 Welcome back everyone to theCUBE's continuing coverage of SuperCloud 5, The Battle for AI Supremacy. I'm your host, Rebecca Knight, with that a great segment coming up here. We've got Peter Gubert, he is the Senior Director of Product Management at Aptio. Thank you so much for coming on theCUBE, Peter. My pleasure, Rebecca. So we're going to be talking about all things cloud financial planning. Peter, why don't you start by talking a little bit about how cloud financial planning is different from traditional IT planning? Sure, that's a great question. So traditional IT planning is basically a technology span. There's many different components of it and there's things like who are you going to hire, like your headcount plan, things that you're going to buy that don't have anything to do with cloud, like equipment, phones, various office supplies, facilities, et cetera. In other words, there's a bunch of costs that are generally a mix of fixed and variable, but there's things that you can plan out for. You get a certain amount of headcount budget for the year and you can kind of manage to that. On the contrast, cloud expenses are 100% variable. They're very dynamic. Even though you could build the best plan in the world that says this is exactly what we're going to spend for the next three months, see like you could have a viral event that makes everyone run to your website and all of a sudden you've spent 10 times more than what you thought you were going to spend. And it's just like that. It just goes out the door because just build directly to your accounts. So because of that, it requires a different set of techniques, if you will, in terms of managing it. And also because cloud expenses are now becoming increasingly more important, they're more largely used, they're being a larger expense item in someone's budget. And oftentimes organizations that actually contributes to their cost of goods. So it's literally something that affects their bottom line. So there's much more attention to it now and you can't apply the same kind of traditional budgeting and forecasting techniques that would work at like cycle times of once a year or maybe once a quarter every half year you might update it. With cloud expenses, you need to keep a very close tab on it. So it requires a different set of tools. Okay, so what are some of the goals and benefits for organizations for forecasting cloud costs? Sure, so today, most people are just approaching cloud costs as to, look, this is what I spent last month. So I'm going to expect, I'm going to spend the same or if I don't then, you know, like I'll try and figure out what that issue was. See if I can adjust my next month. So they're kind of managing it just months by months, but mostly by looking at what happened in the past. What that doesn't really, and so as a result, most of the tools today on the marketplace basically provide just what we call a trend-based forecast. It just takes what you've spent in the past and projects it forward, does some kind of statistical analysis on it to give you like a growth rate based upon your prior spending. Now the problem with that is it doesn't incorporate anything about what you know you're going to be doing. If you're planning on adding next quarter, 10 new workloads or expanding into a new region and deploying all your existing workloads there and a whole bunch of usage now is going to happen as a result. Like none of that's in your past spending. So you can't really, you know, forecast, you can't use a trend-based forecast for that. So the challenges that people have today are just producing accurate forecasts just because cloud spend is so dynamic and they don't have the proper tools to do that. They need to do it far more frequently and wait for their traditional IT spending if they're going to manage it more effectively and they need to manage it more effectively because in a more agile or shorter cycle time because it's so variable. So producing accurate forecasts is a big challenge. The lack of tooling to support really the finance role on the FinOps teams. Most organizations have moved to adopting FinOps as a best practice for managing cloud expenses and a lot of the tooling is basically dedicated for supporting the developer and the operations roles within that but the finance role is really limited to just providing views of spend. There's not a lot of great tooling to help people build consolidated forecasts. The finance people ultimately have to turn around every single year or, you know, every quarter, whatever the forecasting frequency is for the company and say, here's what our consolidated cloud costs look like and that needs to be accurate and they're challenged to do that today. Right, I mean, you really laid out the picture of what an exceedingly difficult task this is because cloud costs are so dynamic and organizations are really struggling to stay within their initial targets. So what is the answer here? How do you come up with the right solution and what are you providing to decision makers? Right, well, first you need a system that's going to actually be monitoring your cloud spend that's pulling in costs on a daily basis and able to aggregate them from all your different CSPs and give you views at a level that makes sense for your business. And of course, a tool like Cloudability does all that. But then second thing you need to do is you need to be able to generate a forecast from that that you can then not just, you know, that is a trend-based forecast. It's a reasonable place to start because that's effectively what your run rate looks like projected forward but you need to be able to make changes to that. You need to be able to add in new investments and update the costs that are in your run rate to reflect changes that you know are going to happen as a result of business activity. And it's not enough just to basically drop it into a spreadsheet and make edits. You ultimately want to capture why you're making these changes. You want to, in other words, move from a forecasting and kind of target setting to a planning exercise. And planning is the act of saying we're doing these investments is going to have these impacts on costs. We're making these changes as a result of this business strategy or this business activity. And then being able to stand back and look at that and say, okay, you know, if you're doing an annual planning exercise, does that make sense? Are