Introduction

FinOps isn’t limited to cloud management. This comprehensive framework extends its reach to SaaS services, cloud solutions, and on-premises infrastructure. FinOps goes beyond mere service optimization; it delves into licensing intricacies and usage patterns. Central to this approach is understanding user types within an organization. By identifying these user categories, companies can strategically align their licensing needs, enabling precise optimization. This granular insight empowers organizations to fine-tune their licensing strategy, ultimately strengthening their position in negotiations with various service providers.

The Fictional Organization

In this article we use a fictional company, named Global Tech Innovations. This is a technology company with 10.000 employees worldwide. Their core business areas are Enterprise Software and Cloud Services. Their IT Infrastructure consists of:

• On-Premises o Legacy systems and private datacentres
• Cloud o Hybrid setup using AWS and Azure
• Network o Global Network Connecting major offices.
• Security o Mix of on-premises and cloud-based security solutions
• DevOps o CI/CD pipelines and containerization

GlobalTech is currently working on modernization it is IT infrastructure, balancing legacy systems with cloud technologies. This means that in the future GlobalTech is embracing a hybrid multi-cloud strategy.

Disclaimer: GlobalTech Innovations is a fictional company created for illustrative purposes only. Any resemblance to real companies, organizations, products, or persons, living or dead, is purely coincidental. This fictional entity should not be confused with any existing business or organization. The information provided about GlobalTech Innovations, including its structure, services, and operations, is entirely fictional and should not be relied upon for any real-world applications, decisions, or comparisons. This fictional company is intended for creative, educational, or hypothetical discussions only.

Using archetypes to optimize license management

GlobalTech, like many modern organizations, employs a diverse workforce engaged in various roles and responsibilities. The company’s adoption of a hybrid multi-cloud environment, combined with the wide range of tasks performed by its employees, introduces significant complexity to its license management processes. This complexity stems from the need to track and optimize software usage across different cloud platforms and accommodate the varied requirements of different departments and job functions.

In response to the challenges inherent in its complex operational environment, GlobalTech has implemented a uniform approach to license allocation. This strategy involves assigning the most comprehensive—and consequently, the most expensive—license to every employee, regardless of their role or specific requirements. While this blanket approach streamlines the distribution process, it has resulted in significant financial repercussions. GlobalTech now faces substantial monthly invoices for Microsoft licenses, as the company is essentially over-licensing many of its employees who may not require such feature-rich software packages. This gives GlobalTech the following license costs each year:

Although GlobalTech’s uniform license allocation strategy is straightforward to maintain and monitor, it falls short in terms of cost-effectiveness. Applying the principles of the FinOps Framework—which emphasizes embracing cloud variability and paying only for what is used—a more nuanced approach could yield significant cost savings. By developing user archetypes based on roles and specific requirements, and then mapping these to appropriate Microsoft license tiers, GlobalTech could substantially reduce its total licensing costs. This refined strategy would strike a balance between optimized spending and manageable license administration, avoiding the pitfalls of overly complex license management while still reaping financial benefits.

What is an archetype and how to build them?

An archetype describes wishes, needs and requirements to do the work people do in the organization. This means that there is need for more than one or two types. When developing these archetypes, contact the different departments and stakeholders to set a baseline of requirements. When the baseline has been set, proceed to add modules to the baseline so this is enriched with the need-to-haves of the respectively set of people.

Example

Global Tech Services had made an analysis of their license usage. Out of this analysis came that the functionalities of the M365 E5 license is far from optimal. The board decided that they want to re-evaluate the license every employee has given. In the interviews they have conducted came the following information:

• HR and IT used Access Reviews extensively, especially for (internal) promotions
• IT also used Privileged Identity Management for Global Admin Role
• Maintenance people only used their Outlook for work.
• There is some differences between the highly technical architects and engineering teams, and therefor there is need for a differentiation on the work description.
• The board indicated that security is a hot topic, therefore enforcing the best security solutions through their Microsoft licenses.
• Teams is the tool used for collaboration.

After a day workshop and getting the right information, GlobalTech has created 4 Archetypes with a work description, usage of the M365 stack and what additional services were required. It is stated as follows:

License costs

Every customer is different when conducting an archetype assessment and a license calculation. Put in this the Microsoft licensing intricacies in the mix and it is a complex task. For the example in this article, we have used a simplified approach. Also, for this example we only use the on-demand pricing as made available by Microsoft on July 12th. In the example above it is already stated that the current Microsoft license costs are $ 7.200.000 per year. Below you can a cost breakdown when using the Archetypes as described:

After conducting an Archetype segmentation and a license calculation GlobalTech can save up to 1.422.000 USD. That a saving of 19% on their license costs!

Conclusion

In this article we have dived deeper into licensing and building archetypes. The archetypes can give organizations the possibility to optimize their licensing costs. Be considerate about what type of work the archetypes are doing and what they need, also investigate the focus points of the organization, and put that also in the mix.

Of course, it is also possible to build these archetypes for resource selection in the cloud, capacity planning for example PowerBI dashboards. In case you want to know more about how to determine archetypes for your licensing position, please reach out to us and we will help you!