Technology business management (TBM) was once referred to as a “journey,” which made adoption sound like Homer’s Odyssey—an epic adventure with unknown twists and turns.
But as TBM has evolved, those early explorations have paved a well-travelled path to achieving full TBM impact. IT leaders engaged in TBM today are leveraging successful experiences to continually improve IT services and increase business value. Many find themselves on a spectrum, ranging from “let’s get an accurate read” to “we’re confident we’re driving business impact.”
Whether you’re testing the waters or you’ve jumped in head first, there’s now a map for understanding your progress—one that can guide engagement and help you reach your objectives.
How to chart your course
Five years ago, the TBM Council partnered with McKinsey & Company to evaluate IT leaders at various stages of TBM implementation. More than 250 enterprises of different sizes, with varied IT budgets, and from a broad range of industries were surveyed and interviewed.
The resulting TBM Index classifies organizations by the degree of sophistication of their cost models, service catalogs, allocation methodologies, and budgeting processes. Over time, the index has evolved to holistically measure TBM maturity levels across multiple dimensions (service orientation, operating model, tools, management capabilities, etc.).
The index groups IT leaders into stages with common denominators. While the research indicates all TBM adopters share a baseline desire for financial transparency, improved business interactions, and cost efficiency, the ability to impact the business increases in parallel with TBM maturity. The more engaged IT leaders are in TBM, the more they’re able to impact the business.
Five maturity archetypes
Organizations tend to fall into one of five archetypes representing different levels of TBM maturity. Each level builds on the next, adding layers of activity that enhance adoption.
Level 1: Transparency-driven
This TBM adopter is busy creating transparency around IT cost, performance, complexity, and consumption. This might include mapping IT costs to business services, demonstrating costs to the business (“showbacks”), and implementing tools and processes to make data easier to review and interpret.
Level 2: Cost optimizer
The level 2 archetype blends transparency with cost optimization initiatives, even as the IT organization continues to meet existing business needs. This includes identifying and linking major cost drivers to business services, enhancing showbacks, and sharing IT economics with C-suite decision makers.
Level 3: Portfolio optimizer
With increased transparency and optimization, IT leaders optimize portfolios. Level 3s are working on aligning IT with the business portfolio, and beginning to shape this portfolio with TBM-driven initiatives. Showbacks are more granular (unit cost, volume, and service level), demand and business alignment are actively managed, and a productized operating model is developing.
Level 4: Services provider
The services provider is enabling new business capabilities and leading from a service orientation. At this stage, the business/IT relationship has evolved into much more of a partnership and IT is building management capabilities around economic opportunities. Some level 4 teams are charging consumption costs back to the business.
Level 5: Digital enterprise
At level 5, TBM practitioners are driving business transformation and significantly changing the role of IT in the organization. These folks are enabling new customers, providing new products, and more. They recover consumption costs and have adopted a service-oriented operating model, offering standard services covering more than 80% of business needs. Finally, they are developing management capabilities around innovation, economics, and continuous improvement.
Where do you stack up?
Knowing where you fall in the maturity spectrum can help you identify opportunities to derive greater TBM impact. For organizations that haven’t yet implemented TBM, even just dipping your toes in the water creates a ripple effect that drives bottom line financial impact and operational improvement.
The TBM Index can help you identify key enablers, in order to:
- Develop an understanding of what “great” looks like
- Create a holistic roadmap to achieve your desired TBM end state
- Define metrics and targets to quantify and track TBM value
- Utilize change management principles to shift thinking
- Bolster executive sponsorship across IT, Finance, and Business
- Improve business engagement capabilities within IT
- Address data gaps and tool challenges
For those already immersed in TBM, index research proves that continuing to evolve your practice can increase or even double your impact. Those who have reached a level 4 or 5 TBM maturity status will attest: they’re still finding plenty of ways to transform the role of IT and their engagement with the business.
Where do you fall in this spectrum and what are the TBM-enabled opportunities that lie ahead for your organization? Take our short assessment to gauge your progress and learn how to take the next step.