FinOps in Action

How do you turn FinOps from a reporting function into part of the company’s operating system?

In this episode of FinOps in Action, I sit down with Zach Johnson, Head of FinOps & Cloud Platforms at Splunk to unpack why world-class FinOps isn’t about dashboards or reports, it’s about business value, executive alignment, and proactive decision-making.

Zach shares how one of his earliest lessons in FinOps was realizing that “presenting data isn’t the same as solving the problem.” That insight shaped the way he approaches communication with engineering, finance, and the C-suite and why the right metric depends entirely on who’s in the room. He explains why executives care more about unit economics and unallocated spend than tagging compliance, and how connecting cloud usage to business outcomes changes how organizations prioritize optimization.


We also dive into why rate optimization drives the biggest impact at scale, how Zach’s team uses AI-generated insights and Slack automation to make FinOps proactive rather than reactive, and why people skills often matter more than technical depth when driving adoption. From building monthly business reviews to modeling commitment purchases with data science, Zach offers a transparent look into how Splunk achieves over $100M in annual cloud savings.
 
Here’s what we talked about:
  • Why “more dashboards” is not a FinOps strategy and why presenting data is not the same as solving the problem
  • The metrics executives actually care about (and why tagging compliance usually isn’t one of them)
  • How business context, margin goals, and unit economics shape every FinOps decision Splunk makes
  • Why proactive FinOps beats reactive FinOps and how Slack automation + AI insights help teams get ahead of cost changes
  • How to communicate cloud spend in a way that Finance, Product, and Engineering all understand
  • Why rate optimization drives the biggest financial impact in large-scale SaaS environments
  • How Zach’s monthly business review framework aligns engineering, product, finance, and FinOps around shared priorities

 🎧 Subscribe for more FinOps leadership conversations → https://www.finopsinaction.com/ 

Quote of the Show:
  • “A terrible engineer with fantastic people skills can oftentimes make a lot more progress than a fantastic engineer with horrific business skills or people skills.” - Zach Johnson
Links:

Ways to Tune In:

Creators and Guests

Host
Alon Arvatz
Producer
Rayanne Pruitt

What is FinOps in Action?

Welcome to FinOps in Action! Join host, Alon Arvatz, Each week, as he sits down with FinOps experts to explore the toughest challenges between FinOps and Engineering. This show is brought to you by PointFive - empowering teams to optimize cloud costs with deep detection and remediation tools that drive action.

FIA - Zach Johnson
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Zach Johnson: [00:00:00] sometimes finops people like to be command and control. And, and sometimes it's more about being an, an enabler

we just need to enable teams to kind of utilize new technology and, and figure out what that return on their in investment is. So sometimes it's, it's not about controlling those costs, it's about enabling people to understand the data behind the money that they're spending and the business value that that's hopefully driving for their organization.

Intro: Welcome to finops in Action. I'm your host, Alon Arvas. Each week I'll sit down with finops experts to explore the toughest challenges between finops and engineering. This show is brought to you by 0.5, empowering teams to optimize cloud costs with tip detection and remediation tools that drive action.

Alon Arvatz: Hello everyone and welcome to another episode of finops in Action. I'm really excited about the episode today because we have here someone with. Tons and tons and tons of finops experience. He actually comes from [00:01:00] engineering background, but from there he moved to finops. Today he supports a company with billions of dollars in revenue.

He support hundreds of millions in cloud commitments and generates annually a hundred million dollars in cloud savings through finops initiatives. What crazy numbers. I'm happy to welcome head of finops and cloud platforms at Splunk, Zach Johnson. Zach, how are you today?

Zach Johnson: Yeah,

I'm fantastic. Thanks for having me on. You know, as a, as a listener, it's, it's great to, you know, finally get to become a guest.

Alon Arvatz: Absolutely, and I'm always happy to, uh, welcome our listeners as guests. It's amazing feeling and great to see how people are getting more acquainted with the podcast. So, Zach. Please share with me. You have so much experience, but I'm sure that when you started your pheno career, there were things you did wrong.

What is the one thing that you feel you got wrong [00:02:00] when you started your pheno career?

Zach Johnson: Sure.

That's a great question. I think that's, that's

something,

you know,

Alon Arvatz: I.

Zach Johnson: can look back and reflect on no matter how. Long you've been on your finops journey. I think the biggest thing I got wrong is I thought that. data and presenting a problem was the, the same thing as solving it, right?

I think we beat people over to death with, with dashboards and reports and just hundreds and hundreds of optimization, you know, opportunities. So I, I think that's the biggest thing I got wrong is I, is, I thought I'd make a bunch of fancy dashboards, a lot of great reporting, and just sending people, just mountains of data and, and alerts would magically solve all my finops problem.

And I got that. know, really wrong, you know, for a number of reasons. Not only at the engineering level, but all the way to the executive level. It's just definitely something I got wrong and I've been able to, you know, build on e every year in my career since I've been in finops.

