Episode 7

Pedro Veloso - Bridging the Gap Between Finance & I.T.

Published on: 14th June, 2022

Episode 7 Pedro Veloso - Bridging the Gap Between Finance & I.T.

The Finance episode! Pedro Veloso, International Man of FinOps, has performed FinOps-style roles in Brazil and Germany. Joe & Pedro discuss finance diving into the world of cloud, some of the misconceptions, the challenges and the problems that need to be worked on in order to provide data for real-time decision making.

Also, special-guest appearance by Finn the Dog.

Mentioned in this episode:

Join us for a Women in FinOps Virtual Meetup on August 24.

FinOps Events

Transcript
Pedro:

I'm Pedro Veloso and this is FinOpsPod

Stacy:

Hey, this is Stacy Case.

Joe:

And I'm Joe Daly.

Stacy:

And this is FinOpsPod.

Joe:

Stacy, I had a very lovely conversation with Pedro Veloso.

Joe:

He is a finance person in the world of FinOps, and I love finance people in

Joe:

the world of FinOps because I'm an old finance person in the world of FinOps

Stacy:

You are a finance person, Joe, and that is your happy place I know.

Stacy:

So I'm sure this was an exciting conversation for you to have.

Joe:

well, it's not so much my happy place.

Joe:

It's just my place . . . of

Joe:

. . . Stacy: Comfort?

Joe:

I don't know.

Joe:

I don't like, what do you find finance people don't say

Joe:

finance is my happy place.

Joe:

Why do we do this anyway?

Stacy:

Maybe

Joe:

it?

Stacy:

say finance is my happy place.

Stacy:

Are you just afraid to admit that finance makes you happy?

Joe:

No finance makes no one happy.

Joe:

Actually, maybe it does make some people.

Joe:

It didn't make me the most happy.

Joe:

I think that's why I left finance.

Joe:

But there are some folks maybe

Stacy:

bet it makes Pedro happy.

Joe:

Pedro finance, finance might make Pedro happy.

Joe:

He's an interesting guy.

Joe:

He started off in Brazil.

Joe:

did some IT finance roles there and then moved to Berlin, Germany and is

Joe:

doing more IT finops roles there, and we had a really great conversation.

Joe:

It's just great to hear and talk to folks who have similar

Joe:

experiences that you've had.

Joe:

Cause you can just make connections and like, yes, I know I've had those

Joe:

conversations, I've been in those rooms.

Joe:

And he talks a lot about how cloud removed a lot of the processes

Joe:

that took information from IT and fed them into business decisions.

Joe:

Well, Your dog, just bite you or something.

Stacy:

No, my dog just started.

Stacy:

I can tell my dog is going to bark and I try to get hah . . .. Do you

Stacy:

hear, I knew they're going to bark so I thought really quick on the mic.

Stacy:

Hold on.

Stacy:

And the mute, hold on just a second.

Stacy:

Hold on.

Stacy:

I must be getting a delivery.

Stacy:

Um,

Joe:

that's pretty

Joe:

funny.

Joe:

So,

Stacy:

So, you can talk.

Joe:

so Pedro, Pedro had a, Pedro was talking about how

Stacy:

okay, hold on a second.

Stacy:

Do you want to take a bath?

Stacy:

That shuts them up.

Stacy:

I threatened them with baths.

Stacy:

It worked, it

Joe:

Yes.

Stacy:

okay.

Joe:

Pedro was talking about how cloud deployments have removed a lot of

Joe:

the procurement and finance processes that took information and delivered

Joe:

it to the business so that they can make a lot of business decisions.

Joe:

And sort of finops practices he needs to implement in order to

Joe:

facilitate real-time decision-making.

Joe:

I really liked how he explained it.

Joe:

He's called it.

Joe:

The gap between finance and technology is widening.

Stacy:

That sounds interesting.

Stacy:

Even for finance I'm kidding.

Stacy:

I joke.

Stacy:

I joke.

Stacy:

That does sound super interesting.

Stacy:

I'm excited to hear about it.

Joe:

I hope I hope we get some of your dog barking in the background.

Joe:

Actually.

Stacy:

Can I tell you how excited that my dog's name, who I've had for 13 years?

Stacy:

His name is Finn and I work for a FinOps Foundation.

Stacy:

I keep trying to work that in.

Joe:

People get so confused.

Joe:

They think FinOps stands for financial operations and really

Joe:

it's just a dog-walking business.

Stacy:

It's just a dog-walking you guys finops is really just dog-walking.

Stacy:

It's just, that's what it is.

Stacy:

You have all been tricked.

Stacy:

That is the reality of what fin ops and it's named after my dog, Finn.

Stacy:

Hey Joe, speaking of what does FinOps really stand for?

