How to Optimize Public Cloud Resources with Cloud Cost Management (CCM)

Christine Morris: Today is our sixth MasterClass. We’re going to talk about Cloud Cost Management. Just a quick agenda: We’re going to do a little welcome and intros. And then I’m going to hand it off to Ian, our resident asset expert, and he’s going to talk about why your cloud resources are assets too, dive into a little bit of detail on the features of Cloud Cost Management, integrating that with those major cloud providers, managing and optimizing your cloud resources, and then some next steps and Q&A.

So a little bit about Ondaro: We are a pure play partner. All we do is ServiceNow. We live and breathe it every single day. Most of us are ServiceNow groupies. You’ll see there on the left, all of our practice areas. We have deep expertise. We don’t really hire generalists. We hire people with expertise in their field.

And so in addition to all those product areas, we really have these three key pillars of services that we provide: Business transformation. Organizational change management. A big one that we’re doing a lot these days is AI readiness. We like to say we just turn it on and go, but we want to make sure that you are ready for it. It’s not a won-and-done kind of thing, all the way up to our award-winning UI/UX design portal designers. In 2024, we were Portal of the Year for ServiceNow. It’s something that we’re very proud of. And then as well as some of our ongoing support. So we do day-to-day support, enhancement services, product management for some large App Engine stuff. So lots of good stuff provided by Ondaro.

I’m Christine Morris, so I am senior director here of consulting services. So I lead all the amazing folks like Ian who are specialists in their area. Been in the ServiceNow ecosystem for a decade. Love the platform so much that I changed my job, and ServiceNow is all I do. And I like to help folks from making some of those same mistakes that I made early on in my ServiceNow career. Ian?

Ian Cahall: Yeah. Ian Cahall. I’m associate director and principal architect for our ITX practice. So, ITOM, ITAM, and security and risk are the spaces that I’m focused on. I’ve been working in and around ServiceNow for a little over a decade. And looking forward to this session with you guys.

Christine Morris: So a little bit of housekeeping here. We love to interact and engage with you. Our goal of these sessions isn’t to sell you products. It's to help you learn. And, in many instances, we learn together. If you want to come off mute and share some information or ask a question, we welcome that. You can post questions in the chat. If you need help, use the chat to let us know. And then if you need captions, if you click on the More button there at the bottom of Teams, you can turn on live captions.

So before we dive in, just a refresher. I think some of you guys have been with us through a lot of the sessions. But we’ve got a host of CMDB sessions that we’ve done previously on everything from governance to the most whizbang cloud portions of that that you can check out. We’ll post the link in the chat.

And then as I said, this is our sixth session for the ITAM MasterClass. But if you’re interested in some of those other topics, you can go there and take a look as well.

And you guys know I love my surveys. So let’s kick us off with a little bit of survey. And we’ll respond in the chat. So today’s poll is “Have you heard of Cloud Cost Management before?” And (A) “Yes, we actively practice it as part of our software asset management program.” (B) “Yes, we haven’t done much about it or looked into it further.” (C) “Never heard of it, but that’s why I’m here.” (D) “I thought CCM meant ‘Constantly Crying Machine.’”

Oh, wait, Lori’s got a B. Love it, Lori. She’s interested. Lori’s one of our all-time—she would get the award for most-attended MasterClass sessions. We’re old friends now, right, Lori? Connor says B. Tito says B. Yeah, lots of folks interested in wanting to understand more. All B’s. Love it. Good. That’s why we’re here. All right, well, let’s dive right in.

Ian Cahall: Thank you so much. Yeah. So, the theme of today’s session is going to really center around this next point that I think it’s—I think for folks that have been working in and around asset management or, really, hyper-focused on cloud in whatever form or fashion that may be, this probably is going to resonate pretty well. But I think the message is maybe not as well spelled out in other areas. And certainly, if you’re dipping your toes into Cloud Cost Management, the understanding that your cloud resources are assets too, I think, is a really important one. And so, we want to frame the rest of what we talk about today in that context.

And the reasons why we look at cloud resources as assets just like your hardware and software, cloud resources have a lifecycle. Their costs are tied closely to when and where they’re at in their life cycle and how they’re currently being utilized. We can optimize those resources and what we spend on them by analyzing that usage. And they’re governed very often by enterprise agreements that dictate who can use them and for what reasons just like software assets are. And in many cases, if you really boil down cloud resources and how they’re used, they are pretty effectively just virtual hosted versions of what we would otherwise be talking about as a hardware asset or a software asset, depending on whether we’re thinking about infrastructure as a service or platform as a service.