Alon Arvatz: So how do you look at it today? So it's not [00:03:00] about presenting the data and the problems, what else you need to do as a finops leader?

Zach Johnson: Yeah, so I think it's finding the, the right metrics to the audience that you're, you're presenting on. You know, if you're presenting to the C-Suite, they're probably not gonna care about tagging compliance. But they're gonna care a lot about the percent of unallocated spend in the, in their environment.

If they can't attribute, you know, that spend to a business unit, a business service, a business entity, whatever you call it you know that that's a major problem for them. think the second thing is, is connecting. Business value to every action that you're, you're taking, whether it's helping companies, uh, increase their margin, or whether you're talking about they've got, you know, 50 hours of developer time to spin in a sprint.

What makes the most sense to return, the most value to the business? In, in finops, we certainly care very much about, uh, our remit of, of saving money, but we don't really, a lot of people don't stop and, and take that, what that full picture looks like. Right. Could. [00:04:00] Be spending time on developing new features that brings in a lot more revenue than spending time on, on cleaning up resources or idle waste in, in their environment.

So it's really about balancing, know, your priorities with the business priorities and, and come to kind of an alignment on what, what's gonna return the most value for that business unit, that product, or that service.

Alon Arvatz: Yeah. Wow. I have so many questions of what you said right now, but let's take it one by one. Uh, first of all, business value. Let's, let's open it up because a lot of people bring this topic to, to the podcast, and I think there is a lot in there. So when you say business value. That mean like showing what revenue is generated from, from this, uh, spend, or it's also about other type of value.

You know, for example, um, this, this new feature or new model is helping us with retention, helping us with position ourselves as innovative. So do you go to revenue [00:05:00] or you go beyond to other value you're getting from the cloud investment?

Zach Johnson: Yeah, so I, I think, you know, a SaaS company, the, the company I work at. So, you know, mar margin is, is always the most important thing for us, but I think it's important to, to realize that it's, it can go beyond. revenue and, and, sometimes finops people like to be command and control. And, and sometimes it's more about being an, an enabler in, in a situation like the, the race to ai, right? So every company wants to enable ai. They wanna use ai. It's, it's the hottest thing on, on the marker right now. So sometimes it's more about how do we en enable the right dashboards and data sources to show where we're spending our time in, in money, in ai, and, and rather than. Tie, tie it to like, what are you actually getting on your return for ai?

So sometimes it's, we don't yet understand that return on investment, so we just need to enable teams to kind of utilize new technology and, and figure out what that return on their in investment is. [00:06:00] So sometimes it's, it's not about controlling those costs, it's about enabling people to understand the data behind the money that they're spending and the business value that that's hopefully driving for their organization.

Alon Arvatz: And that's a really interesting insight. So you're basically talking about, hey, I can also show the organization that our investment goes on innovation and that we're actually, uh, investing in ai, which is something that is a strategic initiative in the company. When you go to the executives you talked about earlier and you don't talk to them about tagging compliance.

Okay, I get that. Uh, do you also share with them, Hey, look, we're investing more in AI now, thanks to reallocating, uh, a budget or reallocating spend to AI services or infrastructure.

Zach Johnson: Yeah, and we also try to go a layer layer deeper, right? You're enabling with your development teams with maybe a AI enabled I IDs or, or code generation. So. You think that's great, but how does that [00:07:00] attribute itself to business value? Are we seeing, uh, more commits, more features? Are we seeing less errors in our code, less pipeline failures?

'cause our, our code is better and hopefully our, our velocity is getting better. So we try and take it a, a, a layer deep beyond just reporting. You know, we're spending X dollars per engineer trying to connect it to that next layer of business context. We spent X dollars per engineer on these, these code generation or optimization tools, but we're actually getting in return, uh, features out to our customers quicker.

Our pipelines are, are failing less 'cause our, our code, uh, is cleaner and developers are able to commit. know, make more commits. Um, and, and less time in between those commits 'cause they're accelerated by those AI tools. So just showing the cost you're spending per engineer on a tool like that doesn't really connect to that second layer of business context, which is really the most important thing to any

kind

of leadership

Alon Arvatz: Yeah,

Zach Johnson: team.

Alon Arvatz: that's great. And when we're talking about what's interesting for [00:08:00] executives. Do you find executive, uh, care about optimization? Do you share the optimization efforts? How much was saved? Is that, is that part of your presentation?

Zach Johnson: Yeah, we, we certainly, you know, share that, but I think the ultimate, they care about the bottom line. They care about their, their gross margin and, and how it affects the goals that they have to, you know, report up to, to the board. So I think that's a, you know, interesting one. You know, those, those I think KPIs are, are constantly changing.

