Summary

Cloud engineers live in a world driven by minimizing time to market and delivering innovative solutions. Technical skills are the key to making cloud possibilities a reality for the organization. FinOps helps “bring financial accountability to the variable spend model of cloud” as defined in the second edition of “Cloud FinOps” by JR Storment and Mike Fuller. But there’s also a need to integrate cloud with the organization’s financial management processes and actively participate in strategic business decisions (value conversations). TBM provides the tools that facilitate this later crucial step to complete the maturity evolution of cloud.

Introduction

Who needs another discipline when you’re working on the future building blocks of a business? Cloud engineers do.

Why get distracted, instead of building since the world will be mesmerized by the outcomes? Because as costs pile up questions will become more and more incisive. How to balance demand and supply, how to prioritize investments, how to communicate the value of the IT services that use the cloud (among other infrastructure elements), and how to demonstrate carbon footprint efficiencies of those services, …

Cloud engineers and technical staff do need to step beyond their comfort technical zone into the business management aspects of the cloud. FinOps and TBM together provide the framework that guides this journey.

In this document I will present arguments why technology professionals in general, including cloud engineers, should embrace TBM and add it to their portfolio of skills.

Business skills

The “natural” lifecycle of many technical innovations that came before the cloud: electricity, the telephone, the internet, is the same lifecycle cloud is going through. It’s part of the FinOps framework with the phases: Inform, Operate, Optimize, maturity evolution: crawl, walk, run. There is a maturity state where the tipping point manifests, where management structures are imposed on processes, and where additional personas need to be included in cloud decision points. At that point it’s more effective to adopt a proven discipline like TBM rather than ... re-invent the wheel!

Cloud engineers’ professional careers will eventually take them to management positions where they will be asked to resolve business management problems beyond technical cloud configuration ones. Most junior engineers do have an opportunity to improve the outcomes of their interactions with business colleagues by embracing TBM practices and principles.

The guiding principle is how TBM helps, how it accelerates positive outcomes, and how it adds value.

Business complexity

Cloud is no different from any other component of the enterprise technology infrastructure. Each one (Network, security, applications, …) has its own tools, constraints, and subject matter experts, and these come together within the TBM structure to enable value driven decisions.

According to the 2022 HashiCorp State of Cloud Strategy survey, 94% of organizations are wasting money in the cloud. The world of technology has seen this before, several times. There is no need to point fingers or blame anyone for situations like this. Instead, it is much more effective to enable and participate in value conversations about how cloud is delivering value for money, how to manage cloud resources in a collaborative conversation with the manager consuming cloud resources in the context of the business service or product being delivered to the marketplace.

Cloud engineers cannot expect those business personas they are talking to will understand the highly technical and complex concepts driving cloud workloads. Cloud engineers will need to translate those concepts into simple business terms. A proven way to do that is described in the TBM disciplines. A few examples of how TBM can help are:

• Including cloud cost details into the TBM cost model

• Using techniques like benchmarking, unit costs, spare capacity visibility, and project spending transparency

• Applying TBM financial planning, forecasting, variance analysis processes can help drive the maturity of cloud budgeting

 As a result, the chances for a successful business collaboration will be much higher.

TBM agility

The speed of cloud does represent a challenge for the traditional cadence of TBM processes. Given the business value potential of the cloud, TBM needs to accommodate its processes to facilitate the speed of the cloud.

The FinOps concept of informed ignore is a perfect scenario where a FinOps best practice is well suited to be enabled by TBM. During the initial stages of cloud adoption management of cloud resources is limited to cloud-centric processes, butit is important to monitor cloud spend. . At some point more robust FinOps practices need to be deployed. Monitoring when an organization reaches that point is critical.

TBM has a role to play to preserve FinOps innovation and speed to market. Here are a few examples to illustrate this point:

• Enable a rolling forecasting process (vs static annual budgeting). This allows for quick reaction to changes in market conditions or Agile delivery processes linked to cloud adoption

• What-if scenarios to help drive cloud migration decisions. Introduce new data or allocation assumptions to compare one scenario to another

• Provide continuous monitoring and management of team costs aligned to products or services. Monitor spending on third-party vendors and cloud services, being used to create value in the new Product centric model

• Optimize run the business costs, so enterprises can funnel that money over to grow or transform the business initiatives. This also helps justify the cloud first investments because they help reduce those operations costs without negative impact to the speed, reliability, SLAs, etc.

Constant change

As exciting and promising as the cloud is, and as quickly as new features are enabled increasing even further the business potential of the cloud, the business is driven by financial results and needs to respond to external stakeholders (customers, regulators, shareholders). Organizations have deployed reporting structures, and business processes that cannot change at the pace the cloud does. This is one more time this situation is not unique to cloud technologies and one more time TBM provides the space to accommodate and enable these different dynamics to coexist and thrive.

Many organizations are also realizing migration to the cloud is a two-way street. Large number of workloads or applications can run more efficiently on the cloud compared to on prem, and those migration decisions do benefit from a full understanding of the on prem cost vs cloud cost (enabled by TBM). In fact, many applications work better on prem than in the cloud. And in the dynamic world of technology, applications will need to move back and forth between cloud, on prem, and hybrid versions of both. Dealing with the complexity of technology and placing it in a business context is one of the strongholds of TBM, with an eye always on the business value IT needs to deliver.

Conclusion

There is a value multiplying effect the enterprise will experience when cloud adoption is managed within the FinOps and TBM frameworks combined.

Cloud engineers need to understand the TBM fundamentals, take the lead in value conversations with multiple non-cloud stakeholders. Assuming the rest of the business (finance, customer experience, marketing, legal, business operations, and other) will accommodate cloud driven processes is not realistic.

Cloud is not the only leading-edge technology at play. TBM is a great tool to manage the friction between cloud adoption and business management and place it in the context of the complete enterprise technology portfolio.

TBM professionals who understand the relationship between FinOps and IT financial management will enable better business outcomes.