How Technology Business Management Helps Technology Companies Scale

Technology Business Management (TBM) is a value management framework that helps large enterprises to manage the costs of delivering information technology (IT) services, and it aids and accelerates decision-making for CIOs, CTOs, CFO and other senior leadership members.

How Technology Business Management Helps Technology Companies Scale
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TBM helps enterprises to define the tools, processes, data, and people needed to manage the business of technology. 

Recently, a sizable Asian financial institution adopted Technology Business Management (TBM). They identified and cancelled 1,200 unused or excess service numbers in the first 30 days. Additional benefits of the TBM implementation include:

  • 50% reduction in time to answer ad-hoc questions about costs
  • 2% annual public cloud costs savings
  • Insights reduced vendor invoice validation time from 14 to 6 days
  • An established platform for continuous cost optimisation

Another example is a multibillion-dollar vertically integrated engineering group, whose business units cover aerospace, electronics, land systems and marine sectors, engaged Apptio’s partner, KPMG, for strategic counsel, and the result was to implement Apptio’s solutions. The Government-linked corporation (GLC) wanted to digitize their highly complex and manual IT chargeback process, so KPMG worked with Apptio to analyze the existing business structure and chargeback rules set for 20,000 global employees, who work in 100 subsidiaries and associated companies spread across 24 countries. Together, they configured the conglomerate’s existing systems to match how consumption of services, budgeted consumption, trend reporting, and variance analysis would be managed in a digital sense, before overseeing the implementation of the digital system of chargeback management. 

Developed over a decade ago by the TBM Council, which today is a community of thousands of CIOs, CTOs, CFOs, and their key leaders, TBM is adopted by enterprises across every industry, independent of maturity and size, from banking to healthcare to manufacturing to government, and more. 

Yet many organizations start and end their analysis of IT value with spend metrics. An analysis of IT actuals to budget is valuable, but it is also an invitation for further analysis, rather than an endpoint. Some other organizations blend financial and operational data to generate calculated metrics that are more insightful. Another example is how IT Finance teams take extracts from corporate financials, and layer it in an IT context, drawing data from a configuration management database (CMDB), project lists, an IT asset database, or service desk systems. 

For effective IT spend management, IT needs to measure, optimize, and operationalize its management practices for IT spend, inclusive of traditional on-premises solutions, and emerging cloud-based IT services. 

Companies adopting Agile Development at Scale must fund both a value stream or a product and measure the value it delivers. When an entire department or cost centre worked on a project that delivered a business outcome, it was easier to analyse.  

But today, teams are striped across program increments (PI) that combine labour and tooling to produce a result. Traditional IT financial management (ITFM) practices also struggle to support the needs of decentralized teams across multiple PI’s.  

 

Single source of truth

 

The TBM value management framework snaps stakeholders and strategy, whether it is through projects or products, into one single source of truth. 

Speed to market is an IT value that depends on agile ways of working. Agile development models depend on public cloud services that scale on demand but come at a cost. In the meantime, organizations must manage, modernize, and rationalize existing technologies while optimizing costs. Technology leaders need to ensure their people or teams are working on the best business outcomes, demanding innovation at the speed of the business, and confirming that precious capital is being invested to create leverage for the business. 

Measuring IT value is a metric-driven endeavour (e.g. total cost of ownership of apps and IT), but the outcome from defensible metrics is a change in the conversation with the business around trade-offs, IT complexity, and variable spend—particularly from cloud solutions. And this is where TBM comes in. 

Once the domain of tech companies like Cisco, Microsoft, HPE, and Red Hat, TBM is now being adopted by enterprises across every industry, independent of maturity and size, such as banking, healthcare, manufacturing, government, and more. Increasingly, almost every company is becoming a technology company. More and more value is being delivered to customers digitally, and directly through the application of IT.

 

Optimizing costs with TBM

 

TBM offers data-driven decision-making to manage, plan, and optimize IT costs, value, and quality of all technology investments. Ideally, TBM adoption begins with a strong financial foundation and then works within a framework to ensure complete business alignment for all technology investments. By starting with the basic financial baseline and working toward the ability to communicate and chargeback, companies can also include any of the specialized pillars or specialities they need. 

Optimization of cloud resources has been a part of the model since there were cloud costs, but the complexity of gathering, sorting, and categorizing the vast amount of cloud data is the newest challenge to companies only doing TBM. 

TBM requires a common language that normalizes tech and business speak to connect IT and the business. A hierarchical taxonomy of IT services, towers, and cost sources promote alignment between IT, Finance, and Business Unit leaders. TBM provides a standard taxonomy to describe cost sources, technologies, IT resources, applications, and services. It is the TBM council that governs and maintains the TBM taxonomy. 

In order for them to do so, the TBM model requires a data-driven method for mapping and allocating costs and resource consumption from their sources to their uses—powering value conversations with reports, analytics, and metrics. 

Cost allocation is an integral part of TBM. Visibility and trust in the fully loaded cost and quality of IT services require a defensible allocation of IT costs through a TBM model.  TBM relies on trustworthy data. When data quality comes into question, stakeholders doubt the output. 

TBM’s top-down approach to business value abstracts a lot of operational detail. Application rationalization (App rat) is a key initiative for many TBM practices. First, segment applications (by revenue driver, by revenue supporter, and KTLO (keeping the lights on)), then determine the action to take in each segment (invest to maximize performance, optimize performance and cost, and minimize the cost to meet SLAs (service level agreements)).  

An IT cost model built on a TBM taxonomy with defensible cost allocations (from a general ledger, through on-prem infrastructure, and up to applications and services) is a prerequisite for confidence in business value metrics. App rat is a business value conversation, but you need operational and financial detail within TBM to have it.

 

Agility

 

TBM metrics incorporate the needs of product-led value workstreams. Agile metrics monitor productivity across the software development lifecycle, but product portfolios are ultimately judged for the time between the request for delivering a product and actual delivery. Product managers require a trendline of business value delivered by portfolio per quarter. This helps improve time estimates and flag resource constraints if a business needs to outstrip a team’s productive hours. Measuring and monitoring business value output enables product managers to meet delivery commitments. 

In essence, TBM offers accurate, real-time reporting through automation, improves decision making for key IT initiatives, helps executives manage the cost and quality of the services they consume, allocates IT resources to the most relevant business priorities, and transforms IT from a cost-centre to a profitability-enabler. 

Unlike some other resources, TBM is a framework that helps businesses integrate IT into the whole. It does not assume businesses are already fully IT integrated but instead, it provides a pathway to do so. The goal is that TBM scales with your organization, and as you grow, so does your usage of this system.

(Written by Owen Gan, Vice President, Sales-Southeast Asia at Apptio)