Technology is no longer only supporting the business, technology has become an essential cornerstone for virtually any organization. With its ever increasing role and dominant importance, the need to manage that role differently has increased as well.
Many organizations have been struggling with the way technology has been managed. With the introduction of TBM (Technology Business Management) business and technology leaders now have a way to jointly manage technology spending for both running and growing the business.
TBM provides a framework for understanding the relationships between the business and the level of technology spending. CostPerform offers you the needed financial and operational tooling to implement the TBM framework within your organization. Find out how 450+ companies in 45+ countries have improved their financial discipline by using CostPerform.
For more in-depth information on the research and science behind the TBM methodology, visit tbmcouncil.org.
The TBM Council is a non-profit membership organization with forward thinking CIOs and senior IT executives with a common goal:
Establish and promote business management standards and practices that empower IT executives to collaborate with their business partners to identify and execute impactful technology strategies to achieve corporate objectives.
Every so often business and technology leaders will find themselves in discussions around budgets and technology spending. While both understand dollar amounts, rarely the same language is spoken in those meetings. IT leaders state their budget in terms of computing, storage and data center necessities. Business leaders want to talk about products, markets and services.
By linking these different languages through a common taxonomy that both parties understand, the right conversations can start. For running the business, IT will be able to show its value to the business, while the business is able to align its portfolio with the incurred IT spend of that portfolio.
And while growing the business, the two parties can actually sit together and look at innovation possibilities through a common lens. It even allows for the right discussions on agility of the business by trying to change the IT cost structure to as much variable cost as deemed appropriate.See examples
For decades IT has been seen as a cost center or a part of general company expenses. Consequently, it was run as such: top down budgets and straight cost allocations through to the different business units. There was never an incentive to truthfully manage the IT department as if it were a business unit of its own.
Over the last couple of years, many technology leaders have adopted a more business-like philosophy where the internal business units were “treated” as clients. Those technology leaders usually created product and service catalogues with associated prices. Although this translates into running IT as a business, TBM progresses beyond that. It ensures the IT department is run with the business.
Instead of IT defining its catalogue, it is now the business that drives the services coming from IT. And with the right linkage between the business and IT, these volume-based drivers extend towards something far more sophisticated than a simple products and services catalogue. By continuously improving this linkage, the integration of IT within the business becomes almost seamless.
In CostPerform you can literally and physically link your IT model with the Business Models, where output of the IT model is input for the business models. Reversely, changes in the business models, will automatically result in changes in your IT model.See examples
While establishing the linkage between the business and IT, another opportunity arises as well: full transparency. Since every line item of IT can now be traced back towards the business initiatives and vice versa. It is time to open up this information and use it for different purposes.
First of all, you should supply the business with a detailed bill of IT so demand can and will be shaped with the right cost consequences in mind.
Subsequently, you can show differences between business units, time periods, budget/actual based upon the right conversations. Are the differences a result of increased/decreased volumes or is input price a factor?
Last but not least you can drastically improve and shorten the budget period by linking the budget directly with the business needs. It will be the business who decides the needed level of IT budget.See examples