Cross-functional collaboration

Collaborate with related roles

• Understand organizational goals.

• Align goals across different functional departments.

• Identify cloud-specific metrics that support organizational goals.

• Define team responsibilities, empowerment, and interaction models, including shared goals between teams.

Share information and data

• Define the data, resources, and terminology to be shared across functions.

• Define key metadata, data access permissions, data parsing methods, exchange formats, and data refresh frequency.

• Define common decision-making processes, communication channels, and cross-team notification mechanisms.

Definition

This capability supports collaboration between FinOps and other IT functional departments, frameworks, or teams within the organization. The widespread use of public cloud presents new challenges to traditional IT domains. The responsibilities of most of these domains extend beyond cloud usage. This capability aims to provide guidance for collaboration between FinOps and existing IT functional departments.

These financial standards may include the following:

• IT Financial Management (ITFM)

• Technology Business Management (TBM)

• IT Asset Management (ITAM)

• Software Asset Management (SAM)

• IT Service Management (ITSM)

• IT Security

• Any other standards used in the organization that cloud services may affect.

The exact impact of the cloud on other disciplines within the organization varies depending on the scope of each discipline. This is why centralized FinOps teams and their partners must follow the FinOps Principle that teams need to collaborate. These partner teams are considered related roles in the FinOps Framework, which emphasizes the need for cross-functional collaboration.

Maturity assessment

Organizations in the Run phase of FinOps have unified processes between existing related frameworks, such as ITSM, ITFM, Project Management Office (PMO), and ITAM. FinOps organizations that work independently or have limited collaboration with personnel from other frameworks are more likely to be in the Walk phase.

Crawl

• FinOps practitioners and related role teams understand where assets and resources are located (cloud vs. on-premises) and how they are used. This includes:

  • Software licensing models for ITAM, such as Platform as a Service (PaaS) or cloud marketplace vs. Infrastructure as a Service (IaaS) with Bring Your Own License (BYOL).

  • The IT or business services that resources or assets support.

  • The existence of any related contracts, such as software support and maintenance.

  • The mapping of resources across different locations and the alignment of resources with business needs.

• Training on cross-functional collaboration is available. It explores how different functional departments can work together to optimize investments in IT assets, whether they are cloud resources or on-premises software licenses.

• Related role teams have their own understanding of how to pay for and use cloud service provider resources. They have a deep understanding of their respective frameworks, information sources, goals, and experiences. This allows them to analyze and evaluate relevant information to determine specific outcomes for their domains.

• Training enhances the understanding of cross-functional collaboration and how it can optimize the business value of cloud service provider investments.

Walk

• Multiple related role teams share an understanding of which assets and resources are in each cloud. They reconcile this information regularly to provide a unified view for the organization.

• Related roles are consulted during business case assessments. For example, BYOL is often used in optimization strategies, architectural decisions, and modernization activities. However, this may affect existing contractual commitments with software publishers.

• There is a shared understanding of each other's taxonomies.

• The FinOps team collaborates with related role teams to reach a consistent understanding of cloud service provider consumption costs. They reconcile these costs regularly to provide a comprehensive view of the organization and create a unified data presentation. They also have a shared understanding of each other's frameworks, which enables effective communication and analysis.

Run

• A common cost management taxonomy is used for all assets and cloud resources. This allows the organization to understand the Total Cost of Ownership (TCO) and Return on Investment (ROI) of IT and business services.

• The FinOps team works closely with related role teams to ensure an optimized IT asset environment. Tracking of migrated workloads shows savings in IT hardware, infrastructure, and licensing costs.

• Existing license agreements are shared across domains to ensure the best strategy is developed for each workload.

• Savings from using hybrid use rights or existing agreements, or from refactoring existing applications to use cloud-native technologies instead of traditional licenses, are tracked and reported.

• Operational tools and processes are extended to support agility between functional departments.

• A common toolset, including software applications and methods, is used to support some or all FinOps and related role team processes. All relevant teams consistently perform repetitive operations in a standardized way.

