Recently, NPI attended a conference hosted by the TBM Council. Many of you may be thinking, “That’s nice, what is TBM?” Frankly, I was unclear myself… it stands for Technology Business Management. It’s a movement that has been around for nearly six years and clearly seems to be gaining momentum.
The term TBM and the conference are primarily sponsored by Apptio, a maker of financial modeling software focused on providing IT cost transparency. The conference was well attended by the CIOs of companies like Cisco, Coca-Cola, Goldman Sachs and many others. Also attending were finance executives, sourcing professionals and venture capitalists.
So, why all of the buzz? Quite simply, Apptio and the TBM Council may finally be making headway on developing a common framework and toolset for capturing, analyzing and mapping IT costs to business functions and processes – all with the goal of allowing companies to manage IT as a business (and to improve IT cost management). To many of us this may sound like just another effort to develop service books and chargeback frameworks. And while service books and “show-backs” (doesn’t that sound better than chargebacks?) are clearly a part of the solution, early results from companies implementing TBM seem to indicate much more.
I attended a variety of sessions at the conference in an effort to understand just what makes Apptio’s tool different, how it really works and what “the business” has to say about it. Without going into too much detail, it does sound like it’s a capable tool for capturing costs, modeling them according to defined models and then associating them with business processes that are clear to the business.
Why is this important? I think many of us have heard the growing importance of understanding how much of IT’s costs go towards “running the business” vs. “changing/growing the business.” More and more C-suite conversations are based on this basic measure and CIOs that want a seat at the table are taking notice. Of course, as outsourcing, the cloud and contract labor continue to grow in popularity, previously internal costs are becoming external costs that make up a larger and larger portion of every company’s IT spend. Managing this external spend requires that it be visible.
While all of this has been attempted in the past using spreadsheets, business intelligence (BI) tools and even ERP packages, none of them were purpose-built for IT financial management. That said, this is not a commercial for Apptio and I think the biggest benefit of the TBM movement will be a growing body of work and agreement on how to capture, model and represent IT costs to the business – perhaps an objective standard will even emerge as has happened with processes such as ISO, PCI and GAAP. Stay tuned…