Top Five Misconceptions About Adopting Technology Business Management

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Top Five Misconceptions About Adopting Technology Business Management

  1. 1. Technology Business Management Top Five Misconceptions About Adopting Technology Business Management TECHNOLOGY BUSINESS MANAGEMENT WHITE PAPER EXECUTIVE SUMMARY IT organizations are challenged today more than ever to provide strategic value to the business, to justify and quantify that value, and to implement transformative IT initiatives that can help the business make real progress in trimming costs and being more agile and innovative. Technology Business Management (TBM) is the practical, applied discipline of maximizing the value of IT services. As implemented by Apptio, TBM has helped more than 150 enterprises transform and improve their IT service delivery. Many organizations tell us that they would like to undertake a TBM initiative but are reluctant to start, for a number of reasons. This paper discusses the top five, separates myth from reality, and hopefully serves as a guide as you move forward with this fundamental and profound shift in running IT. In brief, these myths and our responses are: Myth: “I don’t have enough data or clean enough data to get started.” Reality: Most organizations have plenty of data but no real information or analytics. Others have data that is incomplete or inaccurate. Apptio TBM can help with both situations. If you have a general ledger or similar financial system and basic IT operational systems, you have what you need to start gleaning powerful insights. Apptio will help you create a roadmap for improving your data over time—but you can get started now. Myth: “I don’t have the people or resources required to undertake TBM.” Reality: You are probably already expending resources on TBM-related activities, just not by that name. Do you have a financial transparency or infrastructure optimization initiative underway? A cloud initiative? How many people are involved? Apptio can help you use the very same resources more efficiently to do even more. You can get started with as little as half a full-time equivalent (FTE) devoted to TBM. Myth: “I have other, higher-priority projects that I need to do before I start TBM.” Reality: Again, chances are that you are already expending resources on major IT initiatives that could be accelerated and made more efficient by TBM. By automating manual processes, Apptio TBM frees up time and resources for innovative projects and helps change the conversation with the business about IT. You don’t need to go “all in” with TBM; you can introduce TBM in one or two already- scheduled projects, such as application rationalization, IT- business alignment, or data center consolidation. Myth: “TBM is no different than the insights that I get from my current financial and IT systems.” Reality: Apptio TBM is complementary to your current financial and IT systems. It aggregates data from these systems and translates it into business-value insights. While financial and IT monitoring and service management systems provide plenty of data, they are examples of “siloed” data that do not provide the analytics and contextual insights needed to improve specific IT services or accelerate the Chief Information Officer’s (CIO’s) ability to drive business innovation. Myth: “I don’t know how to build a business case around TBM.” Reality: While TBM can certainly deliver cost savings, even more significant value comes from its ability to help APPTIO | 1
  2. 2. Technology Business Management Top Five Misconceptions About Adopting Technology Business Management CIOs and IT leaders run IT like a business. It will help you automate and accelerate manual analysis and decision- making and yield strategic insights about the value of IT to the business. TBM can help you establish a baseline of your current IT service costs and capabilities and create a quantifiable roadmap for improving them. In summary, TBM can make a profound difference in your organization, as it has for Apptio customers such as Boeing, Microsoft, Cisco, and Starbucks. Spend a few minutes reading our complete responses to these myths so that you can start reaping the benefits of Apptio TBM today. Top Five Myths About Adopting Technology Business Management—Demystified “I don’t have enough data or clean enough data to get started.” Most organizations have plenty of data but no real information or analytics. Others have “dirty” data—data that is incomplete or inaccurate. Apptio TBM can help with both situations. For the first situation—plenty of data but no real information—Apptio has a unique ability to quickly surface, link, and transform existing domain-managed data (data managed by specific IT teams) into powerful analytics that produce enterprisewide insight and value. We can help you automate the collection of financial, operational, and business data; identify data correlations through pattern matching; and present the consolidated data to business users through self-service and role-based analytics. Some Apptio customers have quickly linked hundreds of existing IT and financial data sources and exposed relationships that yielded incredibly powerful insights in a very short time. For the second situation—incomplete or inaccurate data— Apptio can start with a small number of common core data sets and help you create a roadmap for improving your data over time. These data sets can include any of the following: • Financial data o General ledger (GL) o Chart of accounts o Budget data o Fixed assets register from a system such as a configuration management database (CMDB) o Labor data from a human resources management system, project and portfolio management (PPM) system, or service desk system o Vendor invoices • IT operations data o IT resource tower lists (if available) o Server assets list o Storage assets list • Business services data o Application lists o Business services lists (if available) Apptio can enhance the value of whatever data you have by creating rate cards and adding industry averages. For example, here’s a look at how we might work with you to assemble and enhance existing data: • Labor. For customers who do not have a sophisticated time-tracking system, we can create assumptions around labor and time tracking. It’s typical, for example, to expend 10 percent of “The more dirty and fragmented your data is, the more value you will get from Apptio.” Lance Warner, Director of IT Infrastructure, First American Corporation APPTIO | 2
