On-premises IT has well-established processes in IT financial management (ITFM), but public cloud solutions change these processes significantly, and also the people who run them. Your FinOps teams need executive support to drive changes to traditional ITFM approaches built for capital-heavy, fixed-cost IT.
Operations cannot do FinOps alone; neither can Finance. Both groups need to team up with their business partners—who are also stakeholders in FinOps success. You have to explain FinOps to your business partners in the language they understand. A line of business lead isn’t a technologist; she is focused on the business value of IaaS over owned data centers, not the technical differences.
The necessary collaboration between all stakeholders needs effective business support in the form of an executive sponsor: a cross-functional business leader to build and communicate a shared vision and drive all teams toward it, keeping everyone’s eyes on the (business-goal) prize.
Who makes a good executive sponsor?
Selecting an executive sponsor is not as easy as browsing an org chart to find a specific job title. Senior technology leaders wear many hats in small organizations, and executive sponsors can be just another responsibility. However, in a Fortune 500 company, the responsibilities of the CTO or CIO may be too high level for some of the problems a FinOps practice is looking to fix.
Regardless of company size, a good executive sponsor has not entirely left the operational side of IT. She has good relationships across engineering, finance, and the business at large. Cross-functional support sets up FinOps for short-term wins and long-term success.
A good portion of technology spend should roll up to an executive sponsor, or she is at least accountable for cloud spend going over budget. Ideally, she should be someone close enough to the work who knows who is hands on keyboard, but not near enough where she is a part of that day-to-day team. A FinOps executive sponsor, like a sports coach, must have some daylight between herself and the team she is leading. While the executive sponsor doesn’t require significant depth of understanding in any of the particular domains (cloud, finance, business), she should have a sound understanding and appreciation of the concepts within each.
Separation from the day-to-day practice of FinOps helps an executive sponsor’s credibility with non-technology leaders too. Organizations that try to build FinOps from the bottom up—without an executive sponsor—often hit roadblocks when teams consuming cloud think that cost is not their problem. This is a learned behavior (“No one has asked us about cost before; why are you asking about it now?”) that only changes when someone from the outside—not operations, not finance—aligns all groups to a common goal (“We shouldn’t waste our budget, right? That is a core value. Let us align cloud spend to our values.”).
Signs you selected the wrong executive sponsor
It is time to change your executive sponsor if they are doing the following:
#1 They don’t connect siloed stakeholders
It is a bad sign if Finance cannot get anyone outside of finance to pay attention to FinOps. An organization is too siloed if Finance is all in but engineers and product owners are not. That situation needs an executive sponsor to knock down some doors and get everyone working toward the same goal.
#2 They only consider one function
Some early-stage FinOps organizations fail to consider if the executive sponsor is heavily favored by their own team. Finance may want its CFO as an executive sponsor; Engineering, Product, and the Cloud Center of Excellence (CCoE) may see more value in the CTO doing it. There is nothing inherently wrong with either choice. Still, a suspicion that an executive sponsor is biased toward one function over another—intentionally or otherwise—may undermine the credibility of a FinOps practice. An executive sponsor must ensure that your FinOps team engages with IT operations, IT finance, and business partners in a first-among-equals manner.
#3 They aren’t actioning recommendations
The outcomes of FinOps are not realized when recommendations are made but not implemented. Take a cloud-first strategy. Its success is measured by financial KPIs (% IT spend on the cloud) and the number of workloads moved out of a data center. An executive sponsor must ensure that the recommendation of cloud-first shows up in the associated success metrics.
Signs you selected the right executive sponsor
Rest easy if your executive sponsor is doing the following:
#1 They lead a culture shift
An executive sponsor needs to signal a culture shift where cloud cost management is now a part of everyone’s day job. But it is hard for Finance to tell Engineering what they need to care about and vice versa. Different roles have different skill sets, but a FinOps culture requires people to step outside of their normal sphere of influence and collaborate. A thriving culture flows from adherence to the principles of FinOps and a commitment to maintaining them over time.
#2 They help teams compromise
An effective executive sponsor surfaces tensions between Operations, Finance, and cloud consumers. Finance wants 15 different tag values lined up neatly to cost centers, but Engineering cannot apply—and manage on an ongoing basis—tags for every resource. An executive sponsor must drive the FinOps team to either deliver a compromise (“Why do we need 15 tags? How many tags can Operations deliver?”) or push for action that takes more effort but is better for the organization. These conversations are not easy, but healthy debate and transparency stress tests options and builds consensus.
#3 They focus on the business value of cloud
With a healthy functioning FinOps team, you would expect to see increases in workload efficiency (higher output and or lower costs), less overall friction, and less re-work. An executive sponsor holds your FinOps team accountable for these outcomes by tying tactics (e.g., more innovation, less technical debt, better staff effectiveness) to the strategies and business outcomes they are supposed to support. Business outcomes will increase more innovation, reduce technical debt, and better staff effectiveness.
Executive sponsors need a financial management platform for the cloud
To get the most from its cloud providers, IT needs to utilize the massive amounts of cost and usage data available, combined with business information, to obtain relevant business insights and actionable tasks.
Many companies start by using spreadsheets to keep track of the data and analyze it to draw conclusions. Building your own spreadsheets seems to have the virtue of simplicity, but spreadsheets do not scale enough once a company starts to increase its cloud spend and the complexity of cloud usage. There are too many virtual machines, too many variables, not enough in-house expertise, and too many changes on the provider’s end to keep accurate records by hand.
Companies may also look to build custom solutions using a combination of native tooling and custom code. While the infrastructure cost may be low, the cost to build and maintain the custom code over its lifetime is significant. Just like a legacy workload, it requires very specific knowledge to run. This is critical, as the continual innovation from cloud service provides means there will need to be constant upgrades to maintain its usefulness to the business. These resources are being diverted from working and implementing FinOps outcomes in your business to working on tooling.
A tool like Apptio Cloudability is built for this purpose. Cloudability is a solution that ingests, normalizes, and structures cloud billing and usage data from across your public cloud ecosystem so that you can actively manage spend and consumption to continuously improve the unit economics of cloud services. Cloudability enables technology, finance, and business teams to optimize cloud costs and maximize the value of their public cloud strategy.
The right executive sponsor for FinOps turns an inward, tech-focused conversation about cloud procurement and provisioning to an outward, business-led IT discussion about using the cloud to deliver outcomes.
About the authors:
Nathan Besh is a senior director of product management and technical evangelism at Apptio. Maddy Yeazel is a principal solutions architect at Apptio.