And so when we shift our thinking about assets in this way, especially in this cloud space, the reasons why we want to do what we’re doing from a Cloud Cost Management perspective become a lot more straightforward, I think, and a lot easier to not just wrap your head around from a thinking perspective, but certainly to build that business case around why you need to be applying some management processes to these cloud resources.

And really quickly, when we talk about cloud resources as assets, one of the things that’s really important—and if you guys have attended any of our previous sessions, you’ll find this very familiar, because we’ve certainly talked about it a few times now—within ServiceNow, your asset and CI records are joined records. And this is really important because when we think about all of the process investment that we put into your CMDB when it comes to things like discovery or how these CIs are being treated through your ITSM processes—whether that’s request management, change management, problem management—all of those processes also apply to your assets. And when we think about Cloud Cost Management, we want to extend that even further into these cloud resources as well. And so things like scheduled jobs and scripts that keep your CIs joined to your assets and vice versa and keep fields synced with one another are super important in the cloud space as well.

And this is also valuable when we think about the workflows and the forms that we’re using to orchestrate these things within the ServiceNow space. Very often, if you guys are already making use of ServiceNow’s Cloud Discovery, your cloud resources will be created as CIs first. And with CCM, we’re going to then add on that asset layer and continue to manage it as such.

So we’ve talked about Cloud Cost Management for a couple of minutes now. But what is Cloud Cost Management really? Cloud Cost Management is another tool within the ServiceNow IT asset management toolset. It is, in effect, the process of overseeing that full lifecycle of your cloud resources and their associated costs so that we can, hopefully, and in many cases, reduce wasted spend related to the assets, as well as try to maximize our investment in the cloud space and make sure that we’re getting the most out of any kind of migrations. And while cloud has been around for a little over a decade now, in many cases, organizations have only really started to dip their toes in that cloud journey over the last five or so years, certainly post-pandemic. And as those organizations that are a little bit newer to the cloud space—and even those that have been working in and around it since day one—if you’re not applying these asset management principles to the cloud resources, there’s probably a lot of opportunity to, again, make sure that we’re spending the right amount of money on those resources, not wasting spend, and really adding the value that cloud should bring to our environment through these processes.

And so as we talk about this a little bit further, the things that you should be asking yourselves are how do we spin up and down cloud resources within our organization? Are we doing anything, and if so, what are we doing to optimize cloud spend today? And what are our cloud budgets? Who within the organization is responsible for paying for those budgets? Because all of these elements drive how we make a lot of the decisions around when and where to do some of that optimization. And, again, when we’ve got that context built into what our goals are and what we’re trying to achieve here with CCM, all of this becomes a lot clearer.

And so, again, I want to make sure that it’s clear, though, that as we talk about cloud—and cloud, when we think about asset management is one of a very diverse toolset for IT asset management. And if you guys have attended any of our previous sessions, we’ve talked about pretty much all the other categories within this graphic. We’ve talked about hardware. We’ve talked about software. Our previous session was on enterprise assets. And so today we’re rounding out this space by talking about the cloud area.

And as we get a little bit further, we’re going to talk about how cloud interacts with some of the other pieces of this puzzle—especially software, though. And you’ll note that cloud is within this third of the half circle here with software, and that is incredibly relevant. And we’ll talk a little bit more about why here in just a moment.

So, when we think about how to consume CCM, and as we talk a little bit more about the ways that CCM works, this will become more relevant. But I think the things that a lot of organizations probably miss about Cloud Cost Management when they’re considering whether or not this is something that makes sense for them is that Cloud Cost Management really exists in two different form factors:

The first one is it exists as a standalone module. And this can make sense for organizations that have a large proportion of cloud resources compared to on-prem hardware infrastructure or on-prem installed software. And the reason for that is if you’re not doing as much hardware asset management or you’re not doing as much software asset management, Cloud Cost Management on its own could still be relevant in those cases, again, if a significant proportion of your IT spend is living in that cloud space. As a standalone module, CCM does benefit from a mature CMDB, but it doesn’t require one strictly. Again, like we talked about previously, your cloud resources, if you’re using Cloud Discovery, will initially be created as CIs. And those will live within the CMDB. But the rest of your organization and how mature the rest of your CMDB processes are aren’t necessarily going to inform how effective CCM can be. It does integrate really well with ITSM, your Portal and Employee Center for people requesting the spin up and spin down of cloud resources, as well as enterprise architecture. And the good thing about CCM is, since we are so focused on just those public cloud providers, it can be implemented in a single phase. Obviously this depends on your organizational maturity and how broad and complex your cloud environments are. But that’s the typical approach if we’re bringing a CCM into an environment as a standalone module.