  3. 3. Technology Business Management Top Five Misconceptions About Adopting Technology Business Management IT labor on tier 1 support and 20 percent on tier 2 support. We can also look at your support ticket data and extrapolate labor figures from open/close ticket times, ticket severity, and ticket resolution location. We can also merge your data with industry averages and benchmarks to create assumptive costs. Many customers start with assumptive data and gradually replace it with actual data as they implement better time-tracking systems. • Application-to-infrastructure. We typically find that most organizations do not have good application-to- infrastructure mapping. Apptio can help you categorize your applications by importance to the business and overall resource consumption. We can help you calculate the amount of compute and storage resources that each application consumes and the impact to the business if it fails. We can add in service-ticket data to get a good understanding of the application’s support costs. Based on all this information, we can create a rate card that can be used to calculate the cost of running each application. Of course, if you already have application-to-infrastructure data, we can use that to deliver even greater cost accuracy. • Software. Software costs are generally captured at a high level in a GL or vendor invoicing system. Apptio can take GL cost pools and map them to the appropriate infrastructure and applications by using weightings or actual consumption data from vendor invoice systems. It is common for companies to begin with 50 percent real data and 50 percent assumptive data. Even with a very small set of initial data, Apptio has helped organizations gain accurate and actionable cost insights very quickly. By using our data quality and cleansing reports, we can give you a roadmap for how to improve your data over time to help your organization continuously make better decisions. One large telecommunications company realized value in the first two weeks of working with Apptio. The company had a highly complex IT environment with multiple data centers, thousands of servers, and dozens of outsourced providers. Using commonly available data sources—e.g., financials on hardware purchases, software licensing, power and cooling costs, maintenance costs—Apptio enabled the company to quickly assign costs to all of its IT elements so that IT and the business could have fact- based conversations that would drive actionable analysis of legacy processes. “To get started with TBM, we provided data to two different groups: one where the leader said that they would continue to use Excel spreadsheets until both the data and the cost models were 100 percent accurate, and another where the leader chose to start immediately with the data and cost models that were available. The group that started with the available data realized initial, actionable insights within a week, and improved the model and required data as needed over the following months. However, the group that waited until the data and models were 100 percent complete took nearly a year to get the first actionable insights.” Rebecca Jacoby, Senior Vice President and Chief Information Officer, Cisco Systems APPTIO | 3
  4. 4. Technology Business Management Top Five Misconceptions About Adopting Technology Business Management “I don’t have the people or resources required to undertake TBM.” You are already expending resources on TBM-related activities, just not by that name and probably not very efficiently. Do you have an application rationalization effort underway? A cloud initiative? Infrastructure as a service (IaaS) initiative? How many people are involved? How will you make it repeatable and automated? Apptio can help you use your existing resources more efficiently to do even more. For most organizations, the net addition of resources to practice TBM is very small, if not net-zero. Undertaking TBM as a focused discipline can help you automate manual cost-calculation and data management processes that your staff is likely engaged in and reduce the time required for these activities. Based on our experience, approximately 40 percent of organizations undertake TBM holistically, to maximize the value of IT services across their organization. They are using Apptio to transform into an IT services organization and/or to eliminate complexity in their IT allocations. “With Apptio’s Service Costing, we were able to get our TBM initiative started quickly and provide quality data to support accurate cost-saving decisions. We also use the application for ongoing operational reviews and analytics to ensure we are continually improving and delivering value as a team.” Christopher Levitt, Chief Financial Officer of IT, Con-way However, the remaining 60 percent start using Apptio TBM to justify one concrete decision—such as moving to a cloud-computing solution, benchmarking IT costs relative to those of other business units, or buying a new storage system—or to produce one specific deliverable such as a bill of IT. The time-to-value for these discrete- use cases is typically fewer than three months, and the resource demands are minimal. These include: • Half a full-time equivalent (FTE) to serve as a power