, the, the company I work at. So, you know, mar margin is, is always the most important thing for us, but I think it's important to, to realize that it can go beyond. Re revenue and, and, sometimes finops people like to be command and control. And, and sometimes it's more about being an, an enabler in, in a situation like the, the race to ai, right? So every company wants to enable ai. They wanna use ai. It's, it's the hottest thing on, on the marker right now. So sometimes it's more about how do we en enable the right dashboards and data sources to show where we're spending our time and in money, in ai, and, and rather than. Tie, tie it to like, what are you actually getting on your return for ai?

So sometimes it's, we don't yet understand that return on investment, so we just need to enable [00:07:00] teams to kind of utilize new technology and, figure out what that return on their investment is. So sometimes it's, it's not about controlling those costs, it's about enabling people to understand the data behind the money that they're spending and the business value that that's hopefully driving for their organization.

Alon Arvatz: And that's a really interesting insight. So you're basically talking about, hey, I can also show the organization that our investment goes on innovation and that we're actually, uh, investing in ai, which is something that is a strategic initiative in the company. When you go to the executives you talked about earlier and you don't talk to them about tagging compliance.

Okay, I get that. Uh, do you also share with them, Hey, look, we're investing more in AI now, thanks to reallocating, uh, a budget or reallocating spend to AI services or infrastructure.

Zach Johnson: Yeah, and we also try to go a layer layer deeper, right? You're enabling with your development teams with [00:08:00] maybe a AI enabled I IDs or, or code generation. So. You think that's great, but how does that attribute itself to business value? Are we seeing, uh, more commits, more features? Are we seeing less errors in our code, less pipeline failures?

'cause our, our code is better and hopefully our, our velocity is getting better. So we try and take it a, a, a layer deep beyond just reporting. You know, we're spending X dollars per engineer trying to connect it to that next layer of business context. We spent X dollars per engineer on these, these code generation or optimization tools, but we're actually getting in return, uh, features out to our customers quicker.

Our pipelines are, are failing less 'cause our, our code, uh, is cleaner and developers are able to commit. know, make more commits. Um, and, and less time in between those commits 'cause they're accelerated by those AI tools. So just showing the cost you're spending per engineer on a tool like that doesn't really connect to that second layer of business context, which is really the most important thing [00:09:00] to any

kind

of leadership

Alon Arvatz: Yeah,

Zach Johnson: team.

Alon Arvatz: that's great. And when we're talking about what's interesting for executives. Do you find executive, uh, care about optimization? Do you share the optimization efforts? How much was saved? Is that, is that part of your presentation?

Zach Johnson: Yeah, we, we certainly, you know, share that, but I think the ultimate, they care about the bottom line. They care about their, their gross margin and, and how it affects the goals that they have to, you know, report up to, to the board. So I think that's a, you know, interesting one. You know, those, those I think KPIs are, are constantly changing.

But, you know, you can't present every KPI to ev every team you present to. So you really gotta find the ones that, that hit home, um, you know. Best for them. And it's really things like, what's my unallocated spend? How, how does this affect my cloud growth margin? And I think this maybe the tertiary thing is it's, you know, you, you explain to them, we did all these optimization [00:10:00] efforts, but spin went up in the cloud.

So how, how do you separate out your, your customer growth, your, your business as usual, your expansions into new regions to serve your customers? like the savings that you actually achieve. So one thing we really like to focus on is anytime there's a cost optimization opportunity or we're rolling out a new feature or expanding to a new region, we have a separate dedicated tracking program with lots of great automated dashboards and, and Slack integration that can, that can tell people and extrapolate that out from just normal growth or customer growth or customer acquisition and, and show that. This is the, you know, cost that was driven up by this new feature, or this was the cost that was saved by, uh, an optimization project or opportunity.

Alon Arvatz: when I tell people about, Hey, finops and we help save money, they're like, oh, it's, it's a no brainer. Like everyone should, should be on top of it. And I'm curious, like what are your insights about this resistance?

[00:11:00] Like why do people in the organization are not so excited to do fins just as much as we do?

Tammy Burnitt: You know, that's, that's an interesting question. And I talk to my peers a lot in the finops community, and I think part of it is maybe not understanding, or a lot of people think it's just about saving money, right? And I think if you look at finops, there's very much a technical aspect, and then there's the finance aspect, right? And typically the POAs is that you're talking to, they'll either fall on one side of the fence, right? So if they're technical, they may not fully understand the finance side of finops, like. I can't predict my spend. Well, you probably need budgets and forecasts to do that, or anomaly detection or then if you talk to somebody on the finance side, I can't keep track of what's happening over here, or projects or migrations or, you know, the, the finance side might be frustrated because the numbers are all over the place and I can't.

