Managing and Optimizing Cloud Costs: Mistakes Every IT Finance Manager Needs to Avoid!

Are you tired of cloud costs spiraling out of control?

Do you want to unlock the full value of FinOps?

In this episode of The Cloud Collective, the host of The Disruptor Podcast, John Kundtz, chats with FinOps guru Kathryn Lin to explore the typical challenges companies navigate when embarking on their FinOps journey.

In this enlightening discussion, Katherine shares her impressive journey from acquiring her MBA at USC, specializing in technology commercialization, to working with Kyndryl and IBM.

She also delves into the importance of maximizing savings from overspending and making the most of every dollar spent on cloud services. Take advantage of this treasure trove of insights - perfect for anyone navigating the FinOps journey or grappling with managing cloud costs.

The Highlight Reel:

Top 3 Mistakes Made by IT Finance Managers:

1. Cost-Driven Thinking: Overemphasizing cost savings and overlooking the dual potentials of efficiency and agility. 
2. Tech Over Strategy: Getting lured by tools and technology while sidelining the paramount importance of people, processes, and governance. FinOps isn't a tool—it's a transformation.
3. Overambitious Beginnings: Diving too deep, too soon. Embrace the 'crawl, walk, run' principle: start with a small pilot and scale as you learn.

Key Takeaways: 

1. Transparency in cloud expenditure is pivotal for aligning costs with business objectives. A culture of "shift left" empowers engineers, fueling both cost optimization and innovation.
2. Achieving FinOps success hinges on executive support—it's all about stakeholder buy-in and seamless data access. 
3. FinOps transcends mere cost-cutting—it's about maximizing value from every dollar spent. 

Dive Deeper: 

1. Explore the FinOps Framework at FinOps.org for a comprehensive understanding of various maturity stages
2. Head to the Bridge for industry-leading FinOps insights: Kyndryl's Bridge 
3. Conne

***

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Chapters

• 0:00 Managing Cloud Costs and Avoiding Mistakes
• 6:04 Avoiding Common Mistakes in FinOps
• 15:48 Managing and Optimizing Cloud Costs

Transcript

Managing and Optimizing Cloud Costs:
Mistakes Every IT Finance Manager Needs to Avoid!

[00:00:00] John Kundtz: Hi, everyone, and welcome to this special edition of the Cloud Collective Podcast. Today, we will discuss one of the industry's hot topics. 

My name is John Kundtz, and welcome again to this special edition of the Cloud Collective Podcast. 

Today, we will be talking to FinOps expert Kathryn Lin as she shares valuable advice for those embarking on a FinOps journey, especially the pitfalls and mistakes many IT finance managers make before they ever get started.

Welcome to the show, Catherine. It's great to see you here today. 

[00:00:45] Kathryn Lin: Hi. Thanks for having me, John. I'm very excited to be on your podcast. 

[00:00:50] John Kundtz: Awesome. This should be some fun. I've been working with you for a while and know you are a wealth of knowledge. And I can't wait to dive into some of these topics.

But before we do, I like to say everybody has a story or a backstory, so Tell us a little about you and your story, your background, your education, and your experiences. 

[00:01:10] Kathryn Lin: Sure. I've been with Kyndryl and IBM for the past five years now. I started as an offering manager for a cost management tool and eventually moved to morph this entire application into a service led on financial operations, FinOps. Prior to that, I had my MBA at USC, focused on technology commercialization, and before my MBA, I had a whole life of other careers. I've done market research, and I've been in data analytics. A little background about me: I have always been really interested in how technology can help make our lives easier. Certainly, the applications that we manage here, as well as the service, are helping our IT financial analyst groups, as well as the executive teams in any of the business functions and the operating functions in the IT. 

[00:02:03] John Kundtz: Awesome. I knew that backstory of yours, and it's pretty impressive. That's why I've always enjoyed working with you. Let's start with the benefits of having good visibility into your IT organization's spending and the overall financial performance of an organization. 

[00:02:19] Kathryn Lin: The first thing that comes to mind for me is you don't really know until you can't see what you're spending; having that visibility is the first step to getting your control and understanding of your cloud spend, and especially the type of customers that Kyndryl works with.

We work with very complex systems and environments, not just on the cloud but also on the hybrid cloud estate. It just makes sense that we try to consolidate and aggregate the data so everyone can see the same thing and be on the same page. Then, part of FinOps is really about driving that cultural transformation.

Shifting left so that our development team & engineers can actually know what they are consuming and look at it from a cost perspective, and by giving that visibility to the edge to the consumers of those infrastructure services. That's where the importance is getting them to be aware and understand what the budget is and how to spend it wisely. 

I think for FinOps, if we think about it, about the whole concept of FinOps, it's about connecting the dots between the different stakeholders. Having that visibility across executives, the IT finance groups, the operating groups, and the development teams are where you can make something happen and collaborate better together. 

