YäRKEN Blog

FinOps Case Study: Optimising Mobile App Costs in a leading consumer Telecommunications company with YäRKEN

Written by Yarken Team | Apr 26, 2024 2:38:46 PM

Customer Overview
A leading consumer telecommunications company aimed to refine its IT spending, specifically targeting the costs associated with their widely used mobile application. With a focus on achieving cost-effectiveness and transparency, the company sought to integrate detailed financial insights into their operations to guide strategic decision-making and ensure alignment with business objectives.
 
Key Challenge

The main challenge was a lack of clarity regarding the total cost of running their mobile application, including substantial AWS cloud expenses. This ambiguity in financial reporting made it difficult to engage in value-based discussions about IT spending and effectively allocate costs to the responsible business units.

YäRKEN Solution

YäRKEN was implemented to provide a comprehensive showback model that detailed the costs associated with the mobile application, emphasizing AWS cloud spend as a significant cost driver. The breakdown of costs included:

License Cost: Tracking all licensing fees directly associated with the application.

Labor Cost: Including expenses for both permanent and contracted employees related to the app's development and maintenance.

Shared Cost: Allocating costs from shared services such as IT Management, Security, and Compliance.

 AWS Cloud Spend: Highlighting AWS cloud services used, providing detailed insights into usage and optimization opportunities.

This detailed financial model allowed the company to
  • Collaborate closely with business unit leaders to align IT investments with business goals.
  •  Map supporting applications, labor, and AWS cloud expenses directly to the solution for enhanced financial transparency.
  • Use project data for a weighted cost allocation.
  • Distribute percentage of total costs for shared labor spend from IT Management and other functions.
  • Calculate the unit cost based on the app's usage by active users, providing actionable insights on per-user cost impact.

FinOps Principles Applied

 

  1. Granular Cost Visibility:
    By delineating all costs, including significant AWS cloud expenses, YäRKEN enabled the company to gain deep insights into where and how funds were being utilized.
  1. Strategic Financial Planning:
    The showback reports supported informed decision-making, with each cost component analyzed for its impact on overall financial health.
  1. Collaborative Financial Governance:
    Integrating financial data with business unit objectives fostered a partnership approach, ensuring that IT expenditures supported strategic business needs.
  1. Value-Oriented IT Expenditure:
    The detailed breakdown facilitated discussions centered around the value delivered by the IT investments, particularly the efficient use of AWS cloud resources, rather than focusing solely on the costs.

  • Outcomes

    YäRKEN's solution yielded notable improvements and financial benefits:

    Cost Savings Realized: Substantial savings were realized through strategic reallocation and optimization of IT resources.

    Monthly Monitoring of Spend Trends: Continuous tracking of external labor and AWS cloud costs, enabling timely financial adjustments to avoid bill shock.

    Enhanced Cost Efficiency: The established unit price per user per month became a critical metric for assessing the efficiency and justification of ongoing and future investments in the app.

  • Conclusion

    This case study demonstrates how the deployment of YäRKEN led to the optimization of the unit economics of the mobile application within the telecommunications company. By enhancing visibility and strategic management of IT spending, YäRKEN empowered the company to make informed decisions and achieve cost-effectiveness. The sophisticated showback model, coupled with detailed AWS cloud spend analysis, enabled the company to not only optimize expenditures but also advance strategic objectives through value-based IT financial governance. Overall, this case study highlights the transformative impact of leveraging advanced technologies like YäRKEN to drive efficiency and strategic alignment in IT spending.
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