You know, I can't predict, and you know, all this spend is coming up for marketplace purchases. So I think it depends on, you know, who you're talking to [00:12:00] and you have to have a value statement. I think that's probably my new kind of catchphrase for finops is people don't see the value in what you're doing, it will be very hard for them to want to get on board.

Alon Arvatz: Yes.

Tammy Burnitt: That's, I think that's your paid dirt, right? When you can get to that and you can, I think that's, I think that's when I saw people trying to turn the corner is what is the value? I always say, you know, what's your elevator pitch if you get stuck with the CEO or the CFO in the elevator? You know, how do you articulate what do I do here and how am I delivering value?

And I think that transcends to a bunch of different careers and disciplines. But I think for finops per se, and I also, um, one of my best mentors in the finops community. Kim Ware from Target says it needs to be finops plus something else Sometimes finops can't stand on itself alone. So if you can find something that you can attach to finops, so is it finops and ai or finops and you know, something else, right? Uh, or security or, but finops, I [00:13:00] feel like the more people I talk to and the more that I work in this industry and I work with people, sometimes people can't see the value unless you attach the framework. To something else, to, to a, a philosophy or a product. Or a technology, right?

Alon Arvatz: For sure. Uh, you actually said a few very, very fascinating things. Uh, the first thing that I'm also taking from what you said on top of the, uh, insights you shared is the fact that you should also identify the pain points. Of the stakeholders, like this finance guy you talked about, he was having a really hard time reporting on these costs.

He needed help. This engineer, he, he, he wants to do AI better, so he needs someone to help to guide him through how to use it. So how do you do that? Like how do you identify the pain points and actually lead the discussion around that?

Tammy Burnitt: You know, at least for me when I'm. Implementing finops or, you know, I'm, I'm going to a new stakeholder. I try and do [00:14:00] an assessment, so I, I'm very curious and I probe and I ask more questions probably than I do talk and I just listen a lot. And so by probing and by really trying to understand, you know, what's your wishlist?

Like, you know, if you had a wishlist, like, and then if they don't necessarily give me maybe some of the wishes that I think they need, then I'll start kind of planning some ideas. So, so kind of, you know, like, well, so what I'm hearing is, you know, and then I'll throw some things out there, but I think first you have to kind of do an assessment.

I, I love to say a maturity assessment of where is everybody, or, you know, if, if they've got some of the capabilities and domains in place. to figure out how to fill in the blanks. But everybody, you know, I think when you listen to people and you probe and you really try and understand what their pain points are, they really open up to you. And that's where you get all of your data, you know, for your assessment. And then you can kind of come back and go, okay, like, you know, here's, here's where we need to start and here's my recommendations. But you get so much information going on and talking to people and asking questions. [00:15:00] 'cause we all, those of us that have been in finops for a long time, you know, we obviously know what we're doing, but. Finops looks different everywhere at every, you know, different companies in different personas, like it's a good framework, but you're gonna have to modify that to what works the role or the company or the technology where you are, right?

Erik Norman: I need executive sponsorship, uh, and also in the right position because, uh, it has happened to me now more than once that I've been hired by the wrong team. Imagine being hired to fix reporting, fix, uh, the, the cost data pipelines and, and all of that, not have access to cost data. That maybe is responsibility of another team. So if you are in the wrong team and have your hands tied, and maybe there's office politics, so they're even ghosting you, then yeah, it has happened that it took me almost four months to get access to data and then I was fired because I couldn't reach my performance objectives. Um, so it sounds ridiculous, but that [00:16:00] is what happens oftentimes.

So it's, I've, I've definitely improved my skills at stakeholder management and also at um. Making sure that I get the working conditions right before I start the job.

Alon Arvatz: Yeah, and double clicking on that. Would A CFO buy-in be enough, or you would necessarily look for engineering or IT leadership buy-in as well?

Erik Norman: Um, I would say C-I-O-C-F-O is preferred because they have the hand on the budget. And the side effect of a good finops practice is normally a good cost reduction. So I don't believe in cost optimization as such. Um, if you, for one simple reason, if you tell cost optimization to someone who has no idea what finops is, all of them think cost reduction and that's it. So yeah, if you only optimize for cost, they would say, shut down [00:17:00] everything a hundred percent cost saves. Where's my bonus? So that's not even what the company wants, if you go, then you should follow the value, right? Um, and the value realization could even be increasing cloud cost because you are. Maybe carved to the bone too much, and you have service degradation and failure. So you're losing revenue, you're losing customer and market share because you have unhappy customer. So maybe even increasing cloud costs increases the perceived value, the business value of your cloud, uh, infrastructure.

Alon Arvatz: Now, Amy. From past, uh, conversations we had, I know that you're really big on top down support for finops and the importance for that. Can you share with us, your journey to get this top down executive support for the finops uh, program?