On the other end of the spectrum is deploying CCM as part of Software Asset Management Enterprise. And for those of you that don’t know this already, with SAM Enterprise, Cloud Cost Management is actually an included module within your entitlement. And the reason why this is valuable—and again, I alluded to this with the previous slide—cloud resources are managed very similarly to software assets, especially if we get into some of the software licenses and subscriptions that are largely consumption-based. Your cloud resources, generally speaking, are going to have a very basic licensing structure. And then most of your billing for cloud resources is going to be on things like uptime or things like actual transaction utilization. Software assets can add context to how and why some of your cloud resources are being utilized, especially if they are cloud-hosted softwares or SaaS software. And depending on your organizational structure and where you’re at along the SAM adoption continuum, if you will, oftentimes, we’ll go from a SAM foundation into layering over your cloud processes and Cloud Cost Management.

So again, there are a couple of different avenues that you can take when it comes to adopting CCM. And again, it really depends on where you’re starting from and what the landscape of your IT environment looks like.

So, really quickly, I want to touch on Cloud Cost Management roles because this will become relevant as we talk about how some of the features within the toolset work. At the very top of your Cloud Cost Management totem pole, you’re going to have somebody that we call an insights admin. From a ServiceNow role-naming perspective, that would be your CCM admin. And they’re going to oversee the variety of different activities that are going to go on within Cloud Cost Management.

On the one end, we’re going to be super, super focused on just spend. And that’s going to be really focused in on by somebody in a spend admin role. And that could be backed by somebody in a cloud integrations admin role. And the spend admin and the cloud integrations admin, these are two individuals that could be one person, but largely speaking, would likely be two folks. Your cloud integrations admin is going to be the person that’s actually helping deploy and maintain your integrations between Cloud Cost Management and those cloud providers. And your spend admin is the one setting the structure for the roles and the rules around why we do spend, things like budgeting, those sorts of things. And it’s going to flow into your actual net users. And we’ll get into that in just a moment.

On the left side, we see our insights owner. And this is somebody that has specific visibility into things like spend ownership and spend optimization. And the reason why this is on the inside side is we’re thinking about your cloud cost insights. One of the key components of Cloud Cost Management is spend analytics. But it’s also things like budget management. It’s also things like business hour management. And so that insights owner is the person that’s taking that organizational piece aside from spend and feeding data back into your organization. And then from there, we’ve got a number of different user type roles, like budget user, insights user. And these are all folks that can see certain things, that can interact with the data, but they’re generally not in charge of setting those. And depending on, again, the size and scope of your organization and the size and scope of your cloud environments, some of these roles are likely to be consolidated.

So one of the things that I want to make sure is clear is for some of the smaller organizations that see this as potential value, what you shouldn’t take away from this slide is that, “Oh, man, I need four or five or six people to be successful in this.” Usually, these are fractional roles that are combined with other things in your organization that are happening. It’s just that, from a cloud perspective, this is their level of focus.

Christine Morris: Yeah. And the other thing I would add, managing cloud resources at an enterprise scale is rarely a technology problem. It’s typically around governance, visibility. I think back to, I don’t know, telling my age, 15 years ago, when cloud was really starting to become big, it was all about we’re going to reduce costs, we’re going to reduce costs. And we’re seeing a lot of people saying, “Where’s the cost reduction?” We’re moving at such a fast pace and spinning up servers that it’s hard to have that control. And that’s a big part of what this platform or this feature introduces. You’re not just chasing things down anymore. It’s actually bringing you the information that you need to really make those financial decisions.

Ian Cahall: Yeah. Agreed. Absolutely. Okay. So I think we’ve got another poll.

Christine Morris: Oh, my favorite. All right. Who’s ready? All right. We’re going to respond in the chat here. “Who is responsible for managing the cloud spend in your organization?” (A) “A clearly defined financial ops or governance team.” (B) “It’s shared between IT and finance.” (C) “Teams manage their own budgets.” And (D), which is probably more frequent than we’d like, “It depends on who gets the escalation.”

We’ve already got us a D. Yeah. Lori says, “B or C, a little bit of both.” Yes, that’s quite common. Lots of times it’s finance beating on the door, “This wasn’t budgeted.”

Ian Cahall: Right.

Christine Morris: All right, well, let’s go ahead and hop on to the next slide, Ian.

