Tangoe’s Chris Ortbals on the Rise of FinOps

This is Techron tv. Hey guys, thanks for the throw. We're talking with Chris Art Ball, who's Chief Product Officer cgo, and they have gotten yet another patent for their approach to finops, and I think there's 14 of them in all, and we can get into that in a bit.

But I think the issue with the day is that we've been talking about things like capacity planning for as long as I can remember, so Right. Walk us through a little bit about why finops and why now. Yeah.

So, you know, finops, you know, the way I look at finops is, and if you take Tango for example, we've been in the, you know, telecom expense and manage mobility expense space for, you know, two decades, right? And so best practices around that have been around a long time. But when you think about the advent of cloud over the past five to 10 years, the spend has exploded, right?

It's, it's the highest, or one of the highest spend categories of any IT budget these days. And you take stats like things from Gartner where they, you know, talk about 70%, uh, overspend in the environments. And so what is finops?

finops is, my view, is the evolution of the expense management industry now focused on the best practices around cloud, right? So to me, finops is a framework, right? It's, it's all about return on investment, allocating costs, allocating chargeback, managing the huge volumes of data.

And then I think culturally or organizationally, it's about bringing together the IT and the technology professionals and the finance professionals. Um, you know, if you think about years of IT expense on infrastructure, whether it was before cloud or now, it was a fairly predictable, you know, IT spend, it was a capital expenditure, right? It, um, you know, it spread over a number of years and it, and it didn't fluctuate a lot, and it was, again, it was a CapEx or capital expenditure.

It's now an operating expense that has high volatility and unpredictability. Um, and that's where finops is there to build a framework around that so that people, one, communicate, one, understand the metrics, one, understand, you know, where the costs are going and build, you know, a structure around that. So that's, that's, I think the importance of it is that cloud sprawl, cloud overspend is very, very prevalent these days, and this helps put some structure around that.

So Assume the developers and the DevOps teams then build and deploy these apps, have no visibility into this because, you know, on the face of it, it kind of sounds a little bit like they're just, you know, drunken sailors on a Saturday night spending money left, right and center, but, right. Yeah, I, you, I don't think they deliberately do this, so, no. Well, in the process, Um, well, I think it's visibility, right?

And accountability. If you look at, if you take some of the foundations of the finops world, the accountability isn't just in finance or with the CIO, it has to, you have to give that visibility down to the developer, right? Take, take Tango for example.

Obviously we're, we're a provider in this space, but the same time, you know, I run our r and d and engineering organizations and they have the ability to spin up instances A, in AWS instantly. We, we follow the same practices. We have to give them visibility because they have to understand there is a cost to that, right?

And so if you look at how teams are supposed to be formed in finops, it, it can't just be, you know, a blind view. If, if that is, you know, from the developers, the engineers, they have to have that full visibility. So that's why, again, one of the biggest principles in there is the team collaboration and the visibility.

And that's, you know, a key thing because engineers need to know just as much around the impact of that, um, as the person in finance or the person who owns the budget, right? So who wakes up in the morning and says, yep, we gotta go get some finops. Is it the finance team?

Is it the head of it? Is it the DevOps team? It's interesting, the statistics, and I don't have an exact one is it's, it's pretty close in terms of who drives this, but it's typically the CIO and the head of fp and a, or let's say the head of finance that try to spearhead this and become the executive sponsors.

And then it's going to be, you know, in large organizations, typically, let's say there's a finance lead for for it, and then there's, you know, a director of IT that's gonna be the sponsors that run through this. So it's really, I can't stress enough that it has to be collaborative, right? it, and typically, you know, if you look at any of the documentation on finops, it says the executive sponsor should be like a CIO and A CTO and the CFO around this, um, as key, key people.

And then you also have to factor in that the business owners to have a play in this as well. A big piece around finops and cloud expense management overall is the ability to give that visibility to the organizations. A lot of these costs these days are distributed.

For example, my organization in Tango, I have a chargeback model with our IT organization for all of the assets and infrastructure that my team consumes to develop products. The same thing applies to many companies. It doesn't, it's not just a bucket of expense just sitting in IT because the cloud can be so easily consumed now they've gotta have an ability to understand where all those assets and infrastructure are being tagged across the organization.

And so that's where tools like what we have and others outside of in the industry have a methodology to do those tagging, that allocation and those chargeback capabilities. So you have full visibility of, okay, marketing is consuming this much versus, um, you know, operations is consuming this much or this project, which has a very specific ROI, is it running within budget or not? Those kind of things.

