1
00:00:08,000 --> 00:00:12,295
Hey everybody, and welcome back to the
Operational ITAM Podcast. I'm

2
00:00:12,320 --> 00:00:15,815
Bill Van Nort, and today we're following a
saving that made it into the

3
00:00:15,840 --> 00:00:18,465
presentation before it made it into the
accounts.

4
00:00:19,135 --> 00:00:23,490
The licenses have been cleaned up. The
change ticket is closed. The project

5
00:00:23,515 --> 00:00:28,290
report says the work is complete. Then
finance asks why the supplier is still

6
00:00:28,315 --> 00:00:29,480
charging the old amount.

7
00:00:30,075 --> 00:00:34,330
Nobody thinks that is their part of the
project anymore. Fortunately, the

8
00:00:34,355 --> 00:00:36,360
invoice has brought everyone back
together.

9
00:00:37,075 --> 00:00:40,460
Today, The Decision Table: Where Did the
Saving Go?

10
00:00:41,095 --> 00:00:44,430
Good morning, good afternoon, or good
evening, wherever you're listening

11
00:00:44,455 --> 00:00:48,870
from. This is the show where we take the
unglamorous machinery of enterprise

12
00:00:48,895 --> 00:00:52,260
technology and make it make sense. Grab
your coffee.

13
00:00:52,935 --> 00:00:57,710
In episode fifteen, we established who can
make the renewal decision. We gave

14
00:00:57,735 --> 00:01:01,875
that person evidence, options, and
conditions they could actually approve.

15
00:01:02,655 --> 00:01:07,670
Today we start after the approval. We are
going to follow one change until we

16
00:01:07,695 --> 00:01:08,780
can explain the result.

17
00:01:09,495 --> 00:01:13,370
The FinOps Foundation's Reporting and
Analytics guidance calls for comparing

18
00:01:13,395 --> 00:01:17,730
actual spend with the estimate behind a
decision. That's a useful starting

19
00:01:17,755 --> 00:01:21,830
point. The practical challenge is
explaining the distance between them

20
00:01:21,855 --> 00:01:25,560
without changing the original estimate
every time something goes wrong.

21
00:01:26,155 --> 00:01:30,550
My opinion, clearly labeled: the original
business case should stay in the

22
00:01:30,575 --> 00:01:35,490
file. Update the forecast, absolutely.
Keep the earlier version so the

23
00:01:35,515 --> 00:01:40,070
organization can learn from what changed.
Otherwise, every project eventually

24
00:01:40,095 --> 00:01:43,500
achieves exactly the number somebody last
typed into it.

25
00:01:43,835 --> 00:01:47,970
Let's use a fictional company and an
invented software agreement. These are

26
00:01:47,995 --> 00:01:52,970
illustrative U.S. dollar amounts, not
vendor prices or a client result. We'll

27
00:01:52,995 --> 00:01:55,660
follow a calendar year from January
through December.

28
00:01:56,190 --> 00:01:59,985
The company pays for a thousand
subscription seats at twenty dollars per

29
00:02:00,010 --> 00:02:04,285
seat per month. Twenty thousand dollars a
month. Two hundred forty thousand

30
00:02:04,310 --> 00:02:06,175
dollars for a full year.

31
00:02:06,850 --> 00:02:10,325
An assignment review finds that eight
hundred seats can meet the continuing

32
00:02:10,350 --> 00:02:14,805
business requirement. The proposed
reduction is two hundred seats, starting

33
00:02:14,830 --> 00:02:19,505
in January. At the same unit price, that
would remove four thousand dollars a

34
00:02:19,530 --> 00:02:22,395
month, or forty-eight thousand dollars
across the year.

35
00:02:22,775 --> 00:02:27,830
That is our original gross forecast. Gross
means before the cost of making

36
00:02:27,855 --> 00:02:32,310
the change. It is also conditional: the
quantity must be commercially

37
00:02:32,335 --> 00:02:36,890
reducible, the change must take effect in
January, and the remaining service

38
00:02:36,915 --> 00:02:38,360
must still meet the requirement.