Ian Cahall: No problem. So, next up is the key component of how Cloud Cost Management really works. And this is building those integrations with your major cloud providers. And in particular, we’re really focused on the big three cloud providers. And this is where, across these three, we look at the general cloud spend. From an enterprise perspective, these three platforms make up between 60 and 65% of all organizations’ annual cloud budgets. Many organizations are living in one or two or maybe three of these worlds. And so the important thing to note is while a lot of these cloud providers provide different services, a lot of them fall into three core buckets, which are going to be your storage, your compute, and your database. And then, of course, there are a lot of supplementary services, including things like AI, that are coming out of the woodwork. But the reason why we call this out is as you expand into multicloud environments, whether you’re starting from Azure and then branching out into AWS or—again, if you’ve got all three, the challenge here really does become that while we’re largely talking about very similar types of resources and types of outcomes that we’re trying to get from our cloud environments, the naming conventions, the billing methodologies, the access, processes, the way that these platforms do their security, the way that these platforms do spin up and spin down of resources, they vary slightly in between all three of them. And so, again, if you’re in a single cloud environment, and it’s a relatively small compact space, it’s a little bit easier to get your arms around. But as you grow that or you go into multicloud, this is where CCM’s value really starts to shine, because you can start to compare apples to apples without having to jump from the AWS billing screen to the Azure billing screen.

And even more critical is for those larger organizations that have multiple cloud organizations within their cloud environment, all of these things get multiplied by that as well. And so it’s not just, “Hey, we’ve got to look at our Azure spend,” but it’s Azure spend part 1, Azure spend part 2, Azure spend part 3. And so, again, as we’re trying to wrap our arms around these different pieces and how they change and how they vary, having something like Cloud Cost Management, which pulls it all into one central location and it gives you that A to B and A to A comparison between these resources becomes super valuable.

And we’ll quickly add another quick poll.

Christine Morris: So this one is, “How unified is your visibility across AWS, Azure, and Google Cloud, or other cloud providers? Are there others?” (A) “Single pane of glass across providers,” everyone’s dream, and I’ll be shocked if we have any A’s. (B) “Separate dashboards, but centralized reporting.” (C) “Provider-native tools only.” Or (D) “A combination of screenshots, hopes, and dreams.”

Garrett’s having a D day. We need to get Garrett some support.

Ian Cahall: Yeah. Sounds like it.

Christine Morris: Yeah. Brian’s using provider-native tools. Anyone else want to share what they’re using? But I suspect a lot of screenshots and hope.

Ian Cahall: Yeah, it’s pretty typical. So, the thing that we want to focus on here when we’re talking about getting those integrations stood up, the integrations themselves actually are pretty straightforward. And this is going to be a rarity where, oftentimes, if we’re talking about other areas of the platform, we’re talking about integrations, this is generally an area where we’re probably going to say, “Hey, let’s pause and be careful.” And obviously take this with a grain of salt. This gets more complex the more layers we add to it. And so, again, as we talk about, “Hey, I’ve got all three of the big three providers, but I’ve also got multiple organizations with each provider,” you have to multiply these steps by that. And so it does introduce the opportunity for a little bit of either human error or confusion as far as how we’re getting these things set up.

But, I will say that with the cost management guided setup, integration for CCM is one of the rare modules within the platform where we’re less concerned about getting the integrations set up. We’re more concerned about what happens after. So, if you’re not familiar with guided setups, this is something that ServiceNow started rolling out a few years ago, and it’s made its way to Cloud Cost Management. And with the Cloud Cost Management guided setup, it basically walks you through the foundational steps to get integrated with one or more of those big three providers. It’s going to walk you through activating the necessary plugins. It’s going to help you configure those provider integrations and set your basic preferences for how CCMs should behave. So, again, we’re talking about very foundational-level, “Hey, here are where we expect to see our spend things, and here’s where we’d like to see some action be taken.”

What you’re not going to get with guided setup, and where you may need help from a partner in getting Cloud Cost Management set up, are going to be things like establishing your Cloud Cost Management strategies, building and refining those cloud budgets against not just your own internal expectations, but also benchmarks for organizations of your size and also rolling out an effective tagging and categorization strategy that works well with your broader environment, whether that’s CMDB, enterprise architecture, or, like we talked about earlier, if you’re layering this over your software asset management with SAM Enterprise, this is also something to consider.

And so from here, we’re going to get into some of the specific features and the way that some of those things work within Cloud Cost Management that can help you drive some of that optimization. And I think this is really where the rubber meets the road. Because once we’ve got those integrations stood up with your big three cloud providers, we’ve now established that data flow.

And those integrations look a little bit different depending on which provider we’re talking about. With AWS, it’s more straightforward than something like a GCP where you’ve got to create a couple of different connections with billing and with some of your resource telemetry, those sorts of things. So it’s important to keep that in the back of your mind. But again, assuming that we’re able to get those integrations off the ground with guided setup, we’re pretty happy with the data flow that’s coming into our environment. We now need to start making use of it.