[00:03:43] John Kundtz: Super. You bring up a really interesting concept, and I just want to make sure our listeners and our viewers know about it. You mentioned "Shift Left," and there's been a lot written about that. It's another one of the industry trends. Just give us a quick, 10-second conceptual definition overview of it.

[00:04:04] Kathryn Lin: The way I think about it from a FinOps context on the cost perspective is empowering the engineers to be, one, able to understand where they're spending and how much they're spending, and two, if there are ways to optimize, they should be able to have the ability to do that on their own without going through the chain of commands to, looking at it from a more programmatic, programmatic way.

You're, you're able to empower your engineers to do, to act on those optimizations. 

[00:04:34] John Kundtz: I think what you're saying is it's really giving the entire organization not only the tools and the technology but the skills and the processes so that they can push these critical business processes earlier in the development cycle so that they don't have to necessarily come back later and either re-engineer it or retool it. Then, instead of having an IT finance person focusing just on the cloud spend or the IT spend, that engineer has the ability, the developer has that ability, or the business unit has that ability to address these things before they get out of hand, if you will, especially on the financial side. 

[00:05:14] Kathryn Lin: Absolutely, and taking care of some of that automation from the edge is already a huge improvement for the IT organization to work collaboratively and be able to optimize some of the other, higher value chain types of services. 

[00:05:30] John Kundtz: I know you're involved in finops.org and some other professional organizations, and you're starting to take this knowledge and this experience that you've gained in the world of FinOps. Let's spend some time talking about people jumping on the FinOps bandwagon; what I found in my travels is that people make a lot of mistakes. I think where you're coming from is you've seen some of those mistakes and can give us some advice on what they are and how to avoid them. 

I want people to be able to start this journey, but I want them to make sure that they've got a guide like you who can definitely give them a good perspective, what it's important what to do, but it's probably sometimes way more important to know what not to do.

[00:06:12] Kathryn Lin: Sure, let me think about that. A lot of things are coming to my head right now, but I'm thinking about just maybe one or two or three real mistakes that I'm hearing from our customers or from just the practitioners from the FinOps Foundation community. And just a little plug there. I've gotten Kyndryl to become a member of the FinOps Foundation, which is really awesome. We're contributing, and we're doing a lot of great work, collaborating and trying to align our services to their best practices. 

I keep hearing from some of the practitioners and customers, our potential customers, that they really want to focus on savings. And one of the big misconceptions about FinOps is that it's a cost-saving process. They're all really focused on trying to bring down their cloud bills.

And I get that, you're, we have a ton of different types of development teams and business units working off a different cloud, and you want to make sure that they're not overspending. However, I think the real value that comes out of FinOps and this whole operating model is about maximizing your savings from overspending but then also making the most out of that dollar that you spend on any cloud services. 

So one of the common mistakes is that the motivation from our customers could be that, Oh, I want to make sure that I save 30 percent on cloud infrastructure. Whereas really, the whole value is the governance and the cultural change aspect that really can make your whole financial governance model more sustainable in the long run. Although, savings to reinvest is how we want to pitch it that way because eventually, once you get more confident in your cloud bills, you will want your engineering groups to be leveraging more cloud services because that's where the agility and innovation really play into why we continue to move to the cloud. 

[00:08:11] John Kundtz: Everybody wants to save money, but at the end of the day, that's the one and done. I think what you're saying is that, as you get into an initiative, Yes, you'll save money, but it's not so much that you will cut the bottom line. It's that you'll be more efficient in the use of the money you're spending, and you'll be able to move faster and more quickly and address the business needs in an optimized way. 

What else do people do that gets them in trouble? 

[00:08:38] Kathryn Lin: Let's see. The other one is, I think sometimes, We're around FinOps or even just IT in general. We're always so focused on the tooling.

[00:08:51] John Kundtz: I was hoping you would say that. 

[00:08:56] Kathryn Lin: Sometimes, when I'm in conversations with customers, the first thing they ask is, what tool are you going to provide? From what I've learned so far in all these virtual summits with the FinOps Foundation and even in the recent annual conference, there are a ton of tools out there, almost too many.

I was laughing and joking with my co-worker about this that we were so demoed out at the end of the conference because all we saw was just demos after another, how we can forecast, how we can do budgeting, how can we do allocations of containers, costs, et cetera. You just need to figure out what tool matches back to what you need in your organization.

If your company is in the crawl phase, like a very premature FinOps phase, you don't need a forecasting model in that tool to help you run chargeback and showback, for example, so really just making sure that you're focusing on who is going to provide that service for you, whether you're building your own team, does your team have that discipline and the understanding of what's matter in FinOps, actually to bring up that operating model in your organization.

Or if you're hiring someone like Kyndryl or any of the service providers, understand where they can bring value from the people in the processes so that in the end, you're not just left with a tool that you're only using maybe 10 percent of its capabilities and not really getting down to the real value of FinOps.

[00:10:29] John Kundtz: That's fantastic advice, and I can totally concur. If I had $5 every time I watched a client or an organization buy a tool and implement 1/10th of its capability. All of a sudden, I started looking at why I even spent this money, or I didn't even get the benefits that the software vendor told me I would.

 I learned many years ago, back in the 90s, when I ran an IT service management practice, the tool is certainly important, or the technology is important, but unless you've got the skilled people and the knowledgeable people and the business or the governance processes that you're going to fail.

I used to call it the three-legged stool. You've got to have all three legs of that stool, or otherwise, if you have only one or two of them. The stool falls over, and you're not successful. What I'm hearing is. Don't just think you can buy a tool and have a FinOps initiative.

Take time, understand your requirements, evaluate your skills, and review your governance model. All those things would probably behoove you to start with before you even consider spending millions of dollars potentially on somebody's technology. Is that fair?

[00:11:40] Kathryn Lin: Yeah, that's exactly. Don't be fooled by the shiny object that's out there. You really need to go back to the basics and understand what your requirements are. Jump too far ahead and think that you need all these fancy capabilities until you really need them.

That's how I see it. 

[00:11:58] John Kundtz: I think if our listeners followed those two pieces of advice, they'd be well along their way and getting an initiative off the ground. Are there any others that come to mind? 

[00:12:08] Kathryn Lin: Maybe just one more thing. This is pretty basic: when you start anything, you want just to start small. The way that the Finop Foundation describes it is this: crawl, walk, run. So, if you're at the crawl phase, start small, be agile, be able to learn from mistakes, and understand where you actually need help. 

 The way we think about helping our customers on their journey to FinOps is we start with maybe even one application or one cost center as a pilot. And then that way, we understand how to collect all that data, how to optimize that data, how to identify all the stakeholders around that cost center to create that operating model and the processes in place.

And then, you continue to work off that and expand that best practice across the entire enterprise. That's how we continue to improve. 

[00:12:58] John Kundtz: I love the crawl, walk, run analogy. I think the other thing is that you don't have to do this by yourself. You can help supplement your skill sets and your business processes along with understanding what technology is needed; all right. So, as we wrap this up, is there any other advice you would give someone who's considering embarking on a FinOps Journey? 

[00:13:23] Kathryn Lin: Yeah. The first piece of advice is I would recommend going to FinOps Foundation. It's been such a huge, collaborative community that I've been involved with. Everyone's just so passionate about FinOps and optimization and how to run the governance model in their own company.

And a lot of this is practitioner lead, ask the question on their Slack channel; literally everyone will want to jump in and try to answer. I think just getting started in FinOps Foundation, read up the framework, read up the capabilities; you would want to understand the requirements compared to your organization. I think that's a really good start. Secondly, the other advice I would have is it's really important to get some type of executive buy-in and sponsorship at the very beginning to champion your program. So if you're a FinOps practitioner or from the finance team and you want to run a FinOps program, get someone who can buy-in on your mission, and I think that's helpful to one, get access to the right data to get the right stakeholders involved because all of the reason why you want to run synopsis to make sure that all the stakeholders are able to collaborate better together and make better real-time decisions on optimizations. 

So, I think executive buy-in is very important. 

[00:14:46] John Kundtz: That's awesome, those are two great pieces of advice. I want to wrap this up. I want to thank you so much for being such a great guest and for a great interview. 

We will put a link to Kathryn's LinkedIn profile in the show notes if you want to reach out and connect with her or ask her some follow-up questions.

We'll also put a link to finops.org for those who want to explore a little more of what it's all about, and they do have some well-thought-out, thought leadership and ideas. Again, it's a dot-org. So, it's a not-for-profit organization. Is there any other advice we could give people who just want to learn more about how to get started with FinOps?

[00:15:27] Kathryn Lin: Yeah, if you need some help, Kyndryl provides assessments and quick pilot implementation type of projects. We have consultants you can engage with and quickly understand what you need and how you can get to where you want to be. I've seen as I poked around that Kyndryl has a pretty good section on the Kyndryl Bridge that's dedicated to FinOps. We will put a link to the FinOps section of Kyndryl Bridge, where you can look at some white papers some case studies, and get comfortable with what's going on. These are just more industry articles. And then, if you so need to, at some point, I think you can even book a consultation with a subject matter expert such as Kathryn.

So, thanks again. Thanks for sharing, and thank you to all the IT finance managers in our audience for joining us for a fantastic presentation about the mistakes surrounding managing and optimizing cloud costs and the real truth about how to avoid these and how to get started.

So again, I'm John Kundtz. Our guest today has been Kathryn Lin, and thanks for joining us on this edition of the Cloud Connect podcast and talking about managing and optimizing cloud costs. 

[00:16:54] Kathryn Lin: Thank you. Thank you for having me.