CIOs have long struggled to quantify the value of IT services relative to production costs, a financial black box that sows distrust between the tech department and business divisions. As IT implements additional digital capabilities in service of the business, this disconnect is widening, inspiring more CIOs to embrace technology business management (TBM), a discipline aimed at documenting the value of IT services.
“Technology business management as a discipline supports the Elite CIO by enabling a single, transparent view of technology costs, consumption, and performance across the enterprise,” according to research published in October by KPMG CIO advisory practice leader Jason Byrd.
TBM isn't new. CIOs have built large spreadsheets to document the operational efficiency of an IT service, such as time saved and expenses reduced, alongside what it cost to produce the service. If a business peer asked for the information, CIOs share the corresponding spreadsheet. But the share-a-spreadsheet model is hardly sustainable in an era where business executives expect to view metrics and charts from a single digital pane of glass.
"Five years ago, we had a bead on our expenses, but they were locked in spreadsheets and only understood by myself and a financial analyst," Gerry Imhoff, senior vice president of global IT services at Maritz tells CIO.com. This ad-hoc method made it impossible for the business to "consume the data," fueling tensions between IT and Maritz's business.
Imhoff and CIOs from enterprises such as Federal Express, Cisco Systems and several other leading brands have turned to SaaS (software-as-a-service) analytics that automates TBM, eliminating the onerous task of typing financial metrics into a spreadsheet and hoping the business doesn't ask for the data. Using SaaS software from Apptio, CIOs such as FedEx's Rob Carter have shaved hundreds of millions of dollars by eliminating redundant and legacy technologies, part of a broad application rationalization project that had grown unwieldly.
'We suck at IT'
IT was no friend to the business when Imhoff began running IT for Maritz, which builds customer loyalty programs, such as credit card points, and other marketing services, five years ago. For years, IT had operated as a shared services organization at Maritz, making technology decisions for business stakeholders, and providing little choice. Business stakeholders complained that the IT department was expensive, offering little material insight into the value for their money. "Our approach to our customers really sucked," Imhoff recalls. "We were on the bullet train to irrelevancy."
Imhoff took a new path after Maritz founder and CEO Steve Maritz opted to decentralize IT and put more control in the hands of the business. But there was a catch: a mandate for Imhoff to reduce IT costs by 35 percent. So Imhoff implemented Apptio's software to help rein in costs and show results. Apptio helped Maritz cut 40 percent of its IT costs, showing, for example, that a business unit didn't need a new server when it could put new workloads on existing servers, or that another group could save money by moving data to cheaper storage. Another group agreed to move its data off a costly mainframe after two peer groups saved money by shuttering the mainframe themselves.
Sign up for MIS Asia eNewsletters.