IT Cost Transparency for Lean IT Operations

A number IT organizations today have IT Cost Transparency initiatives and while the definition of this varies a bit from place to place, it shares the common objectives of providing deeper visibility into the cost of IT for the benefit of better cost management within IT and greater alignment with the business units. By improving transparency into the fundamental unit cost drivers, managers across IT can make more informed decisions on reducing cost of IT. By providing transparency of the cost of IT Services to the business units, they will naturally align resources around the services that provide the greatest value to the business.

"IT Cost Transparency is critical to understanding customer and service profitability in an on demand business. Apptio's solution has provided us visibility into total costs, allows us to track those costs on a monthly basis, and identify cost optimization opportunities that will improve profitability and generate a return on our investment within the first six to twelve months." Ravi Balwada, Vice President On Demand Operations, SumTotal Systems

Automating IT Cost Allocation

IT organizations that have a good understanding of their fully-loaded costs to deploy an IT service are more effective at managing their costs and eliminating wasteful practices.

IT Service Cost Allocation—the process of understanding the costs of a service and allocating the correct portion of those costs to the appropriate business unit or consumer—is critical in understanding how IT is being consumed and how to optimize the cost of IT. With a good allocation platform in place, IT has the data it needs to answer the following questions:

• How much exactly does each service cost to operate each year, and why?
• What can I do to reduce cost without cutting quality of service?
• How does that compare to benchmarks—Is that good or bad?
• How cost effective is internal IT compared to other alternatives (SaaS, Cloud)?
• I can analyze the ROI of big cost reduction initiatives, and track progress over time?
• If I want to spend more on something that is strategic to me, how can we shift funds?

But as IT infrastructure becomes more complex and virtualization blurs the lines between physical and virtual, calculating the cost of an IT service becomes exponentially more difficult. Spreadsheet-based models have already reached their limit in solving this problem, and are incredibly difficult to maintain.

Proper Technology Business Management (TBM) systems solve the complexity problem by automating data updates, creating a single system of record that tracks changes over time and providing a platform to drive better decisions and deeper understanding of fundamental cost drivers.

A Bill of IT for Clear Transparency into the Cost and Value of IT

Start with producing a Bill of IT on the cost and value of IT Services each business unit consumes. Apptio helps you model the allocation of unit cost (infrastructure, software, labor, facilities) to each IT Service in your service catalogue and those services out to the business units. Cost, quality, utilization and performance metrics can be model for a complete report on cost and value.

Since most organizations have incomplete cost and quality data for all their cost drivers, Apptio helps build a quick Bill of IT given the information currently available—in as short as 3 weeks—and provides the flexible framework to introduce more precise cost and quality information as your systems mature. For real-time tracking of unit cost data based on true consumption, Apptio ties into existing financial, systems management and other systems for Activity Based Costing.

Get Started Today

Every business that has implemented TBM has found significant savings and operates at a more efficient cost structure than previously. And every company, upon starting, has faced challenges of incomplete data and competing resources. However, Apptio's DataLink, Inference Engine™ technology and Slowly Changing Schema help companies quickly model their fully-loaded cost structure, make sense of existing data while allowing for assumptions and best estimates where data doesn't exist and provide a seamless path to improving data accuracy as processes mature.

A Complete Suite for IT Cost Transparency

Apptio's Technology Business Management (TBM) solution goes beyond IT Performance management to provide a complete suite of functionality to Manage the Business of IT. Apptio provides five TBM modules include Service Costing, Bill of IT, IT Benchmarking, Budgeting and Forecasting and Service Quality & Utilization Management. These modules help IT and IT Finance managers systematically reduce cost, track the fully loaded cost and quality of IT Services, improve budgeting and planning processes and better communicate the value of IT to all key business stakeholders.