Stacy:

What does it mean?

Joe:

Oh, it's really, it's a portmanteau which is really

Joe:

fun word to say portmanteau.

Stacy:

I had you say it.

Stacy:

Cause I can't say portmanteau without like poor man's

Joe:

like poor man toe.

Joe:

My feet hurt.

Joe:

that was a portmanteau, a dev ops and finance.

Joe:

So you're taking the financial implications of working in a dev

Joe:

ops agile sort of method, which is actually a lot of what Pedro's going

Joe:

through in this episode saying, how does accounting need to progress?

Joe:

He talks about how the old cost center reporting just doesn't match up to

Joe:

this style of IT operations anymore.

Joe:

It's a really interesting episode.

Joe:

I'm looking forward to getting into it.

Pedro:

Do you mind if I drink some coffee in between?

Joe:

you go right

Pedro:

all right.

Joe:

Not a problem at all.

Joe:

It's late though, for you to be drinking coffee, are you gonna fall asleep?

Pedro:

It's what 6:00 PM here now, but it's okay.

Pedro:

I mean, it's my fifth coffee of the day, so I'm in the mood.

Joe:

It's not gonna, it's not gonna hurt any worse.

Pedro:

Yeah.

Joe:

I worry about your sleep.

Pedro:

You don't even know me, Joe.

Joe:

I know I'm just a caring person.

Joe:

I want to make sure you get a good night's sleep.

Joe:

You are originally from Brazil and you're currently in Berlin, Germany.

Joe:

How did, how did you get there?

Pedro:

Well, all right.

Pedro:

Let me try to shed some light into that.

Pedro:

My whole career, somehow I was driven into the I'm calling finops, but at

Pedro:

that moment I didn't have no clue that finops existed, probably that

Pedro:

the name itself was not even created.

Pedro:

Immediately, when I left the university, I'm graduated in my PhD in economics.

Pedro:

So I joined the company.

Pedro:

It's a software company in Brazil.

Pedro:

It's similar to SAP.

Pedro:

It's the market leader there.

Pedro:

I joined to serve as a finance person.

Pedro:

I was assigned to an area of the company that is a cloud business.

Pedro:

So I was a business partner of this organization, which

Pedro:

was growing in relevance.

Pedro:

Then I realized that actually my role there would be more important

Pedro:

to get deeper into the discussions rather than staying on a shallow

Pedro:

reporting, comfortable position.

Pedro:

So I started understanding some relationships and then we started

Pedro:

to, at that moment, the company was deciding on whether which place it was

Pedro:

the most appropriate one to embed the software solution that they were selling.

Pedro:

If they would sell a full blown solution in AWS, will they do this in Azure, or if

Pedro:

they will do this with a private cloud.

Pedro:

And I was the one who crafted the business case for that.

Pedro:

And I really needed to invest ton of my time and my brain power to understand

Pedro:

what these folks were talking about because I had no education on the topic.

Pedro:

So I needed to learn on the fly.

Pedro:

So then the years were passing.

Pedro:

And while we were doing that, we opted to one of the assumptions was

Pedro:

to actually build a private cloud.

Pedro:

So I was also, I took over the procurement department because we

Pedro:

needed to understand the differences and specificities of each solution.

Pedro:

And then we evolved in this direction.

Pedro:

And then I also had in touch with other public clouds but then time passed

Pedro:

and I realized that actually, if I wanted to make a leap to become like

Pedro:

a, let's say a more complete global professional, I needed to expose

Pedro:

myself to international environment.

Pedro:

And the company was very.

Pedro:

It's as I said, it was a market leader, but it was still

Pedro:

extremely local Brazilian, local.

Pedro:

So I started searching some alternatives.

Pedro:

What am I going to do, where I'm going to work on?

Pedro:

And I really had the whole map open ahead of me and I tried to define where

Pedro:

I would like to align my professional expectations to life expectations.

Pedro:

And immediately I thought about moving to U.S.

Pedro:

but I had also previous experience living in Germany and it connected more to

Pedro:

what I wanted to do personally, and I got hired, or actually it was a match because

Pedro:

it was the only company that I really got in touch with is a it's called Zalando.

Pedro:

They are a market leader also in Europe.

Pedro:

They're actually, they're like generic terms they're copycat of Zappos in U S.

Pedro:

And I was hired there for a role called tech controlling which was in a way

Pedro:

similar to what I was doing in Brazil, but quite different because the company was

Pedro:

in a completely different maturity stage.

Pedro:

They were born cloud native and I was working in an environment extremely

Pedro:

agile, which also was not the case back then in Brazil, where I was working with

Pedro:

people from the eighties monolithic style.

Pedro:

Software engineers from the old times.

