From hardware and software investments, to the cost of supporting critical talent, IT spending is ubiquitous across industries, sectors and geographies. Worldwide, IT spending is projected to exceed five trillion this year – nearly an increase of 8% from 2023. Simply put, IT is a reality within any given organization.
However, your IT investments can be negatively impacted by high operational expenses and back-office inefficiencies, which, for some organizations, can cost up to 30% of their annual revenue. With business leadership keeping a close eye on budgets, every penny matters — and that's where FinOps can help keep IT spending in check while still allowing for innovation and investment.
Adapting to Today's Cost of Business
When an IT issue is not handled correctly, not only is innovation stifled, but stakeholder trust can also be impacted (such as when there's an IT outage or slowdowns in performance). When you add new technology investments and innovations into the mix, you have a recipe for disaster. The number of companies investing $10 million+ in AI is expected to double over the next year and cloud spend is poised for takeoff. Due to these increases, it will be critical for organizations to get their IT house in order now before new investments add chaos — and higher costs — to the mix.
FinOps Provides an Opportunity for IT to Show Value — Not Just Tell
When incorporating FinOps into an organization from both a technology and a culture perspective, organizations can reduce cloud costs by as much as 30%. This leaves ample room to reallocate funds and energy into new investments, provide more accurate forecasting, create more efficient workload planning, so IT teams can focus on innovating and creating new value rather than just managing existing applications and being burdened with day-to-day tactics.
How does this work?
According to the FinOps Foundation, organizations that have a mature FinOps posture can more effectively leverage automation, appropriately allocate their spend to the areas of the business that need it most and set very high KPIs to address the most difficult of use cases. With FinOps — in real time — the IT business can provide critical insights, information and recommendations to inform increasingly important spending decisions.
Connecting the Dots — from CFO to Developer
When discussing IT spend, the most commonly considered stakeholder in charge tends to be the CFO, the CEO or another revenue and business-centric leader. However, a FinOps framework creates a holistic and non-hierarchical platform across levels, functions and responsibilities encouraging collaboration and mutual understanding between finance and IT teams.
In today's enterprise, a developer can use company resources to modernize a company's application, an IT manager can leverage resources to provision onboard new employees, and a CIO can employ resources to invest in a new AI tool — all simultaneously. However, without an element of communication or strategy, these three roles will effectively cancel out the benefits of the others.
FinOps enables professionals at all levels of the organization to have equal visibility into overall IT spend. This common language allows leaders to make informed financial decisions at the individual level like never before.