Client story

Sustainable savings with FinOps: a successful transformation story

  • IT Strategy & CTO Advisory
  • Travel, Transport & Logistics

Driving IT costs down to increase profitability

The CIO and VP of Infrastructure services of a global services organization urgently needed to drive down IT costs to help the company increase profitability.  The client stakeholders were keen to quickly embed processes to ensure they were able to stay in control of IT costs.

This was particularly challenging as approximately half of the costs were incurred by the business functions, so getting a process in place that gave all users visibility – and cost control – over these disparate costs was critical to success.

The Wavestone team was brought in to conduct a full review of IT infrastructure to:

  • Rapidly identify quick cost savings
  • Identify longer-term savings
  • Give the client real-time visibility and control of all IT costs through FinOps
  • Embed the approach with the client team so that savings were sustainable in the long term

 

Identifying where the IT costs come from

A key challenge was that much of the IT cost was incurred by the Business, but the IT function had no visibility of ‘who’ owned these costs that were being incurred in the ‘ether’. Therefore, IT had to pick up those costs and be accountable for them.

At the heart of the problem was cost ‘tagging’. The client needed the business teams to put in the correct tags so that the right owners would be charged. At the start of the project, only 10-15% of resources were being tagged, and most of these were incorrect.

Additionally, there was no standard naming convention for how the tags should be applied or how to recharge the costs.

The recharge team had to spend a week of every month manually assigning costs to owners, which was not only labor-intensive but prone to errors.

Due to the amount of time it took to assign costs, business areas did not realize they were overspending until over a month later, which was too late to take action.

Understanding current level of spend & how to implement controls  

August – December 2023

In this first stage of the project, it was critical to understand the client’s current set up and to identify where cost savings could potentially be made – and what the client would need to do to generate the levels of cost control required.

It was important for the Wavestone team to be able to identify quick savings to demonstrate that this approach could indeed save the client team money. To achieve this, the client’s full infrastructure was reviewed, and the current state assessed.

Results: IT costs under control

The project demonstrated the significant value that FinOps can deliver by exceeding the client’s expectations – identifying and delivering over $1m per annum in practical, annual savings.

  • Quick savings: The Wavestone team were able to meet the request to identify quick savings: by 31 October 2023, they had identified potential savings of $40k per annum and had already implemented $3k monthly savings.
  • IT cost accountability in business teams: Wavestone created and implemented the policy and standards across the entire Azure cloud environment. – achieving 90% compliance by Business users by July 2024.

 We are pleased that the IT investments are now optimized and strategically aligned with business objectives, creating a clear path for sustained cost efficiency and operational excellence.

Stephen Dalton, Manager at Wavestone

Critically, by implementing real-time visibility and control over IT costs, the client now has a sustainable framework for ongoing cost management. The successful deployment of the Apptio Cloud Ability tool and the establishment of a dedicated FinOps team have empowered the client to maintain strict control over Azure cloud expenditures, thereby enhancing overall profitability.