[Music] hi I'm Peter Burroughs welcome to another cube conversation from our beautiful Studios here in palo alto california as we do with every cube conversation we come up with a great topic and we find someone who really understands it so they can talk about it we capture them for you so you can learn something about some of the new trends and changes in the industry and we've doing that today too the topic that we're talking about is how do you do a better job of mapping the costs that are being generated by the cloud or that informations coming out of cloud suppliers related to what you're using with the actual business activities that generate the differential capabilities that customers are looking for that's a tough tough challenge and to understand that better we're talking with junior Stormin who's a co-founder of cloud ability Jaron welcome to the cube thanks Peter good to be here so so let's talk about first who are you yeah so I am co-founder of cloud ability and credibility is focused around improving the unit economics of cloud spend so our customers tend to be those who are spending large amounts in AWS or Azure or GC P and we take their billing data their utilization data various metadata about their business and do machine learning and data science on top of it to help them get better visibility into sort of where that spend is going how they're using it but more importantly to give them some controls around how they want to optimize an optimize doesn't necessarily mean save money in a cloud world because most companies who are moving into cloud very heavily are doing that for the innovation for the speed so they can deliver you know better data faster but it's really about fine-tuning the conversation say okay here we want to save money here we want to move faster here we want to focus on quality and really providing a way for the the various groups that aren't normally talking the finance teams with the engineering teams with the procurement teams all these groups to come together and be able to take executive input to say okay how do we want to operate and how do we one improve those your economics as we go well I want to start with just quick comment on this notion of Union I can when people here historically hear the notion of unit unit economics they think of you know increasing scale so the average cost per unit goes down yeah I think you're talking about more than that right are you really also talking about a mapping of what spend is generating to the business activities that actually generate value and ensuring that you get the differential or the optimized Union economics unit cost yeah oh so the mapping is actually really interesting ly challenging in cloud it's hard enough in traditional IT if you look at somebody like AWS they have two hundred thousand SKUs different products you can buy and they now bill at a second level resolution so what this means is you've got all these engineers out there using cloud in a very good way to move quickly and of 8/2 little more features and they kind of have an unlimited credit card that they can go spend on as quickly as they need and they never see the statements they never see the bills and the other side you've got finance teams procurement teams who've sort of lost control of traditionally the power of the PIO that they have to actually rein that in and they're they're struggling just to understand what is the spend and then to the mapping question how do i allocate these hundreds and millions of charges that i have this month into cost centers and business units and getting that sorted in a world where engineers are focused on moving fast or not they're not tagging things based on cost and are typically so once you get that sort of mapping aspect sorted to the next point you brought as is in bringing the business value so how do we start to relate that back there's a concept a lot of you know IT has been a cost center and now it's sexual driver of value in a world where businesses are increasingly delivering their value through software so we need to start tying the spending mapping into the business and then tying that to the value delivered a great example of this I was sitting last week with one of the largest cloud spenders in the world there have been you know nine figures with their primary vendor and in the conversation with the executives we realized that nobody was looking at both sides of that equation you had the the finance people who were saying hey we're tracking the cost and we think I was happening there and then you had the the revenue generators looking at the money coming anyhow the cloud people with that but there wasn't this centralized view to say alright we want to have a conversation about what value I were getting to spend and the question that always comes up what that is I was doing the right amount well let me build on that because it's seat because IT is historically and this is one of the things that we've been doing over the last few years IT has historically done things on a project level yes all right so we had waterfall development we tried to change that with agile we had you know buy the hardware upfront and then deploy the application on a cloud changes that so this project orientation has led to a set of decisions about finance at the moment that the business asides to do it we've changed the practices that we use at a development level we've changed the practices that we use at an asset level is it now time to change the practices that we use at a finance level is that really kind of what's going on here it is that the project analogy is good because what we're seeing is they're shifting from a project basis to a productive basis and products that deliver value increasingly if you think about the change that's happened with DevOps it in the scene and cloud companies are delivering more of their value through software and they're not just using IT for internal projects right it's actually the driver of business how we interact with Airlines and banks and all these things so that's the shift to say okay now we've gotten good at DevOps moving fast and we've gotten good at deploying and building better data stores now we need to bring in this new discipline and the discipline is what the market is calling fin ops which essentially is combining financial financial operations but you simply combine technology applied specifically do a cloud roll and it only can really happen in cloud it can't happen in data centers because data centers have fixed spending right you have to wait to get resources once you make the investment it's a sunk cost there's months of lead time cloud introduced the removal of constraints which means you can get whatever you want as quickly as you want and DevOps meant it's all automated so instead of your collection of 60 servers you've got thousands that are coming up and down all the time so what you don't have to do is bring in all these groups engineers have to think about cost as a new efficiency metric they have to think about the impact of their business at this code this confirmation template they just wrote is going to have and the finance teams have to shift from this mode of I'm under report retro actively and at a quarterly granularity sixty days after it happened and block investment to be I'm going to partner with these teams report in a real-time fashion give them the visibility help forecast and actually bring them together to make better business decisions about the cloud spend so cloud has allowed development to alter practically agile has been around for a long time before the cloud predates the cloud but it became practical and almost demanded as a consequence of what you could do with cloud so cloud change development through agile it changed infrastructure management through DevOps where now you're you're deploying software infrastructure of code and know as code and what you're saying is the third leg of that stool cloud is now