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As organizations move more of their tools and processes to the cloud, the need for visibility and cost control becomes increasingly important. In order to manage cloud costs more effectively, organizations turn to disciplines like IT Asset Management (ITAM) and FinOps.
Often, it takes a collaborative and integrated approach.
In fact, the FinOps Foundation’s The State of FinOps 2023 report noted a trend of frameworks beginning to intersect and integrate with FinOps. These frameworks include IT asset management (ITAM) and its subdiscipline, software asset management (SAM). When these practices work together, they contribute to a strong SaaS management program.
Read on to learn more about the commonalities between FinOps and ITAM, and why businesses should use an integrated approach when managing SaaS.
Defining ITAM, SAM, and FinOps
Let’s start by defining the business practices.
ITAM: IT Asset Management — the overarching umbrella of asset management — encompasses the financial, contractual, and risk management of all IT assets, both physical and digital (hardware and software).
SAM: Software Asset Management is the practice of managing software, both on-prem and in the cloud. It includes monitoring software usage, procurement, deployment, risk management, licensing, and compliance throughout the lifecycle.
FinOps: FinOps, an amalgamation of the concepts finance and DevOps, is a practice that drives accountability for hard to control cloud costs and cloud spending without slowing down the business.
All practices relate closely with SaaS management, which is the management of all cloud-based applications throughout the organization.
How FinOps and ITAM Support SaaS Management
In an ITAM practice — which includes SAM — leaders focus on analyzing contracts and financial impact of IT assets to reduce risks, while FinOps aims to drive accountability for cloud spending without stalling business growth. When you combine the two principles, it sounds a lot like the Freedom within a Framework approach to SaaS management.
Some of the ways FinOps and ITAM supercharge SaaS management include:
Promoting collaboration
Both disciplines require input from a variety of stakeholders, including business leaders, finance teams, IT staff, and end users. By collaborating with these stakeholders, ITAM and FinOps gain a better understanding of the organization’s needs and goals, and can develop more effective strategies for managing IT assets and costs, including SaaS.
Driving business value
SaaS management requires ongoing consolidation and rationalization to ensure SaaS apps drive value for the business. To support this, ITAM identifies areas for cost reduction. Meanwhile, FinOps devises strategies to achieve those savings, ensuring that SaaS expenses remain aligned with organizational goals.
Providing transparency
ITAM and FinOps combine their expertise to provide clear visibility into SaaS usage and spending. By tracking software licenses, subscriptions, and usage patterns, ITAM ensures that all SaaS resources are accounted for. FinOps adds financial context to this data, enabling stakeholders to understand the cost implications of SaaS usage.
Aligning processes and best practices
ITAM and FinOps aligning their processes for managing SaaS licenses, costs, and usage helps ensure that everyone in the organization is working toward the same goals. For example, ITAM and FinOps can collaborate on developing a SaaS governance framework that defines the roles and responsibilities of different stakeholders in the SaaS management process.
Budgeting for the future
Together, ITAM and FinOps aid in budgeting for SaaS expenses. ITAM’s insights into software usage trends combined with FinOps’ financial analysis help organizations forecast future costs more accurately.
“As a SaaS management professional, you should really be leaning into and learning more about FinOps and how your company is using it,” Zylo Ben Pippenger, Co-Founder and Chief Business Development and Strategy Officer said in an episode of Zylo’s podcast, SaaSMe Anything. “Do you have a FinOps group? Do you have some people within your organization who are focused on cloud-related costs, including SaaS? Start to make some new friends with these folks and see if you guys can unlock some additional value for your company together.”
ITAM and FinOps Achieve Success Together
SaaS management is still a relatively new business practice. Through ITAM and FinOps teams, businesses already practice SaaS management, even if they haven’t put a name to it. But SaaS costs continue to grow. In 2022, SaaS spending surpassed on-premise software spending for the first time. Just as SAM developed as a subdiscipline of ITAM, the practice of SaaS management is now a must-have.
Learn more about how ITAM professionals can forge careers in SaaS management.