FinOps: It’s not just for cloud anymore

“Back in the day,” the desire for cloud financial management practices and tooling was significant and increasing, but there wasn’t a consensus on the best practices to support these efforts. Many organizations relied on a mix of homegrown tools and vendor offerings but struggled to communicate effectively internally and with vendors due to a lack of consistent terminology or standardized processes.

In 2019, the FinOps Foundation (F2) was founded to help address these issues around best practices, and definitions—basically the “how” and the “what” of cloud financial management. The F2 definition of FinOps has evolved in the last five years, with the most recent update in late 2023 specifying:

“FinOps is an operational framework and cultural practice which maximizes the business value of cloud.”

Note the emphasis added on cloud…

The FinOps community has grown exponentially—there are now over 23,000 practitioners from over 10,000 organizations. As a result, many FinOps teams have matured significantly, implementing the core principles of the FinOps framework: Inform, Optimize, and Operate.

Now, these more mature FinOps teams are looking to expand the optimization of their IT assets and services beyond that of the public cloud and into other areas like SaaS, cloud software licensing, and data center usage. The Foundation has responded by creating and empowering a working group (WG) focused on these expanded areas of interest. Initially called the “Beyond Public Cloud” working group, but now known as FinOps Scopes. Its mission is to extend the FinOps framework’s operating model to other areas of technology spend, starting with SaaS and data center infrastructure, with plans to expand into other areas over time.

Welcome to the future of FinOps, it’s been waiting for you

The purpose of this rather long-winded introduction to FinOps Scopes is to illustrate what we at Flexera have been planning for and working towards for years. As a leader in the ITAM space for decades, with a focus on enabling organizations to optimize their technology spend, we closely monitored the FinOps discipline as it began to evolve and take shape. We quickly realized the forthcoming need for the intersection and collaboration of the ITAM and FinOps spaces, and have designed and developed our products to excel between these two disciplines.

To borrow an analogy from the great hockey player Wayne Gretzky:

“I skate to where the puck is going to be, not where it has been.”

At Flexera, we believe we’re already where the puck is headed—ready to support our customers as they navigate the changing tides.

SaaS: Shadow IT and the BYOL opportunity

The first non-cloud scope of the FinOps framework is Software-as-a-Service (SaaS). However, the challenges of SaaS optimization echo those seen in public cloud:

SaaS applications are often procured outside traditional processes, such as through cloud marketplaces or corporate credit cards.
This creates “Shadow SaaS,” similar to the Shadow IT challenge we have spent many cycles trying to squash in cloud environments.
SaaS pricing structures vary significantly: they can be consumption-based, user/device-based, flat-rate, or even tied to the addition of a feature to a different (but related) service.

Keeping track of all this SaaS usage and the disparate licensing and pricing models is cumbersome at best, and ripe with opportunities for errors in both cost optimization as well as license compliance. Enter Flexera’s SaaS Management solution, in conjunction with our Cloud License Management capabilities, which will enable you to:

Identify all your SaaS usage, pricing models and licensing terms.
Align SaaS information with cloud-based usage of those software applications.
Identify areas of overlap, where a SaaS license procured outside of the cloud provider can be used on a cloud resource, eliminating the need for a license to be procured from the vendor.

This optimization opportunity—often referred to as Bring Your Own License (BYOL) instead of Pay-As-You-Go (PAYGO)—can deliver significant savings. For example, leveraging BYOL in the Azure Hybrid Use Benefit model allows organizations to repurpose licenses, avoiding unnecessary spending.

Data center: Moving beyond the tech refresh cycle

The other new technology segment of FinOps Scopes is Data Center Infrastructure. Traditionally, organizations have relied on a “tech refresh” model, replacing hardware every 3-5 years to minimize support issues and keep up with technological advancements. However, this tech refresh approach is costly and inefficient.

With the FinOps framework now applying to data centers, the focus shifts to:

Enabling consumption-based usage and cost modeling to improve forecasting.
Aligning usage forecasting and procurement processes with IT operations.
Optimizing workload placement to balance performance and cost.

This is another area where Flexera plays a role for our customers. Our cloud migration solution enables our customers to assess their on-premises/data center resource usage. We also are able to analyze the interactions between those resources and the applications that run on them by performing in-depth business mapping, identifying the interdependencies of resources and applications within the data center. This includes cost estimations for these on-premises workloads if they were moved to one or more of the cloud providers, as well as migration suggestions and cost estimates for moving workloads from one cloud provider to another.

Where’s the puck headed next?

The expansion of the F2 framework into SaaS and data center infrastructure represents a significant milestone—one that aligns seamlessly with Flexera’s mission and product capabilities. As the framework expands to other technology segments in which we have expertise and insights, we are expanding our capabilities on both our near- and long-term roadmaps. We look forward to the FinOps and ITAM communities embracing the FinOps Scopes initiatives. We will continue to provide solutions to unlock these innovative benefits for our customers.

You can learn more about scopes from the FinOps Foundation or read our guide, “6 steps to create a resilient FinOps strategy.” Download this guide to discover how to: