Will Technology Business Management become the new standard for financially sound IT delivery
Will Technology Business Management become the new standard for effective IT financial management
The world of information technology does a great job at reducing business cost and streamlining and digitising operations. That is it does a great job for everyone else.
For finance, for production, for operations, for HR, for sales.
But is it generally accepted that to date it often hasn’t done such a great job at streamlining and optimising its own efforts.
Generally it still exists in a world where it is seen as a cost centre and the emphasis is always on reducing that cost. “Why does it cost so much?” is the usual CFO and CEO lament.
The real question of course is “Why does it cost so much and how do you know?”
It is time for the CIO to acknowledge a changing world. Move with the times, control your costs while showing value to the bottom line through actual believable figures. To be a driver in terms of growth you need to ensure your strategic bets are well placed…the only way to do that is to have a purpose built management system to so you can understand your strategy is being executed properly.
"The financial representation of that is what Technology Business Management. TBM allows you to measure the effectiveness of strategy appropriately,” says Chris Pick, Chief Marketing Officer at Apptio.
(For details of the the Technology Business Management Council see below).
Robert John Webb is the Group Information and Technology Officer at Etihad Aviation Group.
He told CBR: “It used to be when you installed a financial system, you called SAP, you called Accenture, you bought some kit from IBM and you stuck it in your data centre. And you had to do all the coding and interfaces to make that work.
You need a cost model to do that, and it’s a tradiontal tower based cost model. In today’s world you turn on a SAAS model, say, SAP simple finance in the cloud and it’s a subscription service. And you need to be able to compare investment levels in the cloud and investment levels in the old ways. There are dozens of domains to go through that exact analysis to make those types of calculations. So you are reimaging a financial system or an HR system.”
The question of whether the new way of doing things is cost effective is impacted by things such as SLAs. What happens for instance when SAP’s data centre in Amsterdam goes down and it’s running critical services. Suddenly the question of what SLAs you have subscribed to and signed up for become very pertinent.
Mr Webb says already with such considerations you are calculating the fully loaded cost and the SLA adjusted cost.
So the industry is at a point where visibility on costs of traditional systems is lessening and transparency of cloud costs is a fantasy.
Sunny Gupta, CEO of Apptio, a Technology Building Management software supplier and the lead player behind the Technology Business Management Council which now has over 300 CIO members and is working on TBM standards, says,
“The technology has a role in this. This is a world of software with a lot of innovation being built by hundreds of Apptio engineers and especially lots of innovation around data. CIOs say I don’t have operational, power and labour data – we have created an inference engine for this. A big part of cost structure is legacy and everyone is flying blind on run rate. Traditional cost is a black box, we turn int into a clear box to free up capital to invest in new world solutions.”
“In the new world of cloud our customers are telling us that in order to decipher the bills of cloud providers and make true comparisons about what my on prem linux service is costing compared with AWS and Azure on a fully loaded basis, it is not only the bill and cheque. A 100k bill is 100k line items. In this new world it is impossible to do this manually. And you can’t afford the risk in this new world of making decisions blindly.”
Robert Webb, says, “In Etihad it is about security, privacy, complexity, comms and culture. It is about sitting down and being transparent about constraints, and making choices. TBM allows us to make choices and be clear.
This takes into account the speed of change and the new risk taking and being comfortable with the higher risk environments and the only way to win in environment is through communications.”
For Sunny Gupta this leads into the new IT operations model and the skills change. My customers tell me I need Apptio to help my people become business people. “We are used to talking tech but have to develop skills to talk to business – you can turn them in to business people without me sending them to business school.”
However says Mr Webb says it is a victim mentality to say the business ‘wants this but and technology wants that.’ “We’re all business people.”
How most CIOs embrace the use of TBM is assess what they already have in their existing environment and use it to plan for future technology platform shifts. What they need to have is the strategic planning element, applicable to existing and coming investments.
One partner that provides advice on TBM is KPMG. David Yip, is a Partner at KPMG and TBM partner for EMEA.
He describes his role as working with global business technology leaders to support client engagement.
“We don’t position TBM as a cost it is framework for better managing IT. One of those dimensions is cost, but also service and value that business sees from IT. There’s a perception thing to be addressed: How to demonstrate how IT is delivering value. Service cost, or charge back? How to work on a peer to peer level, understand investment and provide a differentiator. The goal is not to become fixated on cost.”
TBM should not be seen as trying to mend a huge problem of IT, he warns.