Pedro:

So I started to apply some of the knowledge that I had,

Pedro:

especially in the cloud world.

Pedro:

But that, that's where I got a bit more exposed to this new

Pedro:

technologies and new areas of expertise.

Pedro:

And then we started slowly building on top of that.

Pedro:

So then my team that has started with two or three people in the end, I left

Pedro:

the company with six seven, because then we started expanding like the,

Pedro:

our areas of operation lets say.

Pedro:

And applying even concepts that now I understand that they are called TBM . Like

Pedro:

for example, we were already curating a technology assets or a tech applications

Pedro:

catalog in this company is Zalando and labeling what were their costs?

Pedro:

The evolution of their costs, how this was evolving over time.

Pedro:

Plus some other things.

Pedro:

So that's, that's how I landed in Germany.

Pedro:

And then I moved to another company where I'm now.

Joe:

So you wanted a global perspective.

Joe:

You were open to moving anywhere in the globe and you were able to find

Joe:

jobs and professions to allow you to do that simply with your cloud

Joe:

business office, FinOps background.

Joe:

You know, me personally, I've been in Ohio for the last almost 40 years.

Joe:

I'm afraid to leave my children's school district, let alone the state.

Joe:

It's awesome to know this work is global and you can go anywhere to do it.

Joe:

That's really fantastic.

Joe:

Was there any differences that you had to consider when you're moving from Brazil to

Joe:

Germany or was it all basically the same?

Joe:

For example, when I talked to folks in Brazil about FinOps I'm like, what are

Joe:

some of the considerations you're thinking of that's different from me in the United

Joe:

States that I consider and they're talking about, well, exchange rate is huge.

Joe:

And I'm like, oh, obviously I work and live and breathe in dollars.

Joe:

I don't have to consider exchange rates.

Joe:

Were there any sort of eye opening, like, oh, this is not something I

Joe:

learned or dealt with in Brazil when moving into your role in Europe.

Pedro:

Absolutely.

Pedro:

Exchange rate is the first, but I wouldn't say that it's the most important aspect.

Pedro:

It definitely plays an effect that is also uncontrollable.

Pedro:

So you cannot really, it's hard to plan, especially in our times.

Pedro:

But there is another aspect which I think it's even worse, which is the

Pedro:

tax burden of Brazil in particular, but I think it's actually spread out

Pedro:

in the whole South America that we have pretty complex regulations that

Pedro:

impose all sorts of different special taxes to public cloud providers.

Pedro:

And this creates a huge barrier for them to fully access

Pedro:

and dominate these markets.

Pedro:

So to give an example back then, this was 2014.

Pedro:

As I said I was working in the software company.

Pedro:

And then we wanted to define which solution we were going to embed the

Pedro:

software into, which cloud provider.

Pedro:

And we ended up preferring to build in-house, the data center, which at

Pedro:

this point, I'm not sure if this had been best move, you know, but back then

Pedro:

the business case was quite solid that the tax burden plus exchange rates and

Pedro:

to some extent, the level, sometimes the level of services, that the public cloud

Pedro:

providers offer to Brazilian companies it's ahead of what they really need.

Pedro:

And in fact, you might deliver a satisfactory solution to Brazilian

Pedro:

customer base, especially small, medium business with cheaper infrastructure

Pedro:

costs that might not be the most updated ones, or they might not be so agile

Pedro:

or resilient, but maybe this doesn't matter much for the vast majority of

Pedro:

the small medium companies of Brazil.

Pedro:

So I think that these three aspects: tax, exchange rates and

Pedro:

maybe a mismatch of expectations.

Joe:

That's really interesting.

Joe:

The business case, just those scenarios, some uncontrollable like exchange rates

Joe:

some less controllable, like governmental taxation policies, will make a

Joe:

business case look completely different in one country than another country.

Joe:

And then you start valuing what is more important versus not.

Joe:

You know, that whole consideration of I need resiliency or I need expense

Joe:

efficiency or speed or quality, you start changing the calculations of

Joe:

what's the most worthwhile to you.

Joe:

So, was that different for you when you hit Germany?

Pedro:

Yeah.

Pedro:

My experience in Germany and because I joined a company that was in a

Pedro:

completely different maturity state.

Pedro:

What I found when I landed at my job here in Germany was a company that was

Pedro:

experienced, observed growth rates.

Pedro:

They really didn't care much about where they were putting their money.

Pedro:

They were just pushing through capital to make the company expand.

Pedro:

And I think that as a finance professional.

Pedro:

I must say that it's quite frustrating because you live for finding efficient

Pedro:

ways to deliver the same with the same quality resilience and the same benefits.