But, you know, you can't present every KPI to ev every team you present to. So you really gotta find the ones that, that hit home, um, you know. Best for them. And it's really things like, what's my unallocated spend? How, how does this affect my cloud growth margin? And I think this maybe the tertiary thing is it's, you know, you, you explain to them, we did all these optimization efforts, but spin went up in the cloud.

So how, how do you separate out your, your customer growth, your, your business as usual, [00:09:00] your expansions into new regions to serve your customers? like the savings that you actually achieve. So one thing we really like to focus on is anytime there's a cost optimization opportunity or we're rolling out a new feature or expanding to a new region, we have a separate dedicated tracking program with lots of great automated dashboards and, and Slack integration that can, that can tell people and extrapolate that out from just normal growth or customer growth or customer acquisition and, and show that. This is the, you know, cost that was driven up by this new feature, or this was the cost that was saved by, uh, an optimization project or opportunity.

Alon Arvatz: Very interesting and it, it's also very clear that your executive team is focused on on gross margins. I think it is important to mention you're a SaaS company. Obviously the cloud spend is part of your, uh, uh, gross margins. Like, like the bigger the spend, the lower the margins are. [00:10:00] And it actually tied back to what you said about business context, because if you're not working for a company who's not a SA company, cloud is used for it, for example, but not for your product that you sell to your customers, then suddenly gross margins are not relevant.

You have to focus on different things. So it is actually very interesting to see how the business context actually influence on you, your work as a pheno person. So that's really great. And Zach, I have two. You said something very specific. Some would say tactical, but it is interesting for me. You mentioned that you have in place Slack messages that are being sent.

I think generally Slack is an amazing tool to engage with engineers, and I wonder what to use, are you doing in Slack to communicate with engineers or maybe with other personas?

Zach Johnson: Yeah, that's a great question. So we try to meet our customers or clients, however you [00:11:00] wanna describe an internal business. You know, customers where they are. And, and, and for Splunk, you know, uh, they're at. Slack, that's where they live and, and do a lot of their daily, uh, you know, activities. And, and so what we really try and do come up with programs that, uh, monthly, weekly, whatever the cadence that serves them best, um, through several different levels, right?

Executives care a lot less about finite details than maybe a service or, or product owner. So we've custom built. Um, reports or, or Slack notifications that, that come through that really explain, depending on what level you are in the business. And those metrics look certainly different depending on what level, you, you aren't, and, and it helps kind of track, did my cloud spin go up?

Did it go down? How is it? Trending compared to, to, to last month. Then, you know, can kind of separate. I grew by compute, I grew by, uh, storage. I grew by network [00:12:00] traffic. And as we've enhanced that program, certain business units really are into unit economics. Now, what does it cost for me to ingest a gigabyte of data?

What does it cost to me to, you know, service, uh, one customer? And, and so once you get that U unit. Economics in there, it really can help highlight to your leadership team or, or people who are watching those metrics that, you know, with business growth. Hopefully our unit economics stay flat or they're going down, um, with economies of scales, with shared service, with resource and rate optimization.

So. You know, those are things that are kind of more, that second level context that we talked about and kind of with AI on the horizon, we've been working internally to generate AI insights. 'cause the next question we get, typically a lot of these reports or alerts go out is. that's great. I saw my cost go up or down, but let's dig into what actually caused it.

And so with AI based insights, we can now develop to our leadership, [00:13:00] you know, your cost went up 'cause we expanded out to this region to serve new customers or there was an optimization project that went out that, you know, shrunk our storage costs. So. We, we try and, you know, meet customers where they are and, and try, anticipate what questions they would ask and answer them for them right there without them having to come back, pull an engineer off another task, dig into the problem, and, and give them those insights that we're able to generate with

ai.

Alon Arvatz: Oh, there is so much in there. What you said right now, and I really find, uh, uh, fascinating the fact that, you know, you talked about unit economics and you mentioned that for some people in your organization, it's very important to understand. How much it costs to ingest gigabyte of data. Now, correct me if I'm wrong, the reason is because that, like part of your business model is to price based on gigabyte ingested, so that's like how you tie the business context to the type of metrics and data you [00:14:00] deliver to your engineers.

Is that correct?

Zach Johnson: excellent question. So I think, yeah, unit economics helps us extrapolate out like customer growth from normal business activities.

That way UN economics tells you the true

story of

what's really

Alon Arvatz: Yeah.

Yeah. And another fascinating point that is also tied back to how you show business value is when you talked about new regions. So very often, new regions in. AWS, for example, or any cloud provider are associated with extra costs because, uh, other regions are more expensive than others because it can create data, cross-regional data transfer costs that also cost more. But the other side of it is that it unlocks new markets. So do you actually, you know when you talk about, Hey, spend went up because we open your region, do you also tell, hey, by the flip side is that we got into a new market and now we also have more [00:15:00] revenues from that market? Is that a kind of breakdown that you also share with the executive team?

