The pressing question for today's CIOs is, “What do we spend our IT budget on?”
Cloud costs are already a challenge, with a recent survey estimating that 24% are wasting software spend. The explosion of generative AI makes it critical for organizations to consider frameworks like FinOps and Technology Business Management (TBM) to ensure visibility and accountability for all technology spend.
But what does this mean in practice? How can organizations move to a more disciplined, value-driven approach to IT spending? What is the impact of generative AI in this space?
To answer these questions, we spoke with Declan Coombs, a partner in IBM®'s Cloud & Technology Advisory practice, who has more than 20 years of experience helping organizations get more value out of their technology and cloud transformation efforts.
Challenging the Status Quo
What do CIOs want to invest in?
CIOs are constantly struggling to strike that balance running Business and change Business, because it has a major impact on business transformation and revenue growth.
We want to build new capabilities, not just maintain the status quo.
What is stopping them?
Too many organizations still perform their budgeting process on an annual basis, which often involves copying and pasting the previous year's budget and inflating the numbers a bit.
But given the rapid pace of change in technology and business, traditional budgeting cycles are insufficient — the process doesn't allow IT teams to critically and dynamically evaluate whether they're spending money in the right places.
End-to-end financial responsibility
What is FinOps?
FinOps is fundamentally a culture and operating model change. It impacts not only the finance function, but the core of the business strategy and planning function. To really embed FinOps in your organization and move cost ownership and accountability to the edge, you need to think about people, process, and technology.
A lot of it is about giving people more visibility and understanding of what they're spending their money on, so they can make smarter decisions.
Is it just about cloud costs?
What has historically been a primary focus on public cloud is now spreading across cloud and technology spending.
When combined with TBM, the view expands to the broader technology stack – hardware, software, and humanware – providing a clearer, more comprehensive view of technology consumption and how it ties into business outcomes, helping you understand where best to invest and how best to deploy technology in a way that best suits your business.
Maximizing business value of and and Generation AI
How will FinOps impact the AI generation?
FinOps has a key role to play, especially given the rise in Gen AI use cases, the sheer amount of GPUs required to power them, and the resulting huge costs. Organizations will struggle to demonstrate value. FinOps helps teams use and scale Gen AI in a cost-conscious way, and track and measure ROI.
gen How will AI impact FinOps?
Gen AI accelerates FinOps by harnessing data to improve pattern discovery and contextualization, providing insights and recommendations to enable data-driven decisions, streamline processes, and automate actions.
But the real game changer is accelerating application and code modernization with Generation AI, which will achieve the next level of cost optimization while increasing efficiency and business value.
Strengthening Engineer Capabilities
What is the key to success?
Getting engineers to act on cost optimization recommendations is the biggest challenge. Cost reduction efforts tend to be all about take, take, take. It's important to show the benefits and reward those who take the right actions.
Done right, FinOps empowers people to make a difference. If you give them the right tools, visibility, and incentives, they will want to do the right thing.
Rethink your IT spending with AI Learn more about IBM FinOps solutions
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