39
00:02:39,135 --> 00:02:43,355
Before we follow the money, establish what
we're comparing. For this case,

40
00:02:43,715 --> 00:02:47,490
finance agrees that keeping the existing
service at a thousand seats and the

41
00:02:47,515 --> 00:02:51,770
same twenty-dollar rate is a supported
alternative for the year. We have the

42
00:02:51,795 --> 00:02:55,440
current invoices and an available
unchanged renewal to support it.

43
00:02:55,800 --> 00:03:00,035
The business requirement stays the same.
The reduction removes unnecessary

44
00:03:00,060 --> 00:03:04,955
assignments, not a department that has
closed. No price increase, tax

45
00:03:04,980 --> 00:03:09,320
change, currency movement, or service
downgrade is hiding in the comparison.

46
00:03:10,020 --> 00:03:13,740
Those assumptions keep this example
readable. In your own records,

47
00:03:13,900 --> 00:03:14,885
each needs checking.

48
00:03:15,480 --> 00:03:20,135
That agreed comparison is the baseline. It
tells us what the result is being

49
00:03:20,160 --> 00:03:25,065
measured against. Last year's payment,
this year's budget, a supplier's

50
00:03:25,090 --> 00:03:29,945
opening quote, and a forecast of future
demand are different baselines. The

51
00:03:29,970 --> 00:03:34,275
same invoice can look favorable against
one and unfavorable against another.

52
00:03:34,870 --> 00:03:39,405
If demand really changes, explain it
separately. Perhaps the company serves

53
00:03:39,430 --> 00:03:44,070
more customers or acquires another
division. Keep the approved comparison,

54
00:03:44,430 --> 00:03:48,965
then show an adjusted view with the new
scope and its evidence. Don't quietly

55
00:03:48,990 --> 00:03:51,795
rewrite the starting point and call the
difference performance.

56
00:03:52,500 --> 00:03:57,435
You also need the period. A monthly
reduction multiplied by twelve describes

57
00:03:57,460 --> 00:04:01,755
a full year at that rate. It doesn't
establish that twelve months of benefit

58
00:04:01,780 --> 00:04:05,245
occurred. We'll see that distinction
matter almost immediately.

59
00:04:05,900 --> 00:04:10,295
An easy place to lose that discipline is
the handoff between teams. The

60
00:04:10,320 --> 00:04:14,815
person finding unused assignments may
estimate an opportunity. Procurement

61
00:04:14,840 --> 00:04:19,400
may record a negotiated position. Delivery
may mark an action complete.

62
00:04:19,960 --> 00:04:25,075
Finance may report a recognized result.
Those are useful milestones, but they

63
00:04:25,100 --> 00:04:30,055
need their own dates and evidence. If all
four are labeled saved, the report

64
00:04:30,080 --> 00:04:32,625
stops telling you where the work actually
stands.

65
00:04:33,240 --> 00:04:37,275
Keep the original estimate alongside the
latest forecast and the verified

66
00:04:37,300 --> 00:04:41,475
result to date. If the original estimate
was wrong, leave a short

67
00:04:41,500 --> 00:04:46,275
explanation. If it was reasonable but
circumstances changed, document the

68
00:04:46,300 --> 00:04:50,755
change. You are trying to improve the next
decision, not arrange the columns

69
00:04:50,780 --> 00:04:52,865
so nobody has to discuss this one.

70
00:04:53,380 --> 00:04:57,855
The team finishes the cleanup later than
planned. January remains at a

71
00:04:57,880 --> 00:05:02,625
thousand paid seats. The signed change
takes effect on February first.

72
00:05:02,990 --> 00:05:06,785
There is another difference. The supplier
agrees to reduce the commitment

73
00:05:06,810 --> 00:05:11,005
only to eight hundred fifty seats. That is
the minimum in this fictional

74
00:05:11,030 --> 00:05:14,935
amendment. It is not a statement about a
particular publisher's rules.

75
00:05:15,570 --> 00:05:19,645
The authorized owner accepts that option,
and the team records eight hundred

76
00:05:19,670 --> 00:05:24,345
assigned seats against eight hundred fifty
purchased seats. There are fifty

77
00:05:24,370 --> 00:05:29,085
unassigned seats still being paid for.
They are available capacity, not

78
00:05:29,110 --> 00:05:30,835
another saving already achieved.

79
00:05:31,330 --> 00:05:35,005
Now we can explain the revised forecast.
We lost the planned

80
00:05:35,030 --> 00:05:39,270
four-thousand-dollar reduction in January.
For the remaining eleven months,

81
00:05:39,510 --> 00:05:43,625
those extra fifty paid seats cost a
thousand dollars a month above the

82
00:05:43,650 --> 00:05:47,805
original target. Another eleven thousand
dollars of the original forecast

83
00:05:47,830 --> 00:05:49,375
will not happen this year.

84
00:05:50,060 --> 00:05:54,695
Forty-eight thousand, less four thousand
for timing, less eleven thousand for

85
00:05:54,720 --> 00:05:58,455
the retained commitment. That leaves
thirty-three thousand dollars of

86
00:05:58,480 --> 00:06:01,085
expected subscription reduction for the
calendar year.

87
00:06:01,780 --> 00:06:05,895
Here is a simpler way to check it. The
monthly bill should fall from twenty

88
00:06:05,920 --> 00:06:10,595
thousand to seventeen thousand in
February. Three thousand dollars less, for

89
00:06:10,620 --> 00:06:13,445
eleven months. Thirty-three thousand
dollars.

90
00:06:13,830 --> 00:06:17,385
The operational cleanup can be complete
while the commercial result is

91
00:06:17,410 --> 00:06:22,065
smaller than first proposed. Both
statements belong in the report. Calling

92
00:06:22,090 --> 00:06:26,205
the work a failure would ignore the
reduction. Keeping forty-eight thousand

93
00:06:26,230 --> 00:06:28,255
in the forecast would ignore the
agreement.

94
00:06:28,845 --> 00:06:33,100
This is where you connect the evidence.
Keep the approved proposal, the

95
00:06:33,125 --> 00:06:37,025
signed amendment, the effective date, and
the assignment records together.

96
00:06:37,565 --> 00:06:42,140
Each answers a different question. What
did we intend? What did the supplier

97
00:06:42,165 --> 00:06:46,100
agree to? When did that obligation change?
What did the

98
00:06:46,125 --> 00:06:47,470
team actually implement?

99
00:06:48,080 --> 00:06:51,915
Give the change a stable reference that
can appear in the benefit record and

100
00:06:51,940 --> 00:06:56,595
the billing investigation. It doesn't need
a new platform. A reference in the

101
00:06:56,620 --> 00:06:59,595
existing renewal record can be enough if
people can find

102
00:06:59,620 --> 00:07:00,685
the supporting documents.

103
00:07:01,400 --> 00:07:05,295
Microsoft's guidance on buying or removing
business subscription licenses

104
00:07:05,320 --> 00:07:10,055
makes a useful distinction here.
Unassigning a license from a user and

105
00:07:10,080 --> 00:07:14,935
removing a purchased license are separate
steps. Removal timing depends on

106
00:07:14,960 --> 00:07:18,675
the billing arrangement and the applicable
window. Check the actual

107
00:07:18,700 --> 00:07:22,265
subscription and agreement before
predicting when the charge will fall.

108
00:07:22,720 --> 00:07:26,095
That is a real product mechanism, separate
from our invented

109
00:07:26,120 --> 00:07:30,495
eight-hundred-fifty-seat minimum. A
screenshot showing fewer assignments

110
00:07:30,520 --> 00:07:35,035
proves something about assignments. It
does not, by itself, prove a

111
00:07:35,060 --> 00:07:36,325
lower payable quantity.

112
00:07:36,980 --> 00:07:41,275
And before removing access, verify the
continuing service, data, and

113
00:07:41,300 --> 00:07:45,615
retention requirements with the
responsible people. A cheaper bill is not

114
00:07:45,640 --> 00:07:49,055
a successful outcome if the change
prevents authorized staff from

115
00:07:49,080 --> 00:07:50,285
doing required work.

116
00:07:50,920 --> 00:07:55,435
Our fictional company also pays an outside
specialist six thousand dollars to

117
00:07:55,460 --> 00:07:59,495
complete the cleanup. For this example,
that is the only incremental

118
00:07:59,520 --> 00:08:04,335
implementation cost, it is incurred and
paid during the year, and finance

119
00:08:04,360 --> 00:08:06,245
includes it in the benefit comparison.

120
00:08:06,960 --> 00:08:10,835
Thirty-three thousand dollars of
subscription reduction, less six thousand

121
00:08:10,860 --> 00:08:15,075
to implement it, gives twenty-seven
thousand dollars of expected net benefit

122
00:08:15,100 --> 00:08:15,765
for the year.

123
00:08:16,400 --> 00:08:21,015
Internal staff also spend time on the
change. Record that effort. In this

124
00:08:21,040 --> 00:08:25,515
case it fits within existing capacity,
with no extra payroll or displaced

125
00:08:25,540 --> 00:08:29,860
funded work identified, so we are not
inventing an additional cash payment.

126
00:08:30,380 --> 00:08:34,915
If it displaced important work, say what
was displaced and assess it. Paid

127
00:08:34,940 --> 00:08:37,925
invoices are not the only possible cost of
a decision.

128
00:08:38,500 --> 00:08:42,835
The completion check also needs more than
a ticket status. Have the service

129
00:08:42,860 --> 00:08:46,695
owner confirm that the right assignments
were removed, the required people

130
00:08:46,720 --> 00:08:51,555
retained access, and the purchased
quantity matches the amendment. Preserve a

131
00:08:51,580 --> 00:08:55,835
dated record from the system that actually
controls the assignments. If an

132
00:08:55,860 --> 00:08:59,975
automated rule can put those assignments
back tomorrow, identify who owns

133
00:09:00,000 --> 00:09:01,805
that rule before closing the work.

134
00:09:02,460 --> 00:09:06,455
Keep the check proportionate to the
service. You don't need to retest an

135
00:09:06,480 --> 00:09:11,115
entire application because a dormant
account was removed. You do need to know

136
00:09:11,140 --> 00:09:14,915
that the removal happened and that the
reason for calling it unnecessary was

137
00:09:14,940 --> 00:09:19,295
sound. Where the evidence is only a
request to make a change, the

138
00:09:19,320 --> 00:09:21,265
implementation remains unverified.

139
00:09:21,980 --> 00:09:26,095
The counterargument is fair: this sounds
like a lot of checking for a modest

140
00:09:26,120 --> 00:09:30,555
reduction. The effort should be
proportionate. A small, straightforward

141
00:09:30,580 --> 00:09:35,115
change may need a few linked records and a
short review. But somebody still

142
00:09:35,140 --> 00:09:39,335
needs to establish the effective date, the
actual quantity, and the cost of

143
00:09:39,360 --> 00:09:42,805
getting there. The arithmetic gets shorter
when the facts are simple.

144
00:09:43,420 --> 00:09:47,855
At this point we have a revised forecast.
We have not yet verified a full

145
00:09:47,880 --> 00:09:52,095
year's result. Now we need the invoices,
and that is where our case

146
00:09:52,120 --> 00:09:53,345
becomes more interesting.

147
00:09:58,000 --> 00:10:01,960
Let's take a quick break. If you want a
practical procedure for this work,

148
00:10:02,240 --> 00:10:06,535
the Operational ITAM Store has one called
Validate Benefits and Report

149
00:10:06,560 --> 00:10:09,720
Business Outcomes. It's procedure F02.