Functional activities

FinOps practitioners

• Establish and maintain clear communication and coordination with other functional departments within the organization.

• Understand how the organization's cloud spending aligns with other taxonomies and the overall TCO of technology. Ensure that relevant teams can access this data, following the FinOps principle that data should be timely and accessible.

• Align tools, reports, and data sources between FinOps and other frameworks to ensure reliability and a user-friendly experience. This allows stakeholders to receive consistent and reliable information from both functions.

• Identify which cloud service billing items might affect other contracts, such as software licenses. This includes items bundled with services or purchased from the cloud marketplace. Provide this information and associated costs to the relevant teams for management.

• Identify which cloud services are configured for BYOL and provide this information to the relevant teams for management.

• Identify which cloud services are eligible for BYOL to use unallocated licenses from relevant teams.

• Provide service usage metrics to relevant teams so they can determine which cloud services require further inspection.

• Collaborate with relevant teams to track the costs and realized savings of shared optimization opportunities, such as BYOL licenses.

Product

• Use information from the FinOps team and related roles to determine the best design and architecture for building business solutions.

• Include license and IT asset costs, including the cost of idle licenses, in the calculation of product profitability and other metrics.

• Use information from the FinOps team and related roles to understand the TCO of their cloud investment decisions.

• Enable IT financial governance and policies for cloud service usage within their business unit.

• Review and validate cost reports from FinOps and related roles.

Finance

• Use information from related roles for budget planning and forecasting.

• Understand how FinOps and related roles enhance IT spending transparency and use their insights across the organization.

• Determine how to identify cloud costs in the accounting system of record and systematically share relevant cloud costs with those who need them.

• Collaborate with FinOps practitioners and related roles to establish IT financial governance and policies for cloud service usage.

• Work with FinOps and related roles to confirm the accuracy of cost model calculations and reports.

• Work with all roles to understand the TCO and ROI of cloud service provider investments.

Procurement

• Use information from the FinOps team and related roles to determine the best way to procure cloud resources and licenses.

• Identify cloud contracts in the procurement system of record.

• Ensure that cloud service provider and reseller agreements include access to cloud cost data for related roles.

• Determine future usage forecasts based on license types to develop long-term strategies. This includes decisions to create, modify, or terminate license agreements with other companies outside the cloud.

Engineering

• When building resources in the cloud, consider current license and asset entitlements and costs. Select the appropriate licensed or unlicensed version architecture to create these cloud resources. Be careful not to purchase licensed products for which the organization already has usage rights.

• Tag resources correctly so that related roles can easily assess their impact on other standards and contractual commitments, or align cloud spending with other taxonomies.

• Collaborate with FinOps practitioners and related roles to understand the TCO related to cloud migration, development, and operations. Use FinOps tools for detailed deep-dive analysis of cloud spending and resource optimization.

• Allocate cloud costs to applications, products, solutions, business capabilities, or other taxonomies.

Leadership

• Guide the strategic direction of technology investments and confirm their future roadmaps.

• As the final decision-makers, use insights from FinOps and related roles to guide the organization's development.

• Take responsibility for forecasts, budgets, TCO, and ROI calculations.

Related roles

• Provide a summary of unallocated or hybrid-use license entitlements that includes budget and ownership information. The FinOps team can use this information to optimize spending on cloud services.

• Use information provided by the FinOps team to track and manage the license status of cloud resources.

• Manage software license renewals and reduce licenses for workloads that have been migrated to the cloud without using BYOL.

• Use cloud marketplace software purchase cost information provided by FinOps practitioners to guide management by related role teams.

• Establish and maintain clear communication channels with the FinOps office or practitioners to ensure seamless coordination and prioritization of FinOps and related role team plans.

• Understand and communicate the organization's cloud-related TCO. This includes direct cloud service provider (CSP) costs, indirect labor costs, management tool fees, Software as a Service (SaaS) fees, and license fees.

• Promote a culture of IT cost transparency and value-based decision-making for cloud service provider investments.