changing how you do financial management of technology financial management of IT and we're calling that fin ops yeah and you you you can't really have fin ops without cloud or without DevOps and if you have the two together you alter we need this new set of it's a new operating model the reason this has come to a head of late is you know if you look at going to the Amazon riemeck conferences a few years back it was like well how much is cloud gonna be a thing and okay clouds now gonna be a thing when's it gonna happen now it's about the how and how do we do this better cloud is hitting for the material spend levels now at bigger organizations I mean the you know see the the cloud projections where it's going I think it's now 360 billion the next few years and we're seeing CFO's at public companies look to say okay it's not my biggest line-item yet but it's the most variable and fastest growing cogs expense so it's actually start to affect our margins we needed a new set of process used to actually manage this so one of the things that's coming to market is this new group called the phenoms Foundation which is a non-profit trade association that initially has a few dozen of some of the largest cloudspinners of the world there's the Spotify as the alaskans the nation why it's Autodesk's and they've all come together as a set of best practice practitioners to start to codify this into something that can be you know scaled out in organizations so that group is gonna be putting out a user conference around this area there's a new o'reilly book that's coming out the end of the year that's going to be sort of the treatise and all this stuff pulled together because what we found in you know me is in code ability in the last eight years we bring in technology and platform to show the recommendations of visibility how to do this but the real challenge companies run into is they don't have the internal expertise their finance teams understand what they need to the engineers don't and so you know they came to us last year saying can you help figure out the processes can you educate us and that's really where you know the spin offs foundation is growing bringing together those people to define those processes so the the impact of cloud on each of these different groups on the development group on the infrastructure team and now on the finance team the interest the developer groups I think some of them resisted it but generally speaking it's gone okay and and eventually tooling from a variety different players came along that made it easy to enact best practices and software development through an agile mechanism in the last few years after significant battles within infrastructure teams about whether or not they were going to use software as code we've seen new products new tooling that has facilitated the adoption of those practices what kind of tooling are we going to see introduced that facilitates thin ops so that finance teams procurement teams move from a project orientation to a strategic management of the resource orientation I mean I think the first is on the engineering side is seeing costs become a first-class citizen of an efficiency metric that they need to look at so you know in their build processes baked in the CI CD looking to see am I properly sizing my compute request for the workload that it needs there's some research research just came out showing that I think it's like 80 percent of the market is not using the best discounting options the cloud providers offer you hear these horror stories it's too expensive we said overspend that's not actually a problem with the cloud providers that's a problem with the enterprises not using the tools offered the discounts the reserved ences the infrequent access door exactly so I think at the end of the day it's the first step in this is getting those checks in place to say are we using the things that help drive the right cost for our needs and the other side of that the finance team is really changing the way that they are interacting with their technology teams becoming partners becoming advocates in this versus a passive you know retroactive reporter down the line and this enables these sort of micro optimization discussions that can happen where data center world we bought it some cots is sitting there odd world we can make decisions today that impact you know the business tomorrow so let me make sure I got this so I have a client who who I was having a conversation with them they told me that their their Amazon there AWS bill is 87 gigabytes mm-hmm not that monthly that's 87 pages that's 87 gigabyte yeah so we get we bring this 87 gigabytes in and it's a story about what I consume out of Amazon it's not a story what my business utilizes to achieve its objectives so we're now entering into a world where we're trying to introduce those financial visit that financial visibility into how that spend can be mapped to what the business does so the finance group can look at a common notion of truth and the IT group can look at a combination of troop application owners can look at a common notion of truth and that's what is fin ops is providing if I got that right yeah absolutely and the eighty-seven gigabyte example is the exactly reason why it is fin option not just cloud financial management you can't have a person with a spreadsheet looking at that and trying to make decisions about it right it has to be automated its IT finances code it's got to be baked into the processes you know we we've seen organizations that have hundreds of millions of individual charges hitting them in a consumption based manner the other thing that's come in with the fin ops as a core tenant is we're now seeing a decentralization of accountability for that spend so if you look at the big cloud spenders out there maybe spending tens or hundreds mils a year some of them have thousands of cloud environments gone is the day of we have a centralized Group begins to say we're gonna turn this off turn this off we want to give each of those teams the ability to see there's just their portion of that bill in the right mapped way as you said and to be able to take actions on the back of that so that's changed and they you know you run it you maintain it you understand which shutdown what has sort of come back to the old centralized model is this notion and this is where procurements job is shifted to largely of we deal still want to centralize the rate reduction so engineers you go use less right essentially finance team procurement work together with the cloud vendors to get the best possible rates through reserved instances can be reduced discounts you know volume discounts negotiated rates whatever it is and they become sort of strategic sourcing just say you're gonna use whatever you're going to use and you're gonna watch that to make sure you're using the right amount will targets threshold we're gonna make sure we get the best rate and that's sort of the two sides of the coin well very importantly procurement has always been organized on episodic purchases where the whole point is to bring the price point down and now we're talking about a continuous services where you were literally you're literally basing your business on capabilities provided by a third party and that is a very very very different relation just-in-time purchasing right and it's and it's a new supply chain management process where you have so many SKU options and you are making these purchase decisions sometimes thousands a day and that impacts everything down the road excellent gr storm and co-founder of cloud ability talking about Finn ops and cloud abilities role in helping businesses map the cloud spend to their business activities for a better more optimal views of how they get what they need out of their cloud expenditures Jr thanks very much for being on the connects here and once again I'm Peter burrows and thanks for listening to this acute conversation until next time [Music] you