Pedro:

But I think that was the main change because in fact, when you take tooling

Pedro:

costs and infrastructure costs in the scale or proportion to the revenue

Pedro:

and the profit that such big platforms that are extremely scalable deliver,

Pedro:

they are still not the biggest drivers of change of the company.

Pedro:

So, in other words, they really don't prioritize how much they're investing as

Pedro:

long as the product is solid, reliable and engineering community is happy and can

Pedro:

build as fast and as best as possible.

Pedro:

So I think that was a mindset change that in Brazil, the pressures for the

Pedro:

bottom line are extremely high and you really need to take every single penny

Pedro:

out of every single investment that.

Pedro:

In Germany because of the circumstance, it was a whole different story.

Joe:

Yeah, we're kindred spirits here because I worked in highly

Joe:

regulated companies from the finance side and you're right.

Joe:

The bottom line is what is most important.

Joe:

Can you comply with regulations which are expensive to comply with, and also

Joe:

meet the bottom line expectations, even when things were going well, and I've

Joe:

found inefficiencies and I wanted to take advantage of it because from my finance

Joe:

perspective, that's wasted expense dollars that I could use in my headcount budget,

Joe:

and I could hire more people or help fund better raises this year or something.

Joe:

I saw that as expense that could be moved to other line items

Joe:

which, you know, it doesn't always land when talking to an engineer,

Joe:

they're like, nah, that's my money.

Joe:

Or that's the business requirement or something along those lines.

Pedro:

Yeah.

Pedro:

Yeah.

Pedro:

I think that, you're absolutely right.

Pedro:

And I think to expand on that.

Pedro:

I think that now from a third look, because then I just to continue the

Pedro:

journey that I've experienced in Germany.

Pedro:

I moved then for a second time to another company that is now operating

Pedro:

in, let's say mid-level markets which are markets that are not developed

Pedro:

countries like Germany or U.S., but instead Eastern European countries

Pedro:

or other economies that are emerging.

Pedro:

And here I found exactly the middle ground.

Pedro:

There is a strong portfolio management approach to really chase for the

Pedro:

most efficient or the highest profitability of the company.

Pedro:

But at the same time, my current company is also to some extent, very careful about

Pedro:

the product that we're putting out there.

Pedro:

And at least here, I think I'm now making more impact than I was

Pedro:

doing in a different circumstance in the other company, without

Pedro:

this this attention, let's say.

Joe:

Yeah.

Joe:

Do you have more power?

Pedro:

Power.

Pedro:

Yeah.

Pedro:

It's nice.

Pedro:

As a finance person is nice.

Joe:

Yeah,

Joe:

yeah, It's great.

Joe:

It, as opposed to being an annoying voice

Pedro:

yeah.

Pedro:

Yeah.

Joe:

No, that's fantastic.

Joe:

You mentioned before you're working on a role that has FinOps, but

Joe:

also you're implementing TBM style processes and programs to give

Joe:

a whole product costing model.

Joe:

is that easy?

Joe:

Is that easy to do?

Pedro:

Absolutely!

Pedro:

One hundred percent!

Pedro:

No . . .It . . . man . . . To be honest, look, first of all I need to

Pedro:

confess that I thought when I started delving into the TBM topic that

Pedro:

I'll find more answers that I did.

Pedro:

And even though this framework is out there for some time, I think

Pedro:

that a lot of people have still a lot of doubts and a lot of the

Pedro:

things haven't been answered yet.

Pedro:

So it's in particular for industries like mine, which are mainly

Pedro:

internet, digital industry, our core business is not automobile, it's

Pedro:

not governmental, it's not banking.

Pedro:

It's pure platform business.

Pedro:

So , at the moment I don't have all the instruments that would make me

Pedro:

feel comfortable to implement that.

Pedro:

But we have been in discussions with some consulting firms that are supporting

Pedro:

us to at least give us some directions on what are the market standards?

Pedro:

What has been successful elsewhere?

Pedro:

So this afternoon, I was actually writing a six pager about how to

Pedro:

implement TBM in my current company.

Pedro:

And what are the benefits of that?

Pedro:

And I think that the first value that I can give to the company or that I can

Pedro:

ask the company is to tell the story.

Pedro:

And I think that I still don't know how I'm going to do it, to be honest.

Pedro:

But I strongly believe that the way that we operate and most of the companies

Pedro:

operate in, when it comes to financially steer a tech organization in terms of

Pedro:

cost centers or profit centers or cost items, this is completely unlinked to the

Pedro:

operation and the gap of finance and the tech org is actually getting wider.

Pedro:

I think that we need to find ways to fill in the gap.

Pedro:

The gap will be either fueled by tech, taking over.

Pedro:

I dunno, creating roles.

Pedro:

Like we were saying finops and TBM office, something like that.

Pedro:

Or if finance takes over , this role or collaborate better with the tech folks.