150
00:10:10,440 --> 00:10:15,375
It includes an editable HTML procedure, an
SVG flowchart, and a local

151
00:10:15,400 --> 00:10:19,535
adoption and evidence checklist. The
starting inputs include the agreed

152
00:10:19,560 --> 00:10:24,600
baseline, approved action, invoices or
quotes, implementation cost,

153
00:10:25,020 --> 00:10:27,965
currency, period, and business outcome
evidence.

154
00:10:28,560 --> 00:10:32,080
That gives you a structured place to start
the conversation with finance.

155
00:10:32,960 --> 00:10:36,380
Adapt the responsibilities and measurement
decisions to your organization.

156
00:10:37,120 --> 00:10:40,835
The procedure doesn't decide what your
finance team will recognize, and it

157
00:10:40,860 --> 00:10:43,045
doesn't replace the records behind the
number.

158
00:10:43,650 --> 00:10:48,925
You can review the contents at
operationalitam.com/store. This is

159
00:10:48,950 --> 00:10:53,025
my paid resource, and buying it supports
the show. Today's homework uses

160
00:10:53,050 --> 00:10:56,175
information you already have and doesn't
require a purchase.

161
00:10:56,745 --> 00:10:59,840
You'll also find the podcast and practical
resources at

162
00:10:59,865 --> 00:11:05,225
operationalitam.com. If someone keeps
asking you where the saving went,

163
00:11:05,545 --> 00:11:07,850
this might be a useful episode to share
with them.

164
00:11:11,945 --> 00:11:13,550
Alright. Back to the invoices.

165
00:11:14,445 --> 00:11:18,680
January is correctly billed at twenty
thousand dollars. But February and

166
00:11:18,705 --> 00:11:22,400
March are also billed at twenty thousand,
even though the signed amendment

167
00:11:22,425 --> 00:11:27,580
requires seventeen thousand from February
onward. April and May arrive at the

168
00:11:27,605 --> 00:11:29,090
correct seventeen thousand.

169
00:11:29,565 --> 00:11:33,645
At the end of May, those five invoices
total ninety-four thousand dollars.

170
00:11:34,285 --> 00:11:38,980
Our unchanged baseline for five months is
a hundred thousand. The invoices

171
00:11:39,005 --> 00:11:41,470
currently show a six-thousand-dollar
reduction.

172
00:11:42,105 --> 00:11:46,760
The agreement supports a different figure.
January at twenty thousand, then

173
00:11:46,785 --> 00:11:51,180
four months at seventeen thousand, totals
eighty-eight thousand. Compared

174
00:11:51,205 --> 00:11:53,760
with the baseline, that should be a
twelve-thousand-dollar

175
00:11:53,785 --> 00:11:55,070
reduction through May.

176
00:11:55,645 --> 00:11:59,935
The six-thousand-dollar gap is the extra
three thousand charged in February

177
00:12:00,195 --> 00:12:05,170
and again in March. It is a billing
dispute supported by the amendment. It is

178
00:12:05,195 --> 00:12:07,760
not another reduction in the contracted
price.

179
00:12:08,495 --> 00:12:13,390
Keep that distinction visible. At the May
reporting cutoff, show six thousand

180
00:12:13,415 --> 00:12:17,490
supported by the invoices currently
recorded, and a further six thousand

181
00:12:17,515 --> 00:12:21,990
under dispute. Finance decides whether the
disputed amount warrants any

182
00:12:22,015 --> 00:12:26,270
accounting adjustment under the
organization's policy. An expected credit

183
00:12:26,295 --> 00:12:28,660
is not evidence that the credit has
arrived.

184
00:12:29,345 --> 00:12:33,980
The investigation should be specific.
Identify the subscription, the legal

185
00:12:34,005 --> 00:12:38,720
entity, both invoice numbers, the relevant
service periods, the agreed

186
00:12:38,745 --> 00:12:43,700
quantity, and the amendment's effective
date. Ask the supplier to correct the

187
00:12:43,725 --> 00:12:47,980
two identified differences. That is much
easier to resolve than a message

188
00:12:48,005 --> 00:12:50,390
saying the savings report doesn't look
right.