One of the things that we really touch on is—again, we just talked about how the cloud provider integrations work. Right now, today, they’re only available for AWS, Azure, and GCP. And so, like we said, those account for about 60 to 65% of, broadly speaking, enterprise cloud spend. But we know that there are others. Oracle Cloud is growing and making pretty big gains in the marketspace. There are other ones, like IBM, Alibaba, VMware. And so, to make sure that you’re really fully rounding out the totality of your cloud environment and bringing that data back, we also look at ServiceNow Discovery as a tool to bring in data from those other cloud environments that don’t have a Cloud Cost Management integration prebuilt. The way that the Cloud Cost Management integrations work today is it’s a combination of account-level APIs and billing APIs to bring down that cloud spend and transactional data, whereas discovery is something where we’re looking to look at where our resources are at and how they’re being utilized, and then layering over some of our own spend data, much like we would with software asset management, where we would look at how software is being created and used. And then we’re applying our software entitlements. So a very similar process if you’re familiar with that.

As we jump into the concept of resource optimization, one of the things that we’re trying to do is apply rightsizing. And this is, for a lot of organizations, that holy grail of getting something of value back out of Cloud Cost Management. The way that Cloud Cost Management works is it’s going to consume that usage data from your cloud providers. So let’s say, for example, we’re looking at AWS. It’s going to pull back that usage data and that billing data. And it’s going to tailor recommendations made specifically to that provider. And, again, this is really important to understand because AWS and how they bill you and how your utilization is tracked is going to be different from something like Azure or GCP.

And so you are going to get specific recommendations that are focused on the provider that we’re talking about—in this case, AWS. And those recommendations are going to basically give you a summary of where you stand today. “Here’s what your recent usage has looked like. Here’s what that has cost you. Here’s your current resourcing size. And then here’s what we recommend.” And that’s going to be a different size to move to, your potential savings that will result from that, and when and how to make those changes. It’s going to solicit approval. So you’re going to have somebody in an admin or owner space that would get these approvals, much like anything else within the ServiceNow environment, the same kind of approval that you would get if somebody was submitting a request for a piece of equipment from the service catalog. And that approval will basically be you saying, “Yep, I agree with the recommendation. Let’s move forward with that.” CCM does have the ability to generate a change request if your process necessitates that. And it can go either through manual approval or auto approval, depending on the size and scope of that change.

And so, again, much like anything else, if you guys have your change management process stood up within ServiceNow, it’s going to follow the parameters that you’ve already set. This is some place where I would recommend some tweaks just to make sure that it makes sense and the right audience is involved, obviously. But this is one area where, again, based on your current process, your resource owner will get that change request approval. And as long as they approve, a job will get kicked off. And that job will actually send the information back to the cloud provider and make those resizing adjustments. And then it’s going to provide visibility on the actual performance of that recommendation. So, again, the previous state when it made that recommendation, it’s going to say, “Hey, here’s what we expect as far as the savings that you might see and the changes that we’re going to make.” And then on the back end, it’s going to come back and say, “Hey, we made that change. Here’s how we performed against a recommendation. We did better than we thought, we did worse than we thought, or we’re right on target.”

But it doesn’t stop there, right? Because this is a continual process. So once those recommendations are in place, we see how they’ve played out, it’s going to come back and continue to water test those changes that it made previously and make continuous recommendations on, “Hey, actually, let’s maybe tweak this a little bit more, or let’s keep it as is because it makes sense.”

So this is a largely automated process outside of, again, getting that integration stood up and then making a couple of approvals throughout your process. Which is super helpful, right? Because, again, when we think about the size and scale of your environment, outside of you going into your environment and saying, “Hey, I took these screenshots,” or whatever the case may be, now you’ve got one place that’s autonomously checking these things and using, again, benchmarks that we’ve got, both for your organization as well as what ServiceNow knows from all of the other customers using Cloud Cost Management as what makes sense and what you can do within each cloud provider’s scope.

The other thing that we can do when we’re trying to optimize resources is identify unused machines. Now, obviously, this is a little bit more straightforward than rightsizing. But again, the goal here is to largely automate this process rather than have somebody within your environment having to look at telemetry and identify these things on their own. So much like with rightsizing, again, we’re going to get that data in from our integrated cloud provider. And it’s going to come up with a recommendation. And this is going to be based on who is largely set to be in charge of working through unused or unassigned resources. But basically, they’re going to say, “Hey, you’ve got this virtual machine,” or “You’ve got this storage unit. It’s been sitting out there, but no transactions have been logged against that. Nobody’s signed into the virtual machine. It hasn’t been run in two weeks or a month. We should probably look at spinning that down or changing the allocation for it.”