Pedro:

And that's what I'm trying to do at the moment.

Pedro:

we're trying to at least acquire this knowledge to see if we can fill it

Pedro:

. Joe: Yeah.

Pedro:

it's incredibly important.

Pedro:

I remember one of my first a-ha moments of why this stuff is important: I was

Pedro:

working in IT finance for infrastructure shared services, and we had just allocated

Pedro:

out all of our expenses to the business.

Pedro:

And here comes the business CEO.

Pedro:

And he is angry because we have allocated him more expense than was budgeted for.

Pedro:

And he wanted to know what it was.

Pedro:

And I was like, ah, you know, there's some servers, some storage, some labor

Pedro:

and he was like, this is a black box.

Pedro:

How can I make a decision on how to reduce this expense?

Pedro:

And I didn't have anything.

Pedro:

And then that's when he said, well, you have given me an expense

Pedro:

that I can't control and the only lever I have to pull is head count.

Pedro:

It's unfortunate and that's kinda what shook me.

Pedro:

I'm like, oh my gosh, we need to provide more visibility or some

Pedro:

sort of decision-making process, but getting alignment on how to create that

Pedro:

visibility can be very difficult in a shared services sort of organization.

Pedro:

Yeah.

Pedro:

I don't know how many times I've heard the word or the

Pedro:

expression black box in my life.

Pedro:

I don't know.

Pedro:

Maybe this week, three times.

Joe:

It's a black

Pedro:

incredible.

Pedro:

It's a black box.

Pedro:

Yeah, this is always a topic.

Pedro:

I think that allocation is a thing is a whole different story.

Pedro:

It needs to be very well analyzed because you can become very efficient

Pedro:

and precise, but then it's hard to steer it and to control all the attributes.

Pedro:

You mentioned about your aha moment.

Pedro:

I had my aha moment when I realized that my impact was actually getting in the

Pedro:

right place where I wanted it to be.

Pedro:

So this was in Zalando and in the last year when I was working there, recurring

Pedro:

meetings with the tech and the product data and engineering folks, and our

Pedro:

discussions were getting so deep into how many days we are retaining data

Pedro:

for the backup of some applications.

Pedro:

And we were sitting at a table arguing why we should do this 14

Pedro:

days or five days or seven days.

Pedro:

And what would be the immediate outcome in terms of the expenses.

Pedro:

And we, and this was for me the moment, my aha moment when I realized that, yeah,

Pedro:

this is exactly what finance should be doing, because if you relate this to

Pedro:

what a logistic controlling person does in a warehouse, they control the whole

Pedro:

operation and they know the processes and they can challenge the operational team

Pedro:

into their unit economics or their metrics without being the experts on the topic.

Pedro:

And I think that's exactly what I was doing back then, sitting on the table

Pedro:

and having very deep architectural decisions and discussions and

Pedro:

bringing our perspective to that.

Pedro:

And I think that this is the place that I want to be in.

Pedro:

I think that every FinOps person wants to be.

Pedro:

And most important to realize how many decisions are being made without

Pedro:

full awareness of the organization.

Pedro:

Right?

Pedro:

And decision makers.

Pedro:

So in practice, these are the turning point moments where you can really change

Pedro:

the needle in terms of expense expanding, or are spending money in AWS, for example.

Pedro:

But there are numerous examples of that.

Pedro:

And I think that's exactly a good example of how.

Pedro:

Illustrative is the gap that we are creating into the tech world

Pedro:

and the finance senior management, maybe not directly involved into

Pedro:

tech because it's just the tip of the iceberg that they are seeing.

Pedro:

What's really happening?

Pedro:

The decisions are being made on a daily basis without a

Pedro:

procurement workflow for that.

Joe:

You know, I was going to go in one direction, but you're,

Joe:

you're driving me down another.

Joe:

Cause I enjoy talking to other IT finance folks.

Joe:

Going back to your Brazil days when , you were building out a hybrid environment.

Joe:

You had public cloud usage private cloud usage.

Joe:

I worked on the, in the cloud side of things.

Joe:

So people saw me and said, oh, he wants to put everything in the cloud.

Joe:

And I said, nothing could be further from the truth.

Joe:

I want efficient things that are modern in the cloud.

Joe:

I don't want your 30 year old application that hasn't been updated in 10

Joe:

years because the engineers left, nobody knows how to turn it off.

Joe:

That's not going to run cheap in the cloud and there's really no value in it.

Joe:

And do you run into scenarios like that where folks are like, "well,

Joe:

cloud is the newest hottest, and all these marketing white papers

Joe:

will tell me, it'll save me money.

Joe:

Let's put my ancient stuff, that's not secure and not patched in the

Joe:

cloud and get rich while we do it."

