It’s the burning question for today’s CIOs: what do you spend your IT budget on?

Cloud costs were already a challenge—in a recent survey, 24% estimated they wasted software spend. The explosion of generative AI makes it critical for organizations to consider frameworks like FinOps and technology business management (TBM) for visibility and accountability of all tech spend.

But what does this all mean in practice? How can organizations shift to a more disciplined, value-driven approach to IT spend? What is the impact of generative AI in this space?

To help answer these questions, we asked Declan Coombs a Partner for the Cloud & Technology Advisory Practice at IBM®. Declan has 20+ years of experience in helping organizations get more value from their tech and cloud transformation efforts.

Challenging the status quo

What do CIOs wish they could be spending on?

CIOs are always wrestling with that balance between running the business and changing the business. Because that’s what’s going to move the needle in terms of business transformation and driving the bottom line.

Instead of just keeping the lights on, they want to build new capability.

What’s holding them back?

Too many organizations are still running their budgeting process on an annual basis. It’s often a bit of a copy and paste job from the year before with some padding to the numbers.

But given the rapid rate of technology and business change, the traditional cycle of budgeting isn’t sufficient. The process doesn’t allow IT teams to critically–and dynamically–assess whether they are spending their money in the right places.

Driving financial accountability to the edges

What is FinOps?

FinOps is fundamentally a cultural and operating model change. It gets to the heart of not just your finance function, but also your business strategy and planning functions. You need to think about your people, processes and technology to really embed it into your organization and shift cost ownership and accountability to the edges.

Much of this is about providing people the visibility and understanding around what they are spending their money on so they can make smarter decisions.

Is it just about cloud costs?

Much of the focus has been on public cloud, but it’s broadening to all cloud and technology spend.

When crossed with TBM, it widens the lens to the broader tech stack—hardware, software, human-ware—providing a clearer, more comprehensive view into tech consumption and how that links back to business outcomes. This helps inform where best to invest and how best to deploy technology in ways that are most optimal for the business.

Maximizing business value of and with gen AI

How will FinOps impact gen AI?

It has a significant role—especially when you look at the growing number of gen AI use cases, the massive amounts of GPUs required to power them, and the sky-high costs as a result. Organizations are going to struggle with demonstrating value. FinOps can help teams use and scale gen AI in cost-conscious ways, as well as track and measure the ROI.

How will gen AI impact FinOps?

Gen AI will accelerate FinOps. It will help you make better use of your data and improve pattern discovery and contextualization. It can serve up insights and recommendations to enable data-driven decision-making, streamline processes and automate actions.

But the real game changer is using gen AI to speed up application and code modernization. It will help achieve that next level of cost optimization, driving greater efficiencies and business value.

Empowering engineers

What is key for success?

Getting engineers to act on cost optimization recommendations is a top challenge. It’s really easy in these cost cutting exercises for it to feel like it’s all take, take, take. It’s important to show the benefit and reward people for taking the right behaviors.

If you’re doing FinOps the right way, people are empowered to make a difference. You give them the right tools, visibility and incentives, they’re going to want to do the right thing.