And that's where finops really helps with that. In terms of the practice and the framework, It seems like, um, everybody kind of acknowledges that we need this. It's kind of like, you know, they all go to church and hear the gospel and nod their head and say, yeah, we should do this, right?

But there seems to be, um, a gap between, um, intent and execution here. So what are people running into as their challenges for actually implementing Fit Ops? Um, you know, I would say it is, um, first and foremost, um, I mean two angles.

I would say one buy-in from the top, uh, of the organization and understanding that, but I would also say visibility to the information, right? You know, it's, it's quite daunting to try and take on a finops practice. And some of the data we have is, you know, you know, we're obviously in the, the expense management industry.

So we look at, you know, how much savings can be had. And one of the key things we look at when you look at companies that have a finops practice and go, go at IT alone, um, versus ones that use a platform that can pull in all the data, do all the AI and the analytics around it, there's nearly a double return on the savings in that regard. So I think part of it starts with do they have the tooling, the capabilities?

And again, I think it's the sponsorship, uh, of getting into it. Um, if it's just being led outta, I would say the IT organization or just being led outta the finance organization, I don't think you'll see a ton of success in that because the two teams aren't aligned As we kind of go through this whole process, um, has been, uh, this whole space, we've seen a lot of economic headwinds, but it's different by vertical industries. So are more vertical industries driving this faster than others because of the e the economic climate they're in?

Or are there any patterns there? Not necessarily than we see, um, uh, at least in the customers we talked to. Actually, if you look at the growth of finops, you know, there's thousands of practitioners and it's becoming kind of a common language in mid to large enterprises, but finops as an in, like as a attached is now they have practitioners operating finops in 48 of the top 50 Fortune 50 companies, right?

So it's, you know, in terms of where it's being attracted in there, the attach is getting really, really quick at this point. So I, I personally haven't seen a strong vertical push in that regard necessarily. Are the cloud service providers doing enough to help with this whole space?

Because, you know, on the one hand, you know, I think they want their customers to be responsible, but on the other hand, you know, they're the ones who benefit when more of their infrastructure is consumed. Yeah, no, they, they, they actually are, many of them AWS for example, are bringing out capabilities and tooling. I would say it's not cohesive compared to what a typical customer has.

And that's not necessarily a competitive lens statement given where we're at. It's more that most customers are in multi-cloud and also in private cloud, right? So, and that's where having a solution, um, that can span, let's say AWS Azure, Oracle GCP plus also look at VMware based workloads, uh, to look at the whole cloud landscape is more value than having, you know, an optimization and expense management tool built just for AWS, right?

Because the likelihood is most of the enterprises don't need more tools. They want tools that can do more things than a tool for a WSA tool for Azure, a tool for Google, right? Because the one thing that's confusing and challenging in this space is all the providers use different terminology for different services, for different measure points of utilization.

The cloud expense management platforms take Tango for example. We normalize all of that, right? We can look at all of the public clouds, we can look at private cloud, VMware based workload.

So you can, you can span across that whole environment where that's not strategically any sort of a goal for a public cloud provider in that regard. But I will say when you look at finops, all of the major public cloud providers are getting, um, into the programs and trying to build that same methodology and foundation in their organizations, much like we are at Tango, right? So they are, they're active participants.

So are they working towards standardizing the nomenclature per se? Because to your point right now, it's a little confusing. Yeah, Uh, they are, and the finops foundation, I believe it's called, um, unity, and we can follow up and confirm that, but they, they have a team that is building that common framework and, and terminology across, because, you know, our, uh, the definition of a reserve instance and its functions is different than how Azure calls it, you know, as an example.

So you need that common terminology around there. That's something that obviously someone like Tango and others in the industry have obviously, um, had to tackle because you need to normalize that so that your customers can make informed decisions regardless of environment they're in, because the use case that they need for optimization is, is the main focus. It's not, is it, what's this called here and here, right?

So the normalization is key. So what is your plan for all the you guys have in this space? Because it does seem like there's a lot of open source people running around with some contributions.

So what will be the mix here? Yeah, so we have, uh, you know, Tango's had a history of having a deep portfolio of patents around a lot. 'cause we've been in the industry over 20 years, right?

Um, so we have around 70 patents around a number of different areas of expense management from our telecom route to mobility. And then over the past couple of years we've, as, as we've invested in these areas, we have about, we have 14, we just completed our 14th patent in this. And so it's really a series of patents that we're talking about.