user for data modeling and analytics. This individual is typically a senior analyst who has a background in data mining and data analytics and the ability to work collaboratively with finance and IT. • HalfanFTEtoserveasaTBMprogramofficerleader.This individual has experience in relationship management, risk management, financial management, and business strategy. Their job is to drive the technology business planning process and provide reports and analysis to the technology operations team. They also serve as a liaison with the office of the Chief Information Officer (CIO) and business units to help drive business value. • The ongoing involvement of an executive sponsor, such as a CIO, Chief Financial Officer (CFO), or Vice President of Infrastructure. This individual’s responsibility is to implement and realize value from TBM practices as part of IT’s regular monthly management cadence. “With Apptio, we spend less time chasing dataandmoretimeusingdata.Ourbusiness managers no longer have to accept IT costs they don’t really understand.” Jeff Medek, Corporate Business Partner and Former Director IT Finance, Navistar International Corp. APPTIO | 4
  5. 5. Technology Business Management Top Five Misconceptions About Adopting Technology Business Management • Approximately 10 to 20 hours from the finance and IT infrastructure teams to provide the initial data, with diminishing ongoing involvement as data capture is automated. Because Apptio is delivered as a software-as-a- service solution, there are no incremental infrastructure requirements, in addition to minimal staffing requirements. Unlike other vendors, Apptio does not require that you have hundreds of databases or database administrators with coding and schema creation skills. Additionally, the learning curve for using Apptio analytical and decision- support capabilities is minimal, so IT leaders and decision makers can get up to speed quickly and stay productive. Lastly, you can start with a focused initiative to prove value and adapt and evolve your TBM efforts over time to add more value as you progress. Time-to-value is critically important to Apptio, because it is to our customers. We typically see customers making better business decisions in a matter of months. Within 90 days, one large software company with an annual IT spend of more than US$2 billion used Apptio software and services to deliver 400 bills of IT, automate an IT pro forma invoice for the business, and institute monthly reports that quantify the value of IT. The results are just as profound for smaller companies. Park Nicollet Health Services, a healthcare provider in Minneapolis, Minnesota, reversed course on a major technology initiative when Apptio forecasting revealed that the project would not be cost-effective. The company also eliminated 24 underutilized applications and halted a capital investment that Apptio data revealed would require $370,000 in annual maintenance. “I have other, higher-priority projects that I need to do before I start TBM.” The CIO Magazine 2013 State of the CIO Survey1 indicated that the top initiatives for CIOs today include: • Taking action to market IT and to build and solidify relationships with non-IT stakeholders • Making investments in business intelligence and analytics • Making investments in data management solutions TBM will help you address each of these initiatives. More than 150 organizations have already begun with Apptio TBM, and all had other priorities before beginning this work. However, all realized that they needed to thoroughly understand and communicate their IT service costs and service quality before they could optimize them. Beyond the ability to help businesses more quickly meet strategic objectives, Apptio TBM can help you dramatically improve specific projects and initiatives already underway, such as: • Cloud initiatives (determining which workloads to move to cloud, etc.) • Vendor optimization • Server consolidation/virtualization sprawl • Storage consumption analysis and optimization “Apptio allows us to rapidly model and understand the impact of our cloud projects on cost and performance. As a result, we have been able to partner more closely with our business affiliates to align IT with corporate priorities.” Don Tierney, Chief Technology Officer, Park Nicollet APPTIO | 5 www.cio.com/documents/pdfs/2013%20State%20of%20the%20CIO%20Exec%20Summary.pdf1
  6. 6. Technology Business Management Top Five Misconceptions About Adopting Technology Business Management • Application consolidation • Application and infrastructure rationalization • Business unit/IT alignment and transparency (changing the IT conversation with the business) • IT benchmarking • Budgeting and planning Remember, you don’t need to go “all in” with TBM. Get started with one initiative and apply Apptio TBM to it. “TBM is no different than the insights that I get from my current financial and IT systems.” Every enterprise IT shop has a GL system—such as JD Edwards, PeopleSoft, or SAP—used to track high-level expenditures. Others have a fixed-asset system and budgeting system, such as Hyperion, used to provide other specialized financial functions. These systems do a great job of tracking the costs of IT at the general ledger or departmental level, but they do not translate cost views into IT product/service and business-unit consumption views. This is what Apptio enables you to do. Think about how you use applications such as SAP, Oracle financials, enterprise resource planning, and process control systems. These are not single applications but aggregations of multiple operational systems. The benefit of these systems comes from their ability to integrate and reconcile the inputs of many systems. Prior to Apptio TBM, there was no comparable application for IT. In much the same way that SAP provides insights about your business that you cannot get by looking at standalone