And this will be super familiar to anybody that has been working within software asset management because this is very, very similar to how a software asset management reclamation rule works. Again, much like with rightsizing, we’ll send an approval to the person that’s in charge. Again, this is role-based. So could be an admin, could be somebody in that insights owner role. But basically, they’re going to be given those insights and given the ability to say, “Yep, that’s great. Let’s go forward with your recommendation,” or, “No, let’s wait for the moment.” And then again, the system can automatically generate that change request. The change request will go through the appropriate approval process, either via manual approval or auto approval. And then it’ll automate the decommissioning or the deallocation of those unused resources. And again, much like with rightsizing, you’ll get some follow-up reporting on how that performed, what did that do as far as your cloud spend, how did that impact your savings. And again, this is something that runs continually.

Now, obviously it is a little bit different when we turn off an unused device. We don’t have to keep tracking that one. But if it then appears again on a list of unused devices, then we know that, hey, let’s probably react that or something to that nature.

So the other thing to take note of here is that there are a couple of options for ongoing resource optimization for just net savings. And this does vary a little bit by cloud providers. But there are two things that cloud providers often offer in the form of resource reservations and savings plans. And basically what these are is resource reservations are basically pre-buy discounts where you say, “Hey, I know that my usage is going to be X amount over the next month or quarter or year.” So we’re going to pay for that up front. And we’re basically going to reserve these things. And by doing so, we’re basically acquiring savings.

And there are a lot of different examples of where we’ve seen this outside of the cloud space. Oftentimes, your hardware OEMs will do similar, where they’ll say, “Hey, if you buy a big order from us right now, we’re going to give you this cheaper rate. You don’t have to worry about it later, based on our understanding of your usage and that sort of thing.” And so cloud providers will often do this.

And what CCM does is it actually looks at your available options for these resource reservations and can help you proactively grab these resource reservations without having to wait for somebody to go through and do the actual manual measurement of “What do we think we’re going to use for the rest of the year?” It’s going to do this based on the data that it has from your integrations when we look at your historical usage, as well as whatever usage you’ve had while you’ve been using Cloud Cost Management.

So, the great thing is that for a lot of the cloud providers, resource reservations are always available. They just fluctuate in terms of their value and potential savings. So Cloud Cost Management will continue to look at where those reservations are available and where it thinks that you’re going to have that usage in the future to achieve that savings.

Savings plans are very similar, but they sometimes have variable terms or requirements. And so much like with resource reservations, Cloud Cost Management will continue to look at your usage and see where savings plans may be applicable to your environment and where they may be advantageous over something like a resource reservation or just a good choice in general for your current usage habits.

Savings plans aren’t always 100% pre-buy. They’re often a commitment to use a certain amount of resources over a set period of time. And as long as you do so, you’ll get them at a reduced cost. So the ability to opt in to those savings plans is largely manual, in many cases, when you don’t have something like CCM. But CCM will look at where those savings plans are being offered and help you identify where they might make sense for you to utilize them in the future.

Something else that I think is pretty good to know, one of the things that Cloud Cost Management does give you the ability to do to help optimize your cloud resources—and this is really great for those large national or multinational organizations that are using cloud services—Cloud Cost Management gives you the ability to define your regional business hours. And this can help identify ebbs and flows for where folks are using your cloud resources within the scope of those times. And it can also help drive automated schedules to spin up and spin down resources based on when we expect daily peaks and valleys in terms of usage.

And so, again, a great example of this is let’s say you’re on the East Coast in the US, you establish your business hours as 8 a.m. to 5 p.m., Monday through Friday. During those hours, you’re going to expect your typical peak usage. And so, outside of those hours, Cloud Cost Management can actually start spinning down resources that are usage based or uptime based so that you spend less on them. But it can also identify spikes that occur outside of those typical business hours and give you notifications to automatically handle that and potentially spin up resources to react to those spikes. This is super helpful. Again, if you’ve got many different time zones and different organizations in different regions and they’ve all got different business hours, somebody manually managing this can be, I mean, you can imagine the burden. And if any of you are doing this today, I’m sure you know exactly what I’m talking about. So, in this global context based on multiregion cloud, if you think about something like AWS, US East 1 or 2, where you’ve got some resources, and then you’ve got some in US West, and then you’ve got some over in Europe, those resources can be defined by these business hours for that locality as well.

One thing that I will say is that it is important to make sure that as you’re building out these business hours schedules, it is really important to take into consideration the realities of your business. We tend to, from an asset management perspective and an IT perspective, get very tunnel vision on, “Hey, we can do this, and we can save a bunch of money,” and those sorts of things. And that’s great. But it is also important to know that if we know that there are frequent exceptions to some of these business hour rules or that just because we work 8 to 5, that doesn’t mean that there’s not a second or third shift that’s doing something different. It’s really important to make sure that we keep those things in the back of our mind as we build out some of these business hours. But I will say, too, that, again, thanks to the ability to react to those spikes outside of the schedule as we build, usually your risk is pretty low. But again, I would say, in anything we do, from this space, it is really important to take the broader business impact into consideration so that we’re not inadvertently causing somebody to have to wait 15 minutes for their VM to spin up or something like that.