Zach Johnson: Yeah, we, we, certainly wanna understand, do we have enough revenue to support going into that region? Do we have enough customers, right? And so at the end of the day, it's not always about revenue, it's about serving your customers. So in an ideal business case, right, you have, uh, more revenue in that new region than, than your spending to, to run that region. But sometimes it's about, uh. Capturing new customers, capturing new market, rolling out new features, and, and, and hopefully, you know, you're a publicly traded company, so trying to maximize on, on, on shareholder wealth. So sometimes it's not always about revenue, sometimes it's about market share. It's about gaining customers, about meeting our customers where they are, and then the revenue will eventually be there to support it. But in an ideal scenario, right, there is more revenue in that region than what you're spending to run that region.

Alon Arvatz: Got it. And Zach, I wanna take you to the beginning of, of the [00:16:00] podcast. You said that the one thing you got wrong is that you thought that you would put the data in front of the people, and that is. Solving the problem. Now, obviously that's not the situation, that's not the reality. The reality is more complex and it takes me to something you told me in the past that really, uh, stuck with me, and that is that you feel that you need to turn finops into a core part of the organization operating system.

I think it's more or less a quote of what you told me, and I wonder what it means to you, this sentence. And whether or not you have like a tactic or two that you have in place to make it happen that you can share with us,

Zach Johnson: Yeah. Yeah, that, that's a great one. And I think. Whether it's finops, whether it's engineering, cloud platforms, cloud security, I think one area of the business a lot of people un underestimate is, is the relationship aspect. Right? You know, a

terrible

Alon Arvatz: I.

Zach Johnson: engineer with fantastic [00:17:00] people skills can oftentimes make a lot more progress than a fantastic engineer with just horrific business skills or people skills. So the biggest thing. Or tool I, I found to be effective is, is launching monthly business reviews with your business units, entities, service products, however you call it in your organization. And I'm happy to walk you through, what that looks like. 'cause that kind of connects the stakeholders between, uh, the business, finance, engineering, um, and, you know, security can be in these business reviews, but we're really only, uh, focused on the finops. of, and I'm happy to walk you through kind of what that process looks like in an ideal world. So it should happen, you know, every month. Um, I don't think, you know, be super worthwhile to have a bigger cadence than that, but it can certainly be something that's quarterly depending on, on your organization.

Like the first thing is. You know, kind of going through your, your, your welcomes, you know, setting the objectives and [00:18:00] it's basically what are the key takeaways from the last one? What are the highlights? So start off by rewarding all the engineers or people from finance or people from the product who, who have done work.

Right? And then I want to get context from the business unit or product leaders. What are their current priorities? What are their revenue goals? Try and try and figure out how, how do I tie the cloud cost or, or finac activities to their business drivers, And so once we, uh, kind of un understand that we can kind of start to talk through what KPIs or, or anomalies do we need to review to kind of get, to get through that.

And so, you know, you kind of walk through your, your normal. Metrics and revenue up, revenue down, cloud spin up, cloud spend down, uh, you know, maybe your savings plan coverage, your, your tagging compliance. You know, every company's got different metrics that re really, you know, hit that business driver. But those are typically ones most companies, um, have.

So once you have those, you, you've kind of talked about what you did, uh, the last [00:19:00] month, what you want to do this month, and then kind of present to them, you know, these are the savings we realized last month with activities. These are our new resource or service optimization, uh, opportunities or, or, or blockers that are preventing us from doing it. So you've presented those opportunities and then you can start to talk through the business on what makes sense to prioritize this month, the next couple of sprints, right? That way we're both mutually invested. Maybe the finops team is there to optimize the rate. maybe the engineering or product team there to kind of optimize the, the environment or the architecture or, or the resources there. Kind of an agree on something mutually agreed that we're all gonna, you know, focus on this month and then kind of match it to what cloud demand is, is coming. And so we can get ahead. Uh, those potential spikes or savings 'cause in finops any hour, minute day where there's on demand spend, you know, running, we're spending more money than we want to [00:20:00] cloud.

So the, the earlier we know about it and we know it's gonna persist. It's a lot easier for finops to be there, maybe a little bit more, um, proactively than reactively because I think a lot of finops organizations are very reactive in nature. So if I can switch that to being proactive, it shrinks the amount of on demand spend I have, and it shrinks the amount of Unoptimized resources I have.

And so the sooner you can catch it, the more money we're gonna actually save. And then we kind of close up the meeting with. You know, uh, decisions, action item owners timelines, and then the expected business benefits of doing those with everybody agreed on priority. way when it's, you know, time to do all that, everybody understands product.

Agree, business agrees, engineering agree, and finance agrees. 'cause oftentimes finance will have a better idea on your total cost of ownership and where teams need to focus to kind of. Get to those, those goals that finance sets that's maybe a [00:21:00] little bit outside the business.