Joe:

Do you still run into that?

Pedro:

Not anymore, to be honest, because I think that I've achieved, not myself,

Pedro:

but the companies where I've worked here in Germany, they've gone beyond that.

Pedro:

But I can resonate that to Brazil because there is also a strong sense

Pedro:

of, we cannot do better than strong players like AWS and Azure or Google.

Pedro:

If you open the newspapers, they are all over the place.

Pedro:

And you're say that actually, we should give the private cloud that

Pedro:

we burn more efficiently or cheaper than AWS it's it sounds like crazy.

Pedro:

And this was a hard storyline to push.

Pedro:

We needed to explain in so many different ways and it was quite exhausting, but I

Pedro:

think that , it really can make sense, as I said, I mean, it depends how a

Pedro:

lot on the, on the type of applications that are onboarding and it depends

Pedro:

nowadays also on the governmental factor.

Pedro:

Right?

Pedro:

So what kind of requirements you have?

Pedro:

Can you really run freely on worldwide providers or you need to

Pedro:

have to have some sort of local?

Joe:

Cloud is amazing, but it's not magic.

Pedro:

no.

Pedro:

Yeah,

Joe:

to run, it's expensive to run.

Joe:

It doesn't matter where you put it.

Pedro:

Yeah.

Joe:

Going back to the TBM side of things.

Joe:

So you have all sorts of different types of expenses that you're trying to corral

Joe:

and present and figure out how to align.

Joe:

You have your capitalized expenses and depreciation and amortization.

Joe:

And then you have the cloud side, which is more operational expense since coming

Joe:

in monthly and it can be different b ased on a million number of factors, even

Joe:

including how many days are in that month.

Joe:

When you mix all those different types of expenses together, are you

Joe:

finding that it's driving some sort of clarity or are there friction points?

Joe:

And what are the sort of debates and or discussions that come up when you

Joe:

try merging reporting types together?

Pedro:

Yeah, that's a good question.

Pedro:

I'm afraid I won't be able to go that deep because we are really

Pedro:

on an early stage of adoption.

Pedro:

I wouldn't even say that we are adopting it yet because we are first pushing the

Pedro:

benefits and the storyline through.

Pedro:

It's a really big organization.

Pedro:

So we need to convince a lot of stakeholders that this really makes

Pedro:

sense and explain what this means.

Pedro:

But I think that we have some hints on what kind of discussions

Pedro:

this could bring and what kind of decisions this can empower us to make.

Pedro:

So just to give an example, at the moment, we moved away from cost center

Pedro:

reporting, which is for me a very basic way of demonstrating a tech organization

Pedro:

to, to what we call Pack reporting.

Pedro:

Some companies call it a squad or something else or team.

Pedro:

It's a combination.

Pedro:

It's a multi-disciplinary team so comprise of data for engineering,

Pedro:

product, product design, whatever else you need to complete a stream.

Pedro:

So a stream recall it like a chet of our, of our platforms, something like that.

Pedro:

And this differs from cost center because we in cost center

Pedro:

world, we are tied to org design.

Pedro:

So product folks, all sit in one place, engineer, folks, associates in one place.

Pedro:

But in this Pack world, they've actually had everything at once.

Pedro:

So this is already a better representation of what we're working on.

Pedro:

But still, we only see the shallow group of people.

Pedro:

We don't see through it.

Pedro:

So we don't see outcomes of these folks.

Pedro:

And then I think that the first realization that we had and this one

Pedro:

is quite recent, is that we were asked what was the real impact of

Pedro:

the Ukrainian war in our business.

Pedro:

And, as I told you, we have strong operations in the Eastern European, and we

Pedro:

weren't able to have a solid answer about that and how that roll down into our

Pedro:

whole organization and what other sort of decisions would need to make in terms of

Pedro:

maybe divesting some components, changing some maybe architecture because of log

Pedro:

traffic that we don't no longer need to have such level of throughput and so on.

Pedro:

And we couldn't answer that.

Pedro:

And I personally barely , could collect some insights on what

Pedro:

was the impact of the conflict.

Pedro:

So, and this was for me, a big red flag to say that we desperately

Pedro:

need to have something that shows more than just the cost of labor

Pedro:

associated to teams or banks.

Pedro:

And to stop looking at AWS as a separate component of labor.

Pedro:

Because at the end, they're entirely and completely part of one single unit

Pedro:

that we can narrow this down to services, applications, however you want to call it.

Pedro:

And I think that's the steering level that I want to unlock now.

Pedro:

So I want to get away.

Pedro:

As I said, if we got away from cost center, we went to Pack.

Pedro:

Now I want to go one step further and unlock a new value chain of my

Pedro:

role as a finance partner, to the company, to show the company how

Pedro:

we are we're progressing in terms of assets or applications or products.