logistics, demand management, materials planning, and inventory systems, Apptio provides insights that you cannot get by looking at standalone financial, time-tracking, project management, and IT operational systems. While existing financial and IT systems typically do a good job of helping to efficiently allocate resources, TBM will help you efficiently utilize these same resources. In addition to knowing what you spend, TBM will help you understand what you should be spending on. Further, Apptio TBM uniquely enables IT leaders to rapidly and accurately respond and adapt to the market-driven demands of the business, like changes to business priorities Apptio uniquely delivers four capabilities required to deliver TBM purpose-built for IT: • Adaptive data management – the ability to extract, transform, and correlate raw data and easily integrate new or changed data sources • Visual cost and usage modeling – the ability to visually model cost, utilization, service levels, business unit consumption, and customer profitability of all IT products and services • Self-service analytics – the ability to enable real-time cost calculations and data exploration • IT best practices – the ability to immediately apply best practices from hundreds of IT leaders to your organization “I don’t know how to build a business case around TBM.” We can help you develop a business case for TBM based on best practices and the knowledge gleaned through driving hundreds of millions of dollars of value back to our customers. You will find that once you bring TBM into your organization, you will quickly be able to understand the business value of every program, product, service, and initiative and articulate that to your business peers. Your IT organization is already making the decisions and performing the analyses that we call TBM. But TBM as a discipline adds rigor, process, and best practices to make the analyses and decisions more reliable, fact-based, transparent, and repeatable. TBM provides a substantial improvement— sometimes a massive one—over how you are currently making decisions to manage IT. This gain is often so great that it enables APPTIO | 6
  7. 7. Technology Business Management Top Five Misconceptions About Adopting Technology Business Management you to perform analyses and undertake initiatives that you simply would not have attempted before—not because they were impossible but because the level of effort was prohibitive. Apptio TBM is an enabler, amplifier, and accelerator. Although much of what we do could be done manually with enough time and effort, Apptio: • Captures, correlates, and manages vast quantities of frequently changing financial and operational data that would require too much time, effort, and constant rework to manage using spreadsheets or business intelligence tools. • Quickly exposes insights and (often significant) optimization opportunities that previously could only be identified through building elaborate, custom-built models and reports. • Provides transparency into data, relationships, and resource allocation choices, which enables fact-based conversations about performance and priorities rather than squabbles about data integrity. • Leverages purpose-built reporting and analytics, based on best practices from more than 150 Apptio customers, to save time and effort in performing regular day-to-day and month-to-month reporting and analysis tasks. • Enables modeling “what-if” scenarios based on definitive “live” data to understand the potential impact of decisions. Apptio can enable big savings on specific projects, such as storage replatforming, IT service management, and CMDB creation. But the even bigger value of TBM is in how it helps you execute big transformational projects, such as IaaS, cloud computing, and big-data analytics. Apptio enables the CIO to not only measure and manage his or her business but deliver the organizational analytics to measure and manage each area of the IT environment in the context of shifting business priorities. We can help you understand the true cost of the IT services you’re delivering, who is consuming them, and how they’re being paid for. Apptio helps you ensure that your limited staff and dollars are being dedicated to the highest-priority projects. Should these priorities change, Apptio analytics and “what if” capabilities enable you to quickly identify alternative courses of action. CONCLUSION With more pressure than ever on IT organizations to build trusted relationships with their non-IT stakeholders and every IT investment under an ROI microscope, CIOs need to get started today with Technology Business Management. Hundreds of respected enterprises— including Boeing, Microsoft, Cisco, JP Morgan Chase, Bank of America, Con-way, and Navistar—are using Apptio solutions and services to drive accountability, increase information fidelity, and strategically align IT with the business. Contact us today at www.apptio.com/company/contact to begin a discussion about how Apptio TBM can deliver rapid value in your organization. Apptio is the leading independent provider of on-demand Technology Business Management (TBM) solutions for managing the business of IT. Apptio enables IT leaders to manage the cost, quality, and value of IT Services by providing deep visibility into the total cost of IT services, communicating the value of IT to the business, and strategically aligning the planning, budgeting, and forecasting processes. Apptio’s TBM solutions play a critical role in helping companies accelerate IT investmentdecisions,cloudinitiatives,strategicsourcingimprovements, and other key business initiatives. Global enterprise customers rely on Apptio® products and services to reduce costs and align IT with business priorities. For more information, visit the Apptio website or the Apptio blog at www.apptio.com. APPTIO | 7

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