189
00:12:51,085 --> 00:12:55,020
Microsoft's invoice guidance distinguishes
the invoice date from the service

190
00:12:55,045 --> 00:13:00,200
period covered by a charge. That
distinction matters beyond this example. A

191
00:13:00,225 --> 00:13:04,700
document arriving this month can concern
an earlier period. Capture both

192
00:13:04,725 --> 00:13:07,760
dates so a late correction doesn't get
mistaken for a

193
00:13:07,785 --> 00:13:09,010
new operating improvement.

194
00:13:09,645 --> 00:13:13,300
In our fictional case, the supplier
accepts the dispute and issues a

195
00:13:13,325 --> 00:13:17,620
six-thousand-dollar credit in June. It is
applied against June's normal

196
00:13:17,645 --> 00:13:21,100
seventeen-thousand-dollar charge, leaving
eleven thousand payable

197
00:13:21,125 --> 00:13:22,070
for that invoice.

198
00:13:22,845 --> 00:13:26,220
June has not become an
eleven-thousand-dollar service. The

199
00:13:26,245 --> 00:13:30,440
recurring charge is still seventeen
thousand. Six thousand relates to

200
00:13:30,465 --> 00:13:32,090
correcting February and March.

201
00:13:32,765 --> 00:13:37,080
Link the credit to those original invoices
and show when it was applied. If

202
00:13:37,105 --> 00:13:41,100
finance already recognized the correction
in an earlier period, its later

203
00:13:41,125 --> 00:13:45,300
arrival settles that item. It must not
create a second benefit in

204
00:13:45,325 --> 00:13:46,150
the savings report.

205
00:13:46,725 --> 00:13:51,580
And if you want to say cash has been
saved, check settlement. An invoice, an

206
00:13:51,605 --> 00:13:56,120
expense entry, a credit balance, and a
payment are related records, but they

207
00:13:56,145 --> 00:14:00,500
aren't interchangeable. In our completed
fictional year, all the relevant

208
00:14:00,525 --> 00:14:04,640
charges and the credit are settled. Before
that point, use the label

209
00:14:04,665 --> 00:14:05,830
the evidence supports.

210
00:14:06,525 --> 00:14:10,910
Let's finish the year. From July through
December, the subscription stays at

211
00:14:10,935 --> 00:14:15,730
seventeen thousand dollars a month. No
further billing errors, new seats, or

212
00:14:15,755 --> 00:14:19,730
additional project costs occur. The
business owner confirms that the

213
00:14:19,755 --> 00:14:22,180
continuing service meets the agreed
requirement.

214
00:14:22,700 --> 00:14:26,075
The final subscription total, after the
credit, is two hundred seven thousand

215
00:14:26,100 --> 00:14:31,435
dollars. You can check that as January's
twenty thousand plus eleven months

216
00:14:31,460 --> 00:14:35,295
at seventeen thousand. Against our
two-hundred-forty-thousand-dollar

217
00:14:35,320 --> 00:14:38,585
baseline, the reduction is thirty-three
thousand.

218
00:14:38,880 --> 00:14:43,375
Subtract the six-thousand-dollar
implementation cost. The calendar-year net

219
00:14:43,400 --> 00:14:46,925
benefit is twenty-seven thousand dollars
under our stated assumptions.

220
00:14:47,530 --> 00:14:51,565
The credit is already included in that
result. Adding it again would

221
00:14:51,590 --> 00:14:56,325
overstate the benefit. Leaving it out
would understate the benefit. The

222
00:14:56,350 --> 00:14:59,935
credit corrects the billing record so it
agrees with the amended obligation.

223
00:15:00,515 --> 00:15:04,870
We can now explain what happened to the
original forty-eight thousand. Four

224
00:15:04,895 --> 00:15:09,230
thousand was lost because the change
started a month later. Eleven thousand

225
00:15:09,255 --> 00:15:13,095
was lost because the commitment could only
fall to eight hundred fifty seats.