Pedro:

However we want to call it.

Joe:

That's super interesting.

Joe:

I've not heard of that before.

Joe:

It's Peck is a P E C K or P

Pedro:

Yeah.

Pedro:

Yeah, yeah, yeah.

Pedro:

The same thing.

Pedro:

So you've never heard of it,

Joe:

I'm going to look it up afterwards.

Joe:

I'm like what?

Joe:

You're moving away from cost centers.

Joe:

And that's

Pedro:

have you, have you ever, but have you ever heard of squad because

Pedro:

in Spotify, I think they use this.

Pedro:

I'm going to send you a link about that.

Joe:

Yeah, Do that.

Joe:

I've heard of that sort of team structure, but I've never considered

Joe:

the accounting impact of that before.

Joe:

I mean, It's really interesting because when I see companies go from their

Joe:

old department styles to a product model, the accounting behind it

Joe:

doesn't necessarily change too much.

Joe:

It's still doing cost centers.

Joe:

But what you are describing, sounds like you're changing the accounting

Joe:

to match the workflow, which would theoretically show you more of

Joe:

what each team or squad is doing.

Joe:

But you're still seeing that trouble of, Hey, there's still all these expenses.

Joe:

You have to allocate them out properly.

Joe:

And if you don't have a common way to do that or agreed upon way to do that.

Joe:

You've changed the structure of your accounting, it's

Joe:

still not adding the clarity.

Pedro:

Yeah, absolutely.

Pedro:

I see this Joe , as a value chain.

Pedro:

So, you have a possibility to look at their organization in many different ways.

Pedro:

I think that as a finance person, IT finance person, you need to work to

Pedro:

unlock as many dimensions as possible.

Pedro:

Of course, being mindful of the operational burden of carrying this on,

Pedro:

but the basic ones are, I think the cost center report, which is a representation

Pedro:

of the org makes sense for some cases the Pack also makes sense in some other

Pedro:

case, what I wanna do now, and what we're trying to work on is to unlock a new one.

Pedro:

Which I hope that will help me bring in, which is the tech assets.

Pedro:

So I want to see what exactly where a building behind that.

Pedro:

What are the sub products or components of our platforms that we operate and how

Pedro:

we can start steering the organization no longer in terms of teams, but in

Pedro:

terms of applications and what are we going to do with our tech stack that we

Pedro:

have underneath and how much does that cost and ROI and so on and so forth.

Pedro:

So there's endless possibilities.

Joe:

So this morning I was going through the finops practitioner

Joe:

membership applications.

Joe:

I do that every day.

Joe:

I start my day.

Joe:

I let people in.

Joe:

I say welcome.

Joe:

And I always get a thrill when I see finance folks join

Joe:

just that's my background.

Joe:

I have a soft spot for finance folks entering into the IT space.

Joe:

Cause I know it's, it's difficult, you've got a lot to learn and you already learned

Joe:

finance, which was really hard and now you're learning IT, which is really hard.

Joe:

So I know that path.

Joe:

And there was a person named Joshua and he's in Singapore and he's an

Joe:

IT financial analyst and he said, I'm just starting this FinOps world.

Joe:

I'm just getting in.

Joe:

Thanks for having me in here.

Joe:

What would be your advice for financial analysts, accountants,

Joe:

finance background people who are just getting into this FinOps space.

Joe:

What's your advice for first step?

Pedro:

Yeah.

Pedro:

Oh, I think they are quite lucky because we already have

Pedro:

so much literature about it.

Pedro:

Beforehand that I'm talking about four or five years ago, we had so little

Pedro:

and I would say to be honest, the first step is I think there are three main

Pedro:

areas that they can explore and go deep into the loopholes of, which are the

Pedro:

ITFM, the FinOps itself and the TBM.

Pedro:

As we all know, they overlap in many areas.

Pedro:

And I think that's kind of a blur line where each one stops, but the,

Pedro:

there are relevant ready material literature on all the aspects.

Pedro:

And even finops I was one of the early customers of the book that was

Pedro:

released two years ago, I guess, right.

Pedro:

Or three

Joe:

Yeah.

Pedro:

three years ago.

Pedro:

Yeah.

Pedro:

So it's getting there and there is a lot of knowledge available.

Pedro:

So, that's for the basics, let's say the foundations and you

Pedro:

can build upon that level.

Pedro:

Experience of course counts.

Pedro:

So I think that you need to start driving towards the tech teams when

Pedro:

you're putting this into practice.

Pedro:

So if you have exposure to engineering, product folks, , sit with them on

Pedro:

the table and act like a curious business partner that you just

Pedro:

want to understand the business.

