Aligning IT Spend and Business Value
In today’s business world, technology is a competitive differentiator. It is no longer just a support function but a core driver of business success. This shift has created an increasing challenge for business leaders on how to manage and justify IT spending in alignment to business outcomes. FinOps can bridge this gap.
As I work with Evolving Solutions and Keyva clients, I’ve seen firsthand the value of understanding and controlling IT costs to help drive growth and innovation. This is because FinOps doesn’t just offer cost control; it brings the potential for smarter, more strategic decisions that leverage the unique characteristics of new technologies—particularly cloud environments—instead of trying to force-fit traditional optimization strategies onto them.
A Framework for IT Business Value
FinOps provides a framework that allows companies to actively align IT spending with business value, regardless of the technology environment. This alignment is more than just a budget exercise; it’s about transforming IT investments into measurable outcomes.
In the cloud, we see that built-in tools allow organizations to understand consumption in real-time, adjust resources instantly, and optimize spend at a granular level. But achieving this kind of efficiency depends on a shift in mindset. To get the most out of FinOps, organizations must optimize based on the specific characteristics of the technology they are using, not based on the structures of legacy data centers or traditional environments.
Cloud vs. Traditional Infrastructure
One important component of FinOps is that cost optimization needs to be tailored to the specific technologies being used rather than applying a one-size-fits-all strategy. This is because each cloud technology has unique characteristics, cost structures, and performance metrics.
In a cloud environment, where resource flexibility and scalability are inherent, optimization strategies should focus on real-time adjustments, usage thresholds, and dynamic scaling. But traditional data centers and co-location facilities may lack these characteristics. Therefore, the optimization strategies for these legacy environments will look quite different.
Observability tools can help enable this shift. These tools give companies visibility into diverse environments—whether cloud, on-prem, or hybrid. FinOps combined with observability enables organizations to understand and manage each environment uniquely, driving efficiency based on what each platform is designed to do best.
Technology-based Cost Optimization
To gain the greatest value from a FinOps approach, organizations need to ensure they leverage the right cost optimization strategy for the technology. If an organization optimizes cloud spend the same way they optimize traditional infrastructure, they may miss out on cost-saving opportunities or risk overspending.
In data centers or co-location instances, capital expenditure and fixed resources drive cost strategies. In this instance, FinOps strategies need to focus on maximizing the use of existing assets, controlling energy consumption, and maintenance costs. Treating each environment according to its specific characteristics ensures that cost optimization will be successful.
A Tailored Approach
For hybrid IT organizations, a critical step is gaining full visibility across all environments. Observability tools offer insights into both cloud and on-prem infrastructure, allowing companies to apply different financial management tactics based on the environment’s strengths and limitations.
FinOps offers a structured approach to make technology spending more transparent, strategic, and value driven. Here are key steps for implementing an effective FinOps approach:
- Implement Technology-Specific Strategies: Cloud, on-prem, and hybrid environments require distinct cost optimization approaches. Recognize these differences and do not apply a blanket approach.
- Invest in Observability: Observability tools can help teams track resources across diverse The insights gained allow organizations to make the right adjustments to align costs with business goals.
- Continuously Optimize: Technology and business priorities evolve. An effective FinOps strategy requires continuous monitoring and adjustment to ensure alignment with current business needs.
FinOps as a Strategic Enabler
Implementing a FinOps strategy with a technology-specific mindset allows organizations to ensure IT spending is not just controlled but also strategically directed toward value creation. This approach turns FinOps into a powerful enabler of growth, giving organizations a competitive advantage in a rapidly evolving tech landscape. Whether your technology environment is primarily cloud-based or spans multiple platforms, the key to success with FinOps is treating each investment as unique and optimizing accordingly.
If you are interested in designing a FinOps program within your organization, let’s talk.