Alon Arvatz: That's an amazing agenda, Zach, and I actually encourage you to write it down into an article, but now we're on a podcast, so we're in a different format. And what I'm curious about right now is who should be on this calls on these business reviews? So you, you mentioned engineering, finance, um, anyone specific from these teams?

Should we have product managers there? Anyone else?

Zach Johnson: Yeah, so I, I try and, you know. I feel like everybody has a seat at the table, but for, for these, I, I try and have the people that can make decisions on priorities, remove blockers, make those choices of, of where we're gonna focus and understand the business context and trade-offs of doing it or, or, not doing it. So. Typically, do they have a financial, uh, analyst that's assigned to that product or that business unit? Business entity? Um, is there anybody else from finance that we conclude? Is there a product owner, product manager they have a, [00:22:00] a scrum master who kind of helps the team set those priorities

Alon Arvatz: Mm-hmm.

Zach Johnson: those different, um, scrum ceremonies, you know, it's important so that they're included and then somebody who understands the technical construct of, of what. to be done. So I think another area where, where finops has come up short a lot of time, you know, business teams or, or. Finance people coming to engineering people with what problems look easy on paper, but are very, very thorny technical problem to to solve. So it's always important I think to have that engineering context and layer so they can actually translate what does that actually mean for technical investment?

'cause something can look super easy on paper, kind of, but it can be very technically complex or, or fraught with risk to actually accomplish it in production.

Alon Arvatz: Okay. That's great. And Zach, from your experience, who should drive these, uh, these meetings? Like who should lead these meetings? Do you feel like you should be [00:23:00] the one leading it or Actually no. Maybe let the engineering leader to lead a conversation. What's your approach for that?

Zach Johnson: Yeah, so I kind of approached everything in, in finops and cloud platforms here as a party of enablement, right? It's the opposite from old school. It in the, in the early two, was definitely a party of. Command in and control, and I kind of flipped it to where, how can I enable you to, to get there?

So whether it's finops, whether it's the, the business unit, whether it's finance, I don't think it really matters who, who drives it, as long as you have that meeting and those right parties investment. So I'm happy to be a passenger. I'm also happy to drive the bus, whatever it gets us there. You just check your ego out of the situation and know, if it's easier to get there as a passenger on the bus. That's totally fine and sometimes it's easier if, if you drive the bus 'cause you know who needs to be on the bus and where you need to go.

Alon Arvatz: Amazing, and I love the humility. Message that comes with it, [00:24:00] honestly. And do you have like a certain template that you share with the engineering team with, uh, the structure of the agenda?

Zach Johnson: Yeah, we, we, typically kind of run it through your, your, your normal, you know, kind of mini project management tools like your, your Jira, your, your Confluence, your ServiceNow. So it's about meeting the, the people. Where they're at. If they operate and spend all their time in Jira, that's where we're gonna meet them.

We're not gonna force them into using a tool that, you know, we use or we're familiar with. So it's kind of all, all about meeting them where they are, because then it's more of a partnership rather than than a forced activity that they have to do.

Alon Arvatz: Yeah.

Gotcha. And Zach, the one thing I did not see, uh, or hear on the agenda, um, is rate optimization. I would assume it is because you're managing it from the centralized finops team.

Zach Johnson: Yeah, so, so finops team, at least in, in my org, kind of centrally manages, um, kind of rate optimization. We've got some [00:25:00] amazing dashboards built on, uh, Splunk technology that we use that really tell us exactly where we need to in, in invest. That's given us the most. Bang for our, our buck, right? but really rate optimization starts before that. You start spending a million dollars, uh, a year in the cloud. You're eligible at least through AWS for a PPA or EDP. So start there, right? You get savings. You don't have to optimize any savings plans. You don't have to optimize any resources. You know, you get that savings and the, the more you spend with a cloud provider, the more they should hopefully return from you from a top line discount.

So once you get that, then you can start focusing on commitment based, rate optimization, reserved instances, savings plans, whether it's compute or uh, instant savings plans.

Alon Arvatz: very nice and I love it that you built commitments dashboard on top of Splunk technology. Listen, Zach, maybe Splunk can start, uh, selling, uh, commitment management, uh, [00:26:00] solutions on

Zach Johnson: Yeah. As long as I get a cut, you know, uh, we like to say we, we, we drink our own champagne rather than we eat, we eat our own dog food. 'cause we, we, you know, like most companies, we believe in the product that we sell, so we don't use it in-house. It's not gonna really inspire any confidence to, to, you know, outside people.

Alon Arvatz: Very nice. Cool. And, um, tough question to you, Zach. Um, for a company like Splunk, because I know it's not the same for every company, but for a company like, like, uh, Splunk, where do you think the finops team should focus more rate optimization or usage optimization?

Zach Johnson: Yeah, so I mean, ideally there is a world where you, you certainly

Alon Arvatz: Um.

