The New Role of ITFM (IT Financial Managers) in Cloud Environments

February 7 2016 | by Yoav Mor

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Enterprise data centers have been, and still are, large strategic areas within organizations and require a hefty amount of funds to operate. That being said, capacity and budget planning, along with managing IT physical and human resources for organizational projects, can be quite difficult. After over two decades of experience, enterprises have learned how to better cope with their data center financial management challenges. And then the cloud came along and completely disrupted the recently conquered traditional methods.

Nevertheless, the cloud was and continues to be accompanied by a whole new range of financial issues that need to be overcome. IT organizations need to deal with a large variety of cost models and structures that are offered by public cloud vendors. Due to the disruption that the cloud has caused in data centers, today, more than ever, MSPs and enterprises are looking to fill the position of dedicated IT financial managers. This article will discuss the responsibilities that IT financial managers hold, how they can aid an IT organization in becoming a cloud broker, and the tools that are required to support their position.

Challenges and Opportunities in the Cloud

In the world of data centers, running an accurate annual forecast of organizational IT needs and being able to finance purchases can be a major challenge. The on-demand nature of the cloud has changed the way IT resources can be purchased, which has brought about significant financial opportunities as well as risks. Given that cloud resources are temporary entities, you can return a resource to AWS with a single click and easily consolidate resources or stop paying for unused resources. But you can also lose control of your online data center inventory.

IT financial managers need to be aware of the plethora of optimization options that are available and must be able to appropriately choose which ones to implement. Constant analysis, which includes knowing utilization levels and continuously looking for inefficiencies are required to get the most out of your data center. This is one of the most critical responsibilities that needs to be confronted when moving to the cloud. However, due to the cloud’s “infrastructure as code” manner, using the right approach and tools can significantly increase a cloud environment’s transparency and the respective financial manager’s effectiveness. The result is turning endless guesstimations into accurate quantitative and qualitative analyses.

IT as a Cloud Broker

Due to self-provisioning, which is made possible by the cloud, traditional IT is confronted with “Shadow IT”. With traditional IT, the long and cumbersome process of procuring physical servers is the only option, but today, any business unit within an enterprise that requires resources, can easily make purchases from say, AWS or Azure, online, with their own allocated budget. Bypassing the internal regulations that are involved with traditional enterprise IT can make operations run quicker, but it can also have disastrous effects on cost control. Sprawling costs can creep up and ultimately shock CFOs or IT financial managers at the end of the month, showing how difficult it is for IT teams to monitor and regulate finances.

This is where the notion of “Cloud Brokers” comes into the equation. IT financial managers need to be able to create new optimization processes in order to control each business unit’s resource utilization. Take a large brand that has business units located across the globe, for example, each one with it’s own CIO. The global IT enterprise department needs to ensure that costs are optimized and controlled for each individual unit across the board. If the opportunity arises to take on commitments such as purchasing AWS reserve instances in order to support several units, it is possible to decrease costs for each unit.

Control and visibility are two very critical capabilities that an IT financial manager needs to possess in order to make his/her IT department a “Cloud Broker”. IT financial managers need to implement these capabilities and, as the experts, be able to find the best optimization opportunity for every unit throughout the organization. By acting as brokers, IT departments become semi-financial organizations, and in some cases, don’t deal with actual infrastructure deployment, but search for the best cloud vendors and cost models. Their expertise should involve understanding actual IT requirements and being able to financially plan, track, and enforce budgets accordingly.

Run Your IT Like a Business
Businesses are comprised of operations and costs, however, revenues need to be taken into consideration, as well. IT financial managers need to recognize the fact that their goal is not to solely optimize operational efficiency, but to position IT in such a way that it can help increase revenues. For example, IT that uses the cloud to support DevOps implementation will help accelerate release times, which will directly impact customer satisfaction and revenues. If you can have a new feature up and running within a day for interested customers, then supporting a dynamic R&D environment will aid in revenue increases.

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