those the right priorities? So you need a tool that's going to basically be able to support driver-based planning in addition to trend-based forecasting so that you can capture these details and make better decisions. That's how you achieve alignment with your limited funds. And once you've set that, you know, there's kind of two exercises that finance typical is through an annual budgeting exercise and then a regular forecast update process where they're monitoring what they've, what spending has happened relative to what they've planned to spend. And as a result of that, making adjustments. And this is really critical for cloud costs because they are dynamic. You have to move to a more agile kind of planning model. The budget is what you initially start with. There's some top-level envelope. Of course, the company's willing to spend for cloud expenses, but there's lots of variances that happen all throughout. If you do get that big spike, you know, in one area of your business that was unplanned, then you need to make adjustments perhaps in other areas. You need to be able to defer, for example, new workloads and new projects that were produced, new costs so that you can accommodate or absorb those types of expenses. And you need to be able to do that frequently. Every single month, take a look at it. So you can't spend a whole bunch of time manually aggregating up costs, you know, actual spending today and aligning to what your forecast is for each of the areas of the business. If you're gonna basically every single month or even every single week, look at how you're performing it. You need automation to help you do that. So much of the advantages that you're talking about are, yes, it's about simplifying the automation, but it's also about increasing information visibility and being able to communicate that information, loop in teams so that people understand where, what's actually happening and interpret it in certain ways. Can you talk a little bit about the conversations that you're having with customers in terms of how this is changing, how they do business, sort of what they were struggling with and how using these solutions has helped them? Sure. So this has been something that, you know, our cloudability customer base has been asking for a while. And we, for the first time, like in Apgu's history, we really leveraged kind of that interest to have a very extensive open beta. So we actually delivered a form of this product very early this year, like in the April timeframe. We spent the last nine months going through a very extensive beta process with them. And as a result, like we heard a lot of different stories about how people needed to plan their assets and what kind of impact they had. So for example, we had a very large financial services company that was literally running this entire process in spreadsheets. They had over 300 individual cost owners that basically own various applications or products that were contributing to cloud costs. And the finance team would have to meet with those when they pull together an annual forecast, would have to meet with every single one of those or a good portion of those, the top drivers of cost and manipulate their inputs. And by gathering all this stuff together into a single spreadsheet, they'd have to maintain it kind of off the books, if you will. So we had a lot of input from folks that were looking for how they specifically wanted to automate this process. And we took all that feedback in and that's been the result of what we have today in cloud financial planning. Capabilities that are really designed to help finance organization build a consolidated forecast through collaborative engagement with individual cost owners, not so that they have to have conversations but so they can create a consolidated plan, break it down into segments that preach the individual cost owners, share it out with those cost owners so they can put their own inputs in at the same time, have it be reviewable as a consolidated forecast and then use that to set budgets that they can measure from and then automated dashboards and reporting that show performance spend to date relative to what was planned in forecast with proactive alerting to tell people when their variances are large and they should come in and make some changes in the forecast. So these are kind of the tools that we've put in place in the product integrated directly in with all the other cloudability, powerful functionality that allows you to analyze what you've been spending on, how much uses you have, providing optimization recommendations so that when you have this new overlay of like, hey, you're projected to exceed your annual budget by 20% if you continue spending at this rate and we're sitting here maybe in June when you get that then you can go in and you can look at the various optimization possibilities you have to reduce your expenses going forward and capture that in the updated forecast. This informs everyone, right? That you've got a fix for that variance. It's not something that you discovered like on November that you're now 20% off and there's no way to make an adjustment to bring it back in line. It's something that we're giving you tools to find earlier and make corrections earlier. And all of this was direct result of a lot of engagement and input from our cloudability customers. The finance people and the roles that have been using in the FinOps organizations have been trying to use cloudability for this in the past. Right, I'm thinking about the finance team and sort of hearing about, oh my gosh, we're gonna have so much better visibility into knowing what's going on in our organization and where money's being spent and what's happening, what's our usage looking like. But I'm also thinking about the person whose job it was to deal with all those individual lines on the spreadsheet. Are you hearing anything about how it has helped them maybe devote their time to more interesting or more meaningful projects in the company elsewhere? Yeah, that's a great question. The fact that we've automated a bunch of things that used to be part of their job, right, means that which really isn't part of their job. Their job as a finance role is to basically provide transparency and visibility and cost, but then also control and help manage costs. And so when there are, and as we discussed with cloud, there are going to be variances, right? It's just, it's