Zach Johnson: both, right? And so I think the larger the cloud spend you have, the more rate optimization is just something that's far easier to achieve, and it brings you an exponentially better return, right? Optimizing your commitments and your rate is gonna [00:27:00] return you. 20 to 40 ish per percent versus, you know, you're, you're lucky if you get. A few percent to, to five to 10, optimizing on resource. And if your architecture is, you know, sound, you know, it's, it becomes less of a problem. So hopefully you've got great internal architecture teams that, that make that. Problem of, uh, resource optimization, much smaller. But I think rate optimization is something you can do with, without a change cab, without having to prioritize with engineering teams, without having long testing cycles and maybe development and staging before you roll out to production. There's very little, if any, to my customers or downtime.

So there's just a lot of factors at bigger companies that kind of. You know, add up to, to where rate optimization is important. It's not to say that resource optimization isn't important or isn't valuable or doesn't have a lot of areas of of return, but if you're talking about where human beings can invest their [00:28:00] hours, you know, they're far better spent on rate optimization versus an automation tool is really the perfect tool to go.

Chase people, uh, or automatically remediate it than it would be a rate optimization. You know, automatic rate optimization. Purchasing tools make me very, very nervous for resource optimization tools, a lot less so.

Alon Arvatz: Yes. And I, I would also guess, like I, I, I think you have a pretty decent team. When you have a team that can, you know, work on commitments and really fine tune it, you can also achieve better results than an automated solution just because it's a lot more customized and tailor made to your own needs. Is that your perspective as well?

Zach Johnson: Yeah, I think so. If you, if you look at like. Effective savings rate is maybe a really good metric to, to judge am I getting a really good rate of return purely, or mostly focusing on, on rate optimization. You know, if your metric is kind [00:29:00] of at the industry average or above, you know the answer to that question is yes, but every company is, is certainly. Different in companies that are maybe 400 or 500 small products broken out into various business units, maybe, uh, resource optimization is, is, is better served because the, the central in purchasing of that doesn't return as much value.

Alon Arvatz: Yes. And Zach, would that be accurate to say that part of the reason. That you put more focus on rate optimization is because that Splunk as a company provide data infrastructure that has to be ultra, ultra, ultra available and reliable. So the ability to drive changes to infrastructure is a lot harder.

Zach Johnson: I think that's a fair question. I think one thing we're, we're super committed to, like you said, is, is super high uptime and and part of that is. A new, I don't know [00:30:00] instance or family comes out from a cloud provider, we can't just go turn it on in production, right? We need a very stringent and rigid testing products to make sure our product performs just as good on, uh, the next generation of an instance, family as the, as the last generation.

And not to mention. Uh, availability. People assume cloud providers have unlimited availability to un unlimited scale. Kind of, that was the big promise, right? Moving to the cloud, not necessarily you'd save money, but you, you're, you're basically uncapped for resource, uh, availability and that's just not the case. For most cloud providers, for companies that are doing things at at scale. So just because something is new doesn't mean we can immediately roll to it. 'cause there's a long testing product and we have to wait for the cloud providers to have enough capacity. So when we wanna, you know, take advantage of something that's got a better price, performance, uh, ratio, you know, we've. A lot of, uh, business activities we need to take care of before, um, [00:31:00] we, we do that. So it's important that internally, you know, finops stays connected to the teams internally that do that kind of testing and that validation. And then we have a relationship to let them know, know, maybe we can try a, a next generation of this instance family, when you've got time to put it in your testing cycle and validate that it's right for our customers.

Alon Arvatz: Interesting. And Zach, we, we mentioned that your team, so can you share with us maybe how big is your team and what are the different roles you have on the team?

Zach Johnson: Sure. So

yeah,

my finops

Alon Arvatz: Uh.

Zach Johnson: is, is, seven people distributed across the United States. And so I've got three full-time, uh, finops engineers. I've got three full-time more traditional and then I've got one data scientist who. You know, brings crazy math stuff to, to help us make really effective, um, choices in the cloud, solve thorny mathematical problems, you know, [00:32:00] model out lots of different scenarios.

So I'm really lucky to have a diverse group of really capable and exceptional, um, you know, people on, on my team. So it's really great to have that, that diverse amount of people with different skill sets that all kind of, you know, add up together to make what I think is a really solid team.

Alon Arvatz: That's very interesting. Can you share with us some of the use cases that the data scientist is tackling?

Zach Johnson: Sure. So I think the biggest question a lot of people have when making them like. Commitment purchase is, where's this commitment purchase gonna go in our organization, what it's gonna cover, right? The cloud providers will tell you, well, it'll cover the instances that need it most. We can't really tell you what those are gonna be, where they're gonna be until you actually purchase it.

So, you know, this person was able to kind of model out a tool that will tell us if we purchase. Uh, X amount of dollars in, in, in a commitment. It's gonna cover these [00:33:00] resources in, in this area, and it can even give us recommendations that typically align with what the cloud provider says. But the cloud provider doesn't always have like seasonal context or things that, you know, this person can add into the model that helps us, um, you know, make choices.

