A System to Track, Measure and Improve the Performance of IT

"How is IT helping the business achieve its goals?" An answer to that question needs to comprehend both how IT can accelerate top line growth and help control costs to improve the bottom line. To really optimize the performance of IT, companies need IT processes that keep focus on improving business performance and systems that both track key performance metrics and facilitate managing IT services to business outcomes.

Technology Business Management provides IT and business management with the system to track, measure and manage the performance of IT including cost, quality and key performance indicators.

"The Apptio software as a service offering allowed us to easily establish a model of how costs were flowing across all of IT and facilitated the development of a set of high level services against which we could map those costs. On an ongoing basis we can now track actuals vs budget in these areas and have the ability to effectively demonstrate to the business how IT investments align with HomeStreet's business priorities." Mark Gregory, CIO, HomeStreet Bank

Automating the Management of IT Performance

Any IT Performance Management initiative must include the following key areas:

• Business Value – IT's contribution to the business in business terms
• IT Demand Management – The relationship between what the business needs and what IT supplies
• Governance & Oversight – Tracking the ROI of IT projects and services, benchmarking to the market, monitoring alternate opportunities and measuring the success of technology improvements
• IT Efficiency – Measuring the efficiency of service delivery (cost, quality and productivity)
• Key Performance Metrics – Measure and report on IT key performance metrics

But any system, or set of systems, put in place to measure and manage these areas must be flexible enough to change with changing business requirements and easy to use as to not create work just to manage performance.

The Apptio Technology Business Management solution provides enterprises with transparency into the cost, quality and utilization of IT services and serves as a platform for managing key financial processes. It provides a powerful and easy to use system for managing costs, measuring ROI of projects and services, driving up IT efficiency by driving down costs and reporting the value of IT across business leaders. The business measures performance based on financial metrics, so IT must start its performance management capabilities with deep understanding of the IT's cost structure and financial performance.

Business Value

Everyone recognizes that IT is critical to business success. But to most the value that IT provides is difficult to measure. IT provides IT Services to drive Business Services and must therefore create systems to measure the cost and value of IT Services.

Business leaders talk of business services in terms of "cost per stock trade, cost per customer served, cost of product delivered, employee productivity, etc." IT must translate Service costs into these terms, not technology terms such as cost of a server, network port or service ticket, which mean nothing to business managers.

IT Demand Management

By tracking and managing the total cost of IT Services through proper service costing, IT can provide the business with a Bill of IT including the cost, quality and usage of all IT services consumed by the business units. This forms the basis for an ongoing conversation between IT and the business on the services being consumed, where their IT budget is going and what changes can be made to switch resources to higher value services. By following proper Demand Management processes, organizations can reduce IT spend by as much as 10%-15%.

IT Governance and Oversight

Through proper systems that track the cost, quality and value of IT services, including the long-term ROI of IT projects, and reporting on these metrics to business and Governance committees, IT can provide the proper governance to optimize ROI and IT cost efficiency.

IT Efficiency

There are many systems available to track the cost and value of IT projects, but in most organizations spend between 60%-75% of their IT budget on Run the Business (RtB or Keep the Lights On, KTLO) operations. To gain real cost savings and cost efficiency, IT must focus on improving KTLO operations. The biggest gains are made when IT has a deep understanding of the unit cost and cost drivers of IT operations, can drive proper Demand Management process and can use TBM systems to analyze the ROI of various changes.

IT Performance Metrics

Every business function has key performance metrics that role up to business priorities. For IT these may include cost reduction targets, shifting spend from KTLO to Change the Business (CtB) resources, increasing utilization of fixed assets (ROA) through virtualization or creating a more agile cost structure (variable vs fixed) through cloud, outsourcing or other initiatives. Invariably, managing cost and quality (downtime, tickets or application performance) of critical IT services is important. Having a system that tracks and reports on these performance metrics enables IT and business leaders to properly manage and drive higher performing organizations.

A Complete Suite for Managing the Business of IT

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.