impossible to say to nail your note, like with headcount plans, you can nail your headcount plan. That's pretty easy to do, right? But with cloud costs, you don't have that much control. So you have to be able to react to variances. So that is the job of the finance team is to figure out, okay, we've got a big spend over here and it's completely justified. We need to continue to do the other things we're planning to do. Where is another area we can go take money from today? Take in the sense that, you know, like we can defer some of that spending, we can make a strategic decision to delay certain things so that we can afford to continue spending, even though we've had the experience in this other area. That's really what their job is, the solving problems. And when they spend all their time, like they do today, pulling together a spreadsheet that allows them to even have the conversation, then they have less time to actually fix the problems and have better. So what this means for the company is that they have more efficient management of their cloud budget. They have better alignment to what their strategic goals are at the end of the year. They've delivered the right things, despite the fact, the things that were most important to business, despite the fact that there were pickups or unplanned events along the way. That's what finance's job is for, is to help the organization do that. Well, Ray, it's allowing them to be more strategic in their role rather than reactive. So talk to me, this is kind of a fun question. What is the forecast of forecasting? What's the future for forecasting? I mean, what are you seeing? Companies are able to be more strategic. So in some ways, they won't even feel it because they just are acting, they're able to respond to information and then make decisions in a more timely real time, I should say, fashion. But what do you think is going to be the upshot of this in 2024 and in the years to come? Well, I think as with every area of business today, AI is going to play a huge role. So AI, of course, needs to be fueled by data. The better the data you can give it for, the better you can get help in making decisions. But ultimately, forecasting and planning are really decision support tools. I mean, you plan so that you are going to be able to accomplish strategic goals and cloud expenses are just one component of them. But as you said, it's increasingly a very important component. So the strategic planning aspect is being able to make better decisions at the time. There's the annual budget cycle where you're laying out what are the big things that we need to do, but then there's as you're in the year making those decisions that we talked about like where we have to react and their AI can play a huge role. It can basically help make surface up recommendation maybe even take automated actions to help like reduce workload or usage or switch to different RIs or cost configurations to do that first order of like, okay, how do I reduce my costs so that I can fit within the budget I was allowed? Or we can have the strategic conversation about how we might ship more budget here. So there's more opportunities for AI to get involved, taking advantage of customer specific data to make better recommendations. I think the other thing is that there's better tools that will continue to add. So today, if you think about it, what we've really done with cloud financial planning is we've added to existing trend-based forecasts and everyone's had the ability to driver-based planning and strategic plan. And to do that in a consolidated way with collaboration across multiple stakeholders, kind of that process, workflow aspect. But the next big thing is that people want to move to more healthier or better measures of performance. So just looking at cost is not enough. Unit economics is a better way. You're taking a look at what are your unit rates based upon some sort of demand metric that also accomplishes cost. So the next step for cloud financial planning is really to add in demand-based plan. So in addition to saying what the costs are, let me actually forecast my demand based upon my unit rates and how my cost structure has been evolving, all of it dynamic, then I can get a more accurate forecast of that. So there's different tools that will bring to bear. And then finally, there's like, from a bottom-up perspective, like everything I've talked about is more top-down, but there's a, you know, driven by strategic need. But there's also a huge amount of work that or planning that's done by the individual dev teams themselves in the form of planning new workloads. And today that's done using cost calculators, right? We've just shipped, or we're in beta on another feature, we call workload planning, which is really like a better version of all of the platform cost calculators. Why? Because it's a single interface that allows you to plan costs for any different CSP. It takes into account your pricing. But it's something that teams would use as they're building workloads to help them make better decisions, you know, about the resources they're planning on using to support those workloads, better costing decisions. But at the end of the day, it's also a great way of planning out what new workloads in detail, what their cost structure looks like going forward. So think about the ability to pull together many different workloads that have been estimated that are in development, running them through architecture reviews to decide, you know, if they're correct, but then using those costs from a deployed perspective, when those workloads are gonna hit your production data centers or production environments, what does that cost structure look like? So we wanna bring together all of these pieces of information, both from a bottoms up, dev driven perspective, and from a top down strategic perspective, into a, you know, a better planning tool, one that gives you multiple tools to fit the right job, trend based forecast, driver based planning, unit based, demand planning, et cetera. Well, this has been a really exciting, interesting conversation. I think better tools, better metrics, and of course a lot more AI in the years to come Peter. Thank you so much for coming on theCUBE. It was really fascinating. Thank you very much. I'm Rebecca Knight, stay tuned for more of theCUBE's coverage of SuperCloud 5. You are watching theCUBE, your leader in enterprise technology coverage.