So this is where we get into budgeting. So, as part of good financial housekeeping—and we think about the FinOps approach to Cloud Cost Management, one of the things that we do have the ability to do within CCM is build out our budgets. And these budgets can be holistic. These can be your entire organization, your complete cloud budget. Or it can be more specific, focused budgets, depending on what it is that we’re thinking about. And you can see some examples here on the screen where you’ve got your AWS monthly budget, you’ve got your Azure monthly budget. And these can all compile into a larger budget.

But the idea here really is that we’re able to, number one, provide some underlying data that’s required for forecasting and what we think will perform against our future budgets. And it can also be set up to work within specific timeframes. So we see here, again, we’ve got monthly, we’ve got annual. But there are other time frames that we can apply to this as well. Quarterly. We could do half-annual. We could do three- or four-year budgets. And we can also focus these budgets down on specific departments or business units within your organization to better apply what we think each group should be spending.

While we can go into budget overage, the other thing to understand is just because we established, “Hey, we’ve got $10,000 that we can spend on AWS this month,” that doesn’t mean that CCM is going to go, “Oh, I don’t care about what we’re doing from an AWS perspective until we hit that budget.” CCM will always continually drive those optimizations that we’ve talked about. And the goal, obviously, is always to come in under budget if possible so that we can actually show the benefit of the savings that we’ve got here.

The great thing about this budgeting as well is that it can be linked to your other financial systems of record. So let’s say that you do a lot of your financial management in SAP or any number of other tools. Those budgets can be imported from those third-party tool sets to help frame up how we do Cloud Cost Management. Certainly super valuable if you’re already integrated with something like an SAP and you’re doing other financial transactions between ServiceNow and SAP. Super easy to expand that to bring over some of those budgets if they exist in those places.

And the other thing, too, to quickly note here is if you do have a budget set, you can set up notification thresholds. So let’s say you go through 75% of your budget or 90% of your budget or 100%. These things can kick off overage notifications or actions. That action could be, “Hey, we want to potentially limit the spin up of additional resources for this category or this group. You do have the ability to tailor some of the outcomes of what happens when you hit your budget thresholds.

The other thing that’s super important when it comes to the effective management of cloud spend is the ability to tag your transactions. Tagging is something that is very familiar for a lot of folks that have done a lot of other FinOps but maybe is less well understood if you’re more of a traditional IT technologist or cloud person. The idea of tagging categories is something that does live throughout most of the big three cloud providers and even a lot of the other ones that are out there. What tagging does, both within your cloud platform and within ServiceNow CCM, is it gives you the ability to logically group different types of resources and different types of transactions to make sense of how and why it’s being used beyond just, “Hey, this was an Azure transaction,” or, “Hey, this was an AWS transaction.” We can get really specific about some of these things.

We do have the ability to create tag categories. And you can see here on the screen a few of the default ones. But it does make sense for many organizations to create some additional tag categories to, again, better group how and why some of these things are happening. And you can see here that we do have some of them, and one of them in particular we’ll talk a little bit more about with the AI service one here in just a moment. But some of the other ones obviously are your business units, your cost centers, your departments, specific application feature or specific application team, those sorts of things. And so within these default tag categories, we can then create specific tags. And so a great example would be, under your business unit tag category, you might create an R&D tag. And that’s how you know that, hey, these transactions or these resources are being utilized by this group.

This is super helpful for a number of different things, but in particular, a lot of organizations, as they mature their Cloud Cost Management program, are looking to allocate their costs effectively to those other departments or other groups so that they can rebuild that stuff to those groups’ specific operating budgets. And so tagging can really help in the effort of achieving that. The great thing with these tags is, if you’ve got tags already built into your cloud environments, ServiceNow will import those. And then if you put tags on some of these things within ServiceNow, under certain circumstances, ServiceNow can send those tags back to your cloud provider so that they appear within your cloud environment as well.

Christine Morris: Just a second: Tito had a question, Ian. “What does the two asterisks beside AI Service mean or clarify?”

Ian Cahall: Yeah. So we’re going to get into that. I’ve got a slide that I think is the next one where we’ll talk specifically about how we can use the AI Service tag.