You know, the, the goal of them is everything around classifying, analyzing, reporting on cloud usage and data. The most recent things, uh, that we've, we've added into that is something we see a lot of need from our customers is around chargeback, right? The ability to actually take that data and allocate it back in.

And so that was some of the areas that some of these recent patents have focused on. But it's all, again, all about maximizing the cost optimization and the serv service utilization of the customers. Will AI save us from ourselves in this space?

Can we apply algorithms here to kind of surface these issues and what might that look like? Absolutely. So, you know, that's the point I made earlier of a DIY versus using a provider or somebody or a platform with that, you know, the amount of data, the one thing that's great around the public cloud compared to the history of, let's say the 10 industry is the visibility of the data is there, right?

The challenge is it is an immense amount of data, right? It's, it's nearly impossible for an individual or a small team to build an in-house to tool to accurately pull in millions of lines of rows, of building data, of all different variables and perspectives that change rates on a real time basis. And so, you know, take tango for example, and, and what's needed in the industry, you have to apply automation and AI to that, to basically summarize that data down to make it into a distillable level that you can make informed decisions on it.

So AI is absolutely a huge component of what I would say the cloud expense management industry, because without it, you know, it's manual scrubbing of spreadsheets and things like that. And that goes to that point earlier where you see double the savings using a platform than if you try to go out it alone. Will people use this to decide where the application is gonna be deployed in the first place primarily, or will we see them kind of moving workloads as pricing conditions change?

And, you know, how dynamic will all this get? Uh, I think pretty dynamic. I mean the, the foundation of, again, taking tango, but I, these are things that are our competitive capabilities in the market.

The ability to, what you could say, optimize right size and evaluate where workloads should go, our capabilities you should be looking for in a solution, right? The ability to move workloads across if needed, the ability to say this is more cost effective in this location versus this location, or based on the application, they have a better set of services that comes to, you know, it's, it's not just an expense management play with finops, it's also an, what I call an optimization play as well. And so that absolutely is a key part of that because, you know, most, most people are in a hybrid world, and hybrid can mean so many things.

Could mean I'm gonna keep some workloads in a private cloud environment because they're more static, let's say, and they, they're more cost effective there, or I, they're very, you know, elastic services, so I need them to be in the public cloud, but you know, I also want to have redundancy or I want to be able to shift workloads from a WS to Azure or whatever reason it might be. And that's where you need that analy, that analytics and the optimization capabilities that are in the, in the, uh, cloud expense, uh, platforms that are out there today As we go forward. Do you think that, uh, we're gonna discover, maybe it's an open secret, but we're gonna discover just how over-provisioned a lot of these cloud environments are, and we're wasting a lot of resources and that has implications for not just cost, but I guess, you know, green it, but um, are we gonna tighten up our optimization procedures as a result of finops?

I, I think so. I mean, that's really one of the, the, the foundations of it, you know, what we see from our customers is anywhere from 20 to 40% savings, which is you can directly correlate to overprovision environments, right? And it's not just over provision, it's underutilized as well.

Like some workloads only need to, you know, the common use cases of disaster recovery take, you only need it up for a certain amount of time, right? Um, or you know, very, you know, seasonal type workloads and things like that. So the optimization, the, the automation you can put around those to, you know, only use what you need, um, and what those things can identify, I think is going to continue to drive down to, let's get out of that overspend like I talked about earlier, where Gartner's stating up to 70% of, of, uh, resources are being overspent in the cloud.

That's, that's a significant number. Now what we see again is somewhere between 20 to 40%, um, you know, savings the customers can see as they use a platform to help with the solution and again, apply that towards the finops framework. So what's your best advice to folks?

What's that one thing you see organizations that are succeeding doing that you wish other people would copy? Yeah, I think it's, uh, again, it is, it's in the finops framework. It is setting and getting the sponsorship in the company to go at this and, and utilize the framework, get people on board, get the right people involved.

And then, um, again, what we talked about earlier is, um, the DIY approaches are an approach, but I think there's a need to evaluate what options can get you further optimization and further automation around that entire process to where, you know, you're not spending the time on gathering the data and doing the analytics, you're letting a platform do that work for you so that the team can make the decisions and obviously make them much more real time as well. Alright, cool. Well you heard it here folks.

There's much money laying on the floor out there. All we gotta do is bend over and pick it up, but I think we need some tools and some ability to see what's going on. So it all starts with visibility.

Hey Chris, thanks for being on the show. No problem. Thank you.

Take care.