Pedro:

Actually, it's funny because I've built a team the industrial companies that really

Pedro:

work as business partners of tech folks.

Pedro:

And I always advise them to find the tipping point.

Pedro:

So how you can find a small opportunities to showcase that you can link the dots and

Pedro:

you can create a simple use case or if you find the metrics, different finding

Pedro:

unit economics, they might sound hard, but in the end, it's all about drivers

Pedro:

and dependencies and putting that in a visible, clear, digested way and report.

Pedro:

And I think that usually tech teams, they are quite happy when people bring

Pedro:

to the surface, their achievements.

Pedro:

So it's also a good way to start exercising that.

Pedro:

And then afterwards you can also start bringing some

Pedro:

challenges as you enhance it.

Joe:

Very good.

Joe:

That's awesome.

Joe:

Awesome feedback.

Joe:

And you're right about the literature.

Joe:

I mean, I was right there with you learning this years ago and was

Joe:

figuring out as you go along and.

Joe:

I mean, I created some dumpster fires and all I could say at the end was,

Joe:

well, I learned what doesn't work.

Joe:

Don't do that.

Joe:

Let's not do that again.

Joe:

A process of elimination.

Joe:

All right.

Joe:

My last question, we try to ask everybody.

And the question is:

the answer can't be savings plans for RDS.

And the question is:

But what is one feature you would like cloud service providers to release

And the question is:

that would help FinOps practitioners?

Pedro:

Wow.

Pedro:

That's a good one.

Pedro:

Man would love to understand and not only understand to be honest, but to tweak.

Pedro:

Some variables of the forecast that AWS gives me.

Pedro:

So at the moment they, they are somehow accurate, especially on

Pedro:

the shorter, but it'll be lovely to have a tool where we can configure

Pedro:

some few attributes and maybe, yeah.

Pedro:

Just guide the forecast, according to the knowledge that AWS doesn't have.

Pedro:

But that if we can bring to it.

Pedro:

So, and I think that's something that would be pretty good for us.

Pedro:

And also of course, I mean, first of all, understanding how the whole

Pedro:

forecast is calculated because it's still a black box for me.

Pedro:

Let's use the black box term again.

Pedro:

I,

Joe:

a black box!

Pedro:

Yeah,

Pedro:

yeah,

Joe:

but that's a great idea of scenario building in the

Joe:

cloud native forecasting tool.

Pedro:

yeah.

Joe:

I think that's a good one.

Joe:

Well, I greatly enjoyed this.

Joe:

Sometimes we have a co-host interview with me, but I was

Joe:

like, no, Pedro is IT finance.

Joe:

I just want to have a finance to finance conversation.

Joe:

So this is great.

Pedro:

Joe, I love the conversation, man.

Pedro:

Honestly, I was missing having this level of conversation with someone who

Pedro:

really grasped what I was talking about.

Pedro:

As I said, it was a lonely journey to be where I am at.

Pedro:

I'm happy with the path that I took.

Pedro:

I think that this IT finance role is gonna be big in the future.

Pedro:

And people will only realize that a bit later.

Pedro:

And I'm really happy to be part of this community early enough.

Pedro:

And I think that we're still building a lot of things.

Pedro:

Great talking to you, Joe.

Pedro:

Have a nice day.

Joe:

You too good evening.

Joe:

Get a good night's sleep.

Joe:

All right, we just closed the books on the finance episode of FinOpsPod.

Joe:

If you saw what I just did there.

Joe:

it's a good accounting joke.

Joe:

Thank you very much.

Joe:

Pedro Veloso, fantastic conversation.

Joe:

I greatly enjoyed it.

Joe:

really just appreciate how gracefully Pedro put it, shrinking the gap

Joe:

between IT and finance so that we can make better business decisions.

Joe:

Great.

Joe:

Great way to put it.

Joe:

As always thank you to Stacy Case and her dog, Finn, for helping

Joe:

us kick off the podcast today.

Joe:

Make sure that you're following us wherever you love listening to podcasts.

Joe:

And if you have any questions at all that you think that FinOpsPod

Joe:

should address, there's a link in the show notes to our voicemail box.

Joe:

Leave us a voicemail.

Joe:

Tell us your name, your question.

Joe:

Maybe someday we'll feature you and the answer to your question here on FinOpsPod

Joe:

And that wraps up this episode of FinOpsPod.

Next Episode All Episodes Previous Episode
Show artwork for FinOpsPod

About the Podcast

FinOpsPod
Advancing FinOps Practitioners in Podcast Form
FinOpsPod connects practitioners with the rest of the FinOps Foundation community. Real world practitioners will share their experiences and the Foundation team will share the latest news about the community. Learn more about the FinOps Foundation at www.finops.org.