Another area is. How stable is spend in environments. If you're looking to make a commitment purchase, you only wanna purchase in areas with stable spend. If it's high, low, high, low, you know, you don't wanna purchase it at the, at the high watermark. So you're, you're, you know, having unused, uh. Commitments.

So it can also help, you know, model situations, uh, like that to tell us how stable a spend. And then that way the finops practitioner kind of, kind of have a, a red, yellow, green on, on how confident or capable they, they feel like this purchase is, is gonna be. So a green light, super stable spend, you know, it's been very stable.

So we know it's probably pretty good to just go and purchase it, whatever the [00:34:00] tool or the. Cloud provider is telling you to purchase and things that have a lot of variability, you know, it's more of a red light. We have to have a business conversation on, what's driving that up and down and, and where good looks like to make, um, that purchase.

So I never thought, you know, in a million years in high school or college, I would be involved with. Anything mathematical at, at all in my career. And, and here I am loving like the thorny math problems behind, you know, all these choices we make in, in finops. It's, it's, it's a weird world.

Alon Arvatz: Wow. And now I'm even more confident that Splunk can sell your commitment solution maybe you'll get out with a new line of business for Splunk from this, uh, episode. Who knows?

Zach Johnson: Yeah. Absolutely.

Alon Arvatz: And, uh, one last question, if I may. Uh, the software developers on your team, what are they focused on?

Zach Johnson: Yeah, so they're focused on, you know, getting data out of our cloud platforms, into our [00:35:00] cloud costing tool,

into

Alon Arvatz: I.

Zach Johnson: warehouses. They're focused on building that automation between. Cloud providers, our cloud cost tooling and, and tools like Slack, they're worried about pushing data. So we've got lots of self-service, uh, dashboards.

They're there to assist us in getting kind of the roles and permissions we need to collect cloud, uh, you know, data and metrics. They're there to. You know, work with, uh, Kubernetes teams to be sure we can pull data o out of that environment, push it into a, a central tool. And they're also there to, you know, help with in engineering advice and kind of connect, uh, really the dots between the finops side and, and the more, uh, technical side.

So. know, you, you can't rely on just finops practitioners or you can't just rely on technical people. To be successful in finops, you really need a blend of lots of different, uh, skill sets

Alon Arvatz: Yeah.

Zach Johnson: people.

Alon Arvatz: Absolutely. And you mentioned that you have a cloud [00:36:00] cost solution. Is that like a third party solution or is that something you built in-house or maybe it's the, uh, built in solution of the cloud providers?

Zach Johnson: Yeah, I, I think we use all three tools, right?

So

Alon Arvatz: I.

Zach Johnson: use a third party provided cloud cost tool. We definitely use the ones that are, you know, built into the cloud providers. And I think. The finops spaces in an area that the cloud providers have done a phenomenal job in the last year or two on really releasing a ton of features that, know, unfortunately for, for lots of small startups have have kind of. They've looked at what they're doing and they're like, well, we're a big company. You know, certainly we, we can do this. So, you know, we, we try and be cloud service native as, as much as we can. And there's also tools we built in-house on, on, on Splunk or other type tools that we use for kind of financial modeling, reporting dashboards.

So we don't really limit ourselves to one tool. We kind of take the [00:37:00] best of what every tool has to offer and, and use it, um, that way.

Alon Arvatz: Okay. That's great. Listen, Zach, I have so many other questions because. You said so many interesting topics and we got already amazing, all the nuggets. Uh, but I also really wanna make sure we have some time to talk about you and get to know you better. So let's get back to the second part of the episode today and learn about you.

So Zach, you live today in the Denver area, right?

Zach Johnson: Yes. Yep. Denver, Denver, Colorado. I, I grew up, spent most of my, uh, kind of. Elementary, high school, college life in, in, in Ohio. And right after graduation, my, my now wife at the time and I decided we wanna try a major city. We were, we were sick of, of Ohio. And, and Chicago was kind of the next closest big city, which neither of us had ever spent much time. And, but we, we [00:38:00] gave it a shot and we thought maybe, you know, big city life would be the permanent life for us. And then. Seven, eight years or, or so after living in the city. You know, we really liked it, but I had a job opportunity out in the Denver region, so we thought, let's, let's pack up and move. And now I can't picture myself really living anywhere else other than, uh, Denver, Colorado.

Alon Arvatz: Nice. What do you like about Denver besides the views and the ski?

Zach Johnson: You know, we get 300 plus days of sunshine a year, and it's, it's absolutely fantastic to be kind of in a culture where people appreciate the outdoors. You know, e every city's got. Parks and open spaces and, and restaurants that are, that are dog friendly. So those are the kind of things that, you know, I like to do outside of work is, is spend time exploring the outdoors.