• Coordinate tools, reports, and data sources between FinOps and other IT financial standards to ensure reliability and a user-friendly experience. This allows stakeholders to receive consistent and reliable information from both functions.

Success metrics and KPIs

Success is measured based on cloud service usage and may include one or more Key Performance Indicators (KPIs). These KPIs provide the organization with insights on how to maximize the combined efforts of FinOps and related role teams to understand and manage cloud costs. For a complete list of FinOps KPIs, see the KPI Library and select the KPIs that best suit your organization. Some common success metrics apply to both FinOps roles and related roles, such as:

• Consistent reporting: Related roles and the FinOps team collaborate on cloud service provider usage reports, use the same data sources, and have consistent analysis results.

• Collaborative policy and governance: Related roles and the FinOps team consult each other before establishing or changing cloud financial management policies, governance structures, or products used to manage cloud consumption.

• Success is measured based on cloud usage and may include one or more KPIs. Goals are described using Objectives and Key Results (OKRs), and thresholds are declared to define outliers or acceptable deviations from forecast trends.

The following are some success metrics and KPIs that may be related to other frameworks:

• Software license compliance: Monitor software license compliance to avoid potential legal and financial liabilities. The goal of this KPI is to ensure compliance with software licensing and contractual obligations.

• License optimization: Monitor software licenses to minimize underutilized licenses or avoid unused licenses.

• Cloud security and risk management: Monitor cloud security to identify potential risks. Ensure the security and protection of cloud resources and the data on them by configuring and reporting appropriate policies and setting up alerts. An example is Cyber Asset Attack Surface Management (CAASM).

Multiple KPIs can be used to help track the effectiveness of FinOps projects with related roles, such as:

• Percentage or number of licenses that can be reclaimed through cloud migration

• Percentage of applications migrated to the cloud environment

• Percentage or amount of reduction in on-premises license support costs

• Tagging compliance: Percentage of tagged resources

• Percentage of cloud service provider costs aligned with other standards

• Percentage of costs associated with unallocated cloud service provider resources

• Percentage of cloud service provider costs that comply with the tagging policy

• Percentage of costs associated with untagged cloud service provider resources

Inputs and outputs

FinOps inputs

• Cloud service usage data, such as Alibaba Cloud Cost Analysis

• Cloud commitment plans and consumption, such as savings plans, reserved instances, and other negotiated consumption commitments

• Enterprise cost and resource pricing sheets.

• Cloud platform budgets and related monitoring and alerts.

• Related contractual rights, included content, and licensed features

• Cloud tagging standards

Related role inputs

• Software license data

• Software license commitments

• Formal audit reports

• Application portfolio master data and service registry, including application or service owners and demand profiles (current and forecast)

• ITSM data, including the IT Service Catalog, Configuration Management Database (CMDB) or service registry, and service tickets

• ITAM data, including servers (physical, remote or cloud, and virtual machines, including hypervisors)

• IT vendor management data, including vendor agreements and contracts, such as for CSPs, consulting, and other related service providers

• IT technical inputs from monitoring tools for configured or used storage, CPU or RAM utilization, and more

• Management and billing

Finance inputs

• Chart of accounts, cost centers, business unit codes, capital budget codes, and location codes

• Cost allocation models for allocating actual or planned costs to cost pools, IT towers, and applications, services, or solutions

• General ledger and accounts payable

• Financial analysis variables, ratios, and proportions, including discount rate or Weighted Average Cost of Capital (WACC), minimum rate of return, event horizon, standard labor rates, and surcharge rates (labor, planning)

• Financial planning and budget data by ledger account, cost center, and financial period

• Fixed asset ledger

• Financial policies, procedures, agreements, and practices, including financial expenditure approval thresholds, depreciation and amortization policies or strategies, and capitalization variance or strategies

Organizational inputs

• Organization structure, Human Resources (HR), and labor data, including internal and external labor cost rates, number of full-time equivalents (FTEs), and standard burden rates. This also includes contract limitations and conditions.

• Benchmark data, including industry-specific or domain-specific metrics