226
00:15:13,695 --> 00:15:17,530
Six thousand was spent implementing the
change. The remaining twenty-seven

227
00:15:17,555 --> 00:15:20,020
thousand is supported by the completed
case.

228
00:15:20,695 --> 00:15:24,850
That's an explanation someone else can
reproduce. It also gives the next

229
00:15:24,875 --> 00:15:29,790
project useful information. The effective
date needed more attention. The

230
00:15:29,815 --> 00:15:33,190
minimum commitment should have been tested
before the original forecast

231
00:15:33,215 --> 00:15:36,890
circulated. Billing required
follow-through after the technical

232
00:15:36,915 --> 00:15:37,820
work was complete.

233
00:15:38,515 --> 00:15:42,350
Now suppose someone asks for the
annualized reduction. At three thousand

234
00:15:42,375 --> 00:15:46,050
dollars a month, the recurring
subscription reduction would be thirty-six

235
00:15:46,075 --> 00:15:50,450
thousand over twelve months, assuming the
same scope, rate, and commitment

236
00:15:50,475 --> 00:15:55,390
continue. That is a forward run rate. It
does not replace this year's

237
00:15:55,415 --> 00:15:59,220
thirty-three-thousand gross result or
twenty-seven-thousand net result.

238
00:15:59,775 --> 00:16:03,610
And if management spends the released
budget on another service, report that

239
00:16:03,635 --> 00:16:08,390
allocation separately. The original
service can cost less even when the total

240
00:16:08,415 --> 00:16:13,410
technology budget stays level. Equally, a
lower total budget doesn't prove

241
00:16:13,435 --> 00:16:15,800
that your particular action caused the
reduction.

242
00:16:16,435 --> 00:16:21,410
Amazon Web Services provides another
useful example of why labels matter. Its

243
00:16:21,435 --> 00:16:26,370
Savings Plans utilization documentation
defines total net savings against an

244
00:16:26,395 --> 00:16:31,195
estimated On-Demand cost for the same
usage. That's a defined comparison.

245
00:16:31,855 --> 00:16:35,350
It does not mean the organization's bill
fell by that amount compared

246
00:16:35,375 --> 00:16:36,200
with last month.

247
00:16:36,915 --> 00:16:42,130
Amazon Web Services, or AWS as it is
commonly referred to, also

248
00:16:42,155 --> 00:16:47,110
reports how much of the commitment was
used. If a workload is reduced, check

249
00:16:47,135 --> 00:16:51,175
what happens to that commitment and
whether other eligible usage absorbs it.

250
00:16:51,775 --> 00:16:55,735
A technical reduction and a financial
reduction can occur at different times.

251
00:16:56,415 --> 00:17:00,140
The answer is in the usage, commitment,
and billing evidence together.

252
00:17:00,855 --> 00:17:05,390
In our seat example, the fifty unassigned
paid seats might later accommodate

253
00:17:05,415 --> 00:17:10,750
new starters. If they do, record the
actual reuse. If somebody wants to

254
00:17:10,775 --> 00:17:14,370
claim avoided purchasing, document the
additional purchase that would

255
00:17:14,395 --> 00:17:18,830
otherwise have been needed and agree the
comparison with finance. Don't count

256
00:17:18,855 --> 00:17:23,510
both the retained capacity and its later
reuse as separate cash savings from

257
00:17:23,535 --> 00:17:24,440
this year's reduction.

258
00:17:25,115 --> 00:17:29,410
What if the credit never arrives, or the
records are incomplete? Leave the

259
00:17:29,435 --> 00:17:34,495
item open with the amount, evidence gap,
responsible person, and next action.

260
00:17:34,995 --> 00:17:39,130
Report the supported result and the
unresolved amount separately. You can

261
00:17:39,155 --> 00:17:43,330
have a useful result before every issue is
closed, provided the report makes

262
00:17:43,355 --> 00:17:44,300
its limits clear.