My, my wife and our dog. So, you know, Denver, Colorado really offers those opportunities

Alon Arvatz: Yes. No, Denver is absolutely beautiful. It's amazing. Uh, I, I definitely get you here. And, uh, [00:39:00] Zach, I would like to get now a recommendation for you on a book or a movie. I have a feeling you'll give us a good one.

Zach Johnson: Oh yeah, I've, I've got one. So kind of what really like sparked my interest and really wasn't even finops at the time, but if you, if you look at what the book is about, it was really about, uh, a cost anomaly detection that couldn't have been attri attributed to anybody. So the book's called The Cuckoo's Egg, it's came out in the early nineties, late eighties, and it's about a guy who found 74 cents of. spend on on a mainframe, it turned out to be like a international cyber hunt for like a nefarious hacker. This is intrusion detection. This guy kind of invented honeypots and all sorts of things, so it really sh. I guess the exciting part about it is like how much investigative work can really go into like an allocated spend or an anomaly.

So it really like sparked my passion and interest for [00:40:00] like systems administration, digging through logs, talking to team after team, chasing things down. So that'd be a book I, I would recommend. And it's really about the, the hunt for an how when a hunt for an anomaly can turn into something you, you never, ever expected.

Alon Arvatz: Isn't that sound like a basic or fundamental book that any FENOs person should read?

Zach Johnson: Yeah. Yep. And it's, it's better than a normal, you know, boring business book filled with technical corporate jargon in, in, in power quotes.

Alon Arvatz: No, it sounds great. Uh, our listeners should definitely go to the. Closest library to their house and get the cuckoo egg. That sounds really fascinating. Um, and Zach, like, what do you like to do outside work for fun?

Zach Johnson: Yeah, I mean, you know. I work in such a technical role outside

Alon Arvatz: I.

Zach Johnson: It's like, how can I on unplug and, and go to somewhere where there's no [00:41:00] cell phone service, there's nobody pinging me on Slack, there's no and just kind of, uh, unplug and, and just embrace the, the outdoors and, and, and, beauty of, uh. Being outside and kind of trying to connect back to nature as, uh, best I can. That way I, I'm recharged and when I'm at work I can be a hundred percent, uh, focused on work. 'cause, you know, my job can take a lot of brain power and a lot of patience. Uh, some days.

Alon Arvatz: Amazing, amazing. Zach And uh. Uh, Denver is amazing and the outdoor there is an amazing, I have to admit, I've been to the city. I've never been to the ER around that, but it's definitely in my bucket list, so I definitely hope to get there soon. And Zach.

Zach Johnson: I'll have to take you out on a mountain and we, we can talk some, some finops while you're trapped on a, on a chair. Lift with

me.

Alon Arvatz: It is a deal. It's a deal for sure. Cool. And Zach, again, you shared so many interesting insights and ideas. I'm sure people would love to reach out [00:42:00] to you and ask questions. What is the best way to reach out to you?

Zach Johnson: Yeah, you? can just reach out to me on LinkedIn. I think the beauty of the finops community is everybody is willing to talk about what they do great in their organization or share tips that made them successful. It's kind of the antithesis of, of a lot of. Other businesses where people don't wanna give up their secret sauce or talk about what makes them successful. But every conference, every webinar, every finops practice practitioner who's on LinkedIn are almost always willing to have a conversation with you and, and share what works, what doesn't work, what tools are they using, what's cool in the open source community. So yeah, LinkedIn is a, is a perfect place to, uh, connect

with me.

Alon Arvatz: I agree, and I also agree that that's what makes this community so special. I can tell you I made a transition from security to finops, and it was an absolutely smooth transition thanks to the people who accepted me, who explained me, who taught me, who gave me some advice. So it's an [00:43:00] amazing community, and Zach, people like you make this community.

So guys, feel free to reach out to Zach, Zach. Like I said, there were so many golden nuggets on this episode today. You know, from talking about business value and what business value actually means, and what executive wants to hear, and how to build business reviews around finops and how to build a finops team.

I think all that is absolutely amazing. Thank you for sharing that. I learned a lot. And thank you for joining us today, Zach.

Zach Johnson: Yeah, my pleasure. Thanks for having me as a guest.

Alon Arvatz: Absolutely. It was my pleasure and our listeners' pleasure for sure. And I also wanna thank our listeners and our audience for joining us once again, listening in, enjoying. I'm sure you had fun at least as much as I did. And again, don't forget to tell your friends about the podcast. Zach, thank you again.

This has been exciting, fascinating episode of FinOps in [00:44:00] Action. Hope to see you all next time.

Outro: That wraps up another episode of finops in Action. Thank you for joining. For show notes and more, please visit finops in action.com. This show is brought to you by 0.5, empowering teams to optimize cloud costs with tip detection and remediation tools that drive action.