So with all these tags, once we’ve got our tagging built out—and I will say just as a big asterisk over the whole tagging space—this is something that is, once you really get into Cloud Cost Management, FinOps, this is something that is a continuous activity. We’re always going to be tagging things. Because even as you get into a space where you’ve tagged 95% of your environment, as we all know, these cloud environments are constantly shifting. The types of resources that are available are always changing. The cloud providers are always bringing out new products. And certainly now in the post-AI world, we’re also seeing a ton of injection of new AI capabilities within the cloud spaces. And so, as a result, many of those things that come in may not automatically be tagged.

Now, this is something that is also potentially a use case for AI to apply some more effective and proactive tagging. But it is something that, again, I would expect most organizations will always have a certain subset of their time on Cloud Cost Management spent on making sure that tags are applied appropriately. And when we compare that with the amount of time that goes into the overall management of this cloud spend today, it’s minuscule, but it is still something to understand that’s going to continue to be an ongoing effort.

And then, finally, once we’ve got these tags pulled together, Cloud Cost Management spending analytics helps, again, break down and compare how tags are performing against one another. And so, if you’ve got a need to look at how your different business units are each spending money within the cloud space, or you want to see how specific services or specific application features are driving cloud spend, you can actually pull those up within the spending analytics view and look at those side by side or break those down into subtags. There’s a huge amount of flexibility and how you can make use of those tags to get the most out of this visibility.

And then, finally, Cloud Cost Management for AI spend. So like I said in the previous slide, one of the cool new things that you can do with Cloud Cost Management as of, I want to say, Washington update, is you do have the ability to track your AI spend in the cloud. And so this is achieved through those tags, just like we talked about. And you do have the ability to apply tagging to your AI services within your cloud space and then make specific insights in how those AI services are being used. So you can tag things like Gemini in GCP, Copilot or GPT in Azure, Bedrock in AWS—and you can use these to look at and measure and forecast your AI spend within spend analytics. You can then also use this data to create action on spend, much like we’ve done with our other areas. So you can create specific AI budgets and make use of those budgets for tracking overages, turning off certain services if you need to, and making sure that we’re keeping control of this AI space.

Now, obviously, this is limited to your cloud providers. So if you’re an organization or primarily using cloud-based AI rather than going directly to OpenAI or Anthropic, this is a great option. And many organizations are looking at cloud as the preferred way of adopting AI because of the additional telemetry and because of the additional control that you get that some of the AI frontier labs are not natively providing.

And you can see here in the bottom right-hand side of the screen a specific case study on how we would track Gemini spend within GCP. So we’d spin up that integration with GCM and Google Cloud. We would set up our AI service tags within Cloud Cost Management. We would tag our Gemini services with that AI service tag. And then we continue using Gemini just like we normally would. But we would then view an action that’s been using the Cloud Cost Management Spend Analytics.

Christine Morris: All right, Ian, our last poll. So we’ve heard a lot today. “Do you think Cloud Cost Management is something you need to look into?” (A) “Yes, you’ve opened my eyes, and I see it’s necessary.” (B) “It’s going to get on the list of things, and hopefully it gets done this year.” We all have that big list. (C) “I still don’t really get what it is. Help me understand.” And (D) “I’m still looking into ITAM in general.”

So, Lori’s like, “Yes, tell me more.” Brian’s the same.

Ian Cahall: Awesome.

Christine Morris: Yeah. He needs to get the cloud team on board. Lots of A’s. It is truly—and then Lori says, “Also D.” And this is very much like SAM in the beginning. It can pay for itself if you just think about those elements. So it’s one of those hard conversations: “Oh, we need more licensing. But hey, wait.” Or, as they say on the made-for-TV, “But wait, there’s more!”

If anybody is interested in spending some additional time with us, don’t hesitate to reach out. I am fairly certain that there will be a link or an email in the chat in a moment. Do you want a quick assessment? Do you want to see are we ready for this cloud piece? We’ve got a very low-cost assessment approach called Clear Path that we can support. Are you like, “I’m done. Let’s do it. Come on.” We are here for you guys and would love to hear more.

And then just a final reminder, we’ve got our MasterClass series. So if you’ve not had a chance to look at any of the CMDB—which we all know CMDB and asset are such close friends—take a look at that, and we’ll be coming more with more.

We appreciate you guys joining us today. If there’s something that you’re like, “Oh, hey, what about this, Ian and Christine? Let’s do this next.” We’d love to hear your feedback. You can put it in the chat. You can reach out to us at that handy-dandy email that our assistant just posted. We’d love to spend some more time with you. Thank you, Tito. Yes, Ian is the man. We appreciate you guys joining.

Any questions? We got four minutes.

Appreciate it, Lori. We will see you soon.

All right. Well, it looks like no questions. Thank you all for joining today. And reach out if there’s anything we can do or you want to talk more about Cloud Cost Management or anything in asset or anything in ITSM or anything in general. Have a great day.