263
00:17:44,790 --> 00:17:49,705
What if the service got worse? Put that
alongside the financial result. Track

264
00:17:49,730 --> 00:17:54,350
the agreed measures: required access,
completion of the work, support demand,

265
00:17:54,730 --> 00:17:58,425
or whatever the business owner
established. A subscription reduction

266
00:17:58,450 --> 00:18:03,005
doesn't erase rework or an operational
problem elsewhere. The FinOps

267
00:18:03,030 --> 00:18:07,765
Foundation's Quantify Business Value
guidance explicitly includes service and

268
00:18:07,790 --> 00:18:11,035
organizational performance, not just
monetary cost.

269
00:18:11,670 --> 00:18:15,785
My recommendation is to close a benefit
claim only when another person can

270
00:18:15,810 --> 00:18:20,765
follow its comparison and evidence. Record
the scope and period, retain the

271
00:18:20,790 --> 00:18:24,825
source documents, explain the adjustments,
and have the agreed reviewer

272
00:18:24,850 --> 00:18:29,425
confirm the result. Credit the people who
contributed without multiplying the

273
00:18:29,450 --> 00:18:31,415
money by the number of departments
involved.

274
00:18:32,090 --> 00:18:36,365
Today's principle is traceability. Someone
should be able to start with the

275
00:18:36,390 --> 00:18:40,890
reported result and work back to the
approved action, the implemented change,

276
00:18:41,350 --> 00:18:43,455
and the financial records that support it.

277
00:18:43,890 --> 00:18:48,765
Class dismissed. Here's your homework. Set
aside about an hour and choose one

278
00:18:48,790 --> 00:18:52,675
completed technology change, using records
you're authorized to access.

279
00:18:53,280 --> 00:18:57,835
Write down the original expected benefit,
its baseline, and the period it

280
00:18:57,860 --> 00:19:02,720
covers. Find the effective date in the
executed agreement or approved change.

281
00:19:03,280 --> 00:19:07,775
Compare what was implemented with what was
purchased. Then inspect an invoice

282
00:19:07,800 --> 00:19:10,785
covering the affected period and any
related credit.

283
00:19:11,500 --> 00:19:15,575
Record the cost of making the change.
Explain every material difference

284
00:19:15,600 --> 00:19:19,835
between the original estimate and the
result you can support. If a document

285
00:19:19,860 --> 00:19:24,575
is missing, name it and assign the next
action. Finish with one sentence

286
00:19:24,600 --> 00:19:29,375
stating what has been verified and what
remains unresolved. Take that page to

287
00:19:29,400 --> 00:19:30,305
your finance partner.

288
00:19:30,800 --> 00:19:35,320
If you want a procedure to help make that
work repeatable, look for F02,

289
00:19:35,900 --> 00:19:39,995
Validate Benefits and Report Business
Outcomes, in the Operational ITAM

290
00:19:40,020 --> 00:19:42,065
Store. The link is in the show notes.

291
00:19:42,880 --> 00:19:47,135
There is a natural next question at The
Decision Table: once you've verified

292
00:19:47,160 --> 00:19:51,855
a result, what would cause you to revisit
it? Keep that question beside your

293
00:19:51,880 --> 00:19:55,395
completed record. We'll return to how
decisions hold up as

294
00:19:55,420 --> 00:19:56,325
the business changes.

295
00:19:56,835 --> 00:20:01,715
The case files are open. One situation,
one page. The constraint,

296
00:20:02,115 --> 00:20:06,670
what you did, and what happened. Remove
company names and sensitive details

297
00:20:06,695 --> 00:20:10,530
before sending it through the website.
Send me one worth working, and I'll

298
00:20:10,555 --> 00:20:11,860
build an episode around it.

299
00:20:12,315 --> 00:20:17,390
I'm Bill Van Nort, this is the Operational
ITAM Podcast. Keep the comparison

300
00:20:17,415 --> 00:20:21,790
visible. Follow the change through the
bill. Report the result you can

301
00:20:21,815 --> 00:20:24,560
support. I'll talk to you next week. Take
care.