This article originally appeared in Forbes.
While IT cost optimization has been around since personal computers took hold, little has been done to revolutionize the practice over the past five decades. Today, however, we’re witnessing a new shift.
A fresh approach is guiding IT cost control, and its strategic focus might surprise you. It emphasizes dollars and cents as much as it does the softer side of expense management—awareness and personal responsibility. As every expense is tracked, every cost influencer is folded into a culture of cost accountability.
Data says humans help. Companies that succeed at the FinOps model reduce cloud costs by 20%-30%. But how do executives foster an environment of cost ownership? To get the answer, we must start with how people sway expenditures.
Habits: Overlooked Origins of High Costs
With trends in inflation and technical debt, it’s easy to say rising prices, cloud sprawl and scalable technologies cause high costs. But habits hardened over the years are also to blame:
IT Engineers and DevOps: Accelerated innovation has invigorated a tendency toward unrestrained spending, ad hoc deployments, and overbuilding as though IT resources are endless. Developers provision assets as they see fit with limited oversight.
CIOs and IT Financial Analysts: IT leaders accept expenses as simply the cost of doing business. When budgets cover regular business operations, CIOs become the habitual corporate financier—paying for shared services even when costs explode.
CFOs and Finance Teams: It’s a natural response to disregard what is difficult to see, understand, or manage, and the complexity of cloud and GenAI technologies can create a labyrinth of learning curves stymying cost governance.
FinOps’ People-First Approach
FinOps puts people at the center of the cost management model, building the human connections necessary to break traditional workplace patterns. Defined as part cultural practice and part operational framework, it drives accountability through collaboration. While originally created to control cloud infrastructure, the principles of FinOps can be applied broadly.
- Teamwork: A centralized, cross-functional team drives more savings.
- Empowerment: Cost-effective decision making should be decentralized.
- Responsibility: Everyone takes ownership for their IT assets and services.
- Enablement: Focus individuals on timely data and their sphere of influence.
How To Cultivate a Culture of Cost Accountability
There’s no fool-proof strategy for courting accountability, but research exposes an intriguing method for triggering personal ownership. More than 72% of FinOps practitioners use visibility to establish culture, followed by financial reporting best practices (69%) and incorporating cost data into existing reports (55%).
The Science: Shape Cost Data around Your People
The takeaway: Activate accountability by shaping cost data around personal needs. When data is customized, cost-consciousness is heightened.
While everyone wants to see expense origins, reporting best practices include presenting data in formats that make it meaningful in the eyes of each stakeholder. Executives want to see everything in one view. Meanwhile department and project leaders want only the spending relevant to them, and they want it readily accessible in granular detail.
Facing Front-Line Challenges
Beware, accountability can be harder to nurture on the front lines of spending. Forty percent of companies report it’s a top challenge to get IT engineers to act on cost optimization recommendations.
Some employees may require additional engagement to break down barriers, build trust in data and streamline cost optimization. Enabling them to consider price at the precise moment of decision could determine adoption—anything less risks getting overlooked as compromising speed.
Culture-stimulating questions include: What data feeds would you incorporate to make spending information more accurate? What visibility and data cuts do you need to see cost implications? Is data presented in ways that help you inform change and enable action? What is needed to expose root cause? Where should data appear so costs are right where you need them?
The Art: Shifting Mindsets and Empowering Cost Influencers
When it comes to accountability, tensions can run high between IT and finance. CFOs must make financial cuts, while CIOs are asked to drive innovation with smaller budgets. That friction becomes clear when cost-cutting initiatives are met with responses like “What revenue-generating service do you want me to cut?” This mindset needs to pivot, and one Forrester analyst notes that it’s most difficult for tech leaders.
Incite new perspectives by:
- Replacing post-mortem budget blowout meetings with more frequent spending check-ins. Proactive governance relies on real-time monitoring, thresholds and alerts catching cost overruns before they occur.
- Agreeing not to argue over the cost of IT services, after all prices will inevitably rise and increases could also be indicative of positive growth. Instead, partner in lowering unit costs, making expenses predictable and measuring ROI, so cuts are applied first to the services generating the least amount of business value. I recommend starting with chargebacks or cost allocation exercises that assign shared expenses to beneficiaries. This mapping exercise aids in showing where IT investments appear as revenue. Expense management platforms can automate this.
- Using purchasing guidelines and workload placement policies to train IT engineers to design for cost efficiency alongside security, scalability and reliability. Let data guide them in knowing when to use public versus private cloud architectures and which hyperscaler is best.
- Facilitating mindshare. Financial teams should learn how on-demand services are charged, while IT teams should grasp tactics like unit economics and usage optimization. To become better partners, both need to appreciate financial management and how technology is consumed.
- Framing intent alongside the importance of both teams. Financially sustainable transformation is paramount. Cost optimization is not about finger-pointing, purchasing powers, or budget police, but rather building awareness and empowering employees to make smarter purchases. This way companies can be resilient in their ability to innovate.
People are half of the success equation. Cross-functional teams that rightsize assets can use IT waste to fund more innovation. With the right data, employees can plainly see the financial impact of their decisions, and they won’t just take on a sense of cost-consciousness, they will act on it. That’s when visibility becomes cost prevention and awareness matures into a culture of cost accountability.
Ready to activate your culture of cost accountability? Talk to Tangoe.