Amy Race: Sure. Um, I do, I do 100% believe. If you do not have top of the house, not only [00:18:00] support, but you need day to day or month to month, you need somebody at the top to be sitting on these calls. And making sure that the directive is getting heard by the people who can execute in the cloud. We all know that when we change the strategy from buying hardware, handing it to an engineer and saying, so we would build the business case.

We would buy the equipment, we would hand it to someone and they would build it. They never got involved with. Pricing or cost or anything changing that mentality. Uh, the way that we did here at Citizens with this migration that we're doing to cloud was huge for our engineers to understand. So if we don't have that top down to say, you now need to focus on optimization.

Value efficiency in the cloud. The people that are hands on the keyboard, they're not gonna focus on it. They're into now we're into innovation and the sexy things and the bot [00:19:00] here and the this there, they're not gonna want to go back and say, oh wait, I could save X if I just change this. Um, but once you hear the impact of the overall cloud budget to the success of our p and l.

You really can put those two things together. So our CIO sits on a call with us every month and he understands everything that's going on. He's talking to the people, he's supporting my team and making sure that people are looking at this. We have a cute little leaderboard. So it looks like a little, um, platform from the Olympics, the gold and the silver.

Um, so we have efficiency scores. We have the most optimized apps, and we give out awards for it. Um, and everyone loves that. That's like the last five or 10 minutes of the call after everyone's getting yelled at for not doing their optimizations. So everybody loves that part of it. Everybody loves a winner.

So if you are the most optimized application. [00:20:00] Even if you were that because you did something wrong in the beginning, but paying attention to it now and focusing on making those changes is huge in our industry. Right? And then we'll take whatever we've done for one app or one set of resources and say, what can we do across the organization?

If we did that here, it didn't have a negative effect. And the application teams are happy, the end customers are happy, can we take those learnings and apply them anywhere else in our environment? So we're always looking at it. Take the small scale and then bring it out.

Alon Arvatz: Fascinating and was easy to get a CIO on a monthly cadence meeting.

Amy Race: At the time, he had another boss who we, we've reorged so that that boss of his, she was the head of business services. She's no longer there in that role. She was the one that started this when she started to see the budget variance really getting bigger and cloud [00:21:00] and she had no idea about it or what was going on, but she started to look at it and then he did and he got really involved 'cause he's the technology.

Um. Leader at the time, um, still is. And he, he took her lead on that and he just continued. And no, I do have trouble getting other leaders on, but every month he is on that call. He almost never reschedules it unless there's a. Major thing. Um, no. He is 100% supportive of those calls, and that has changed. Um, I definitely, that's changed the perspective of our DevOps teams and now people want to come in and want to work with us.

It's become more of a give and take in our world rather than in the beginning it was us, it was my team. Always reaching out. Now I have people coming to us saying, what do you think if we do this, how will this affect the cost if we make this change? We saw this in the in the cloud [00:22:00] visualization tools.

How do you think that will affect the pricing? And we'll go in and we'll do the analysis for them. We'll get the right people on the call so they can go ahead and make those changes. It's definitely helped us huge.

Alon Arvatz: Nice. It sounds like what moved the needle was the variance of the cloud spend, so it wasn't like, Hey. Necessarily, we, we have a lot of ways, or something like that was more around, Hey, we need to put it under control. So we need the bind of the, um, relevant executive. Uh, is that the way you went about it?

Amy Race: Yeah.

we were, we were really forecasting high for the first couple of years, so we were coming in lower doing optimizations, um, getting our, um, savings plan and our I strategy down solid. So we knew we were getting the most savings there as well, but we were always coming in. Um. Under budget until about our third or fourth year in the cloud when the migration [00:23:00] really started to hit.

And I think a lot of the people who were involved in that work were still on, um, thinking on-prem and didn't really understand the impact of moving. This application and running it in the cloud in a DR environment in multiple AZs, they didn't understand how that would affect the cost. So we started to run a little higher than we were forecasting.

I mean, it wasn't finops forecasting, it's the application teams forecasting we're. Just the reporters, right. Um, but we clearly see that there was a lot of education needed, so we started to do a lot of that as well. Lunch and learns on finops. We created a finops badge now, so you have to be certified finops within our organization.

Um, we do, uh, we have something called the infrastructure Academy. So now finops is a huge part of that as well. So we're always trying to promote it and help people understand how, what they're building and doing in the cloud, how [00:24:00] that affects, literally affects our budget.

Outro: That wraps up another episode of finops in Action. Thank you for joining. For show notes and more, please visit finops in action.com. This show is brought to you by 0.5, empowering teams to optimize cloud costs with tip detection and remediation tools that drive action.