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ApptioOneMXBy 2024, 70% of successful CIOs will have a dedicated ITFM system or tool to help clarify and analyze total IT spend.
What’s driving this adoption? A realization that IT leadership needs help turning insight into action.
CIOs have the pressure of digital transformation while needing to fund new initiatives with the same budget. This needs a purpose-built solution for ITFM and a new mindset.
In the old IT operating model of on-prem, heavily-capitalized assets, measuring impact meant a litany of operational metrics and context-free budget variance analysis. No longer.
The new IT operating model is awash with options—and each needs more then “feeds-and-speeds” to quantify impact.
| From the old IT operating model | To the new operating model |
|---|---|
| Waterfall | Agile/DevOps |
| On-Premises | Cloud Services |
| Tactical Outsourcing | Strategic Sourcing |
| Demonstrating Value | Creating Value |
| Fixed, CapEx | Variable, OpEx |
| Annual Budgeting | Continuous Budgeting |
On-prem, cloud, hybrid IT, Agile development: How do you take insights into these parts of the new IT operating model and drive action to accelerate transformation?
IT leadership must be as agile and responsive as the new IT operating model and embrace a new mindset to drive change.
The “old ways” of managing IT
The operating model has changed, but the mindset of operational excellence over everything else persists.
Cloud solutions only crossed the chasm of mass-market adoption five years ago. That’s too short a time for IT leadership to have organically overcome the entrenched perception of how IT leadership tracks, communicates, and increases IT value.
| “Old Ways” | “New Ways” |
|---|---|
| Defined by total spend | Defined by delivered value |
| IT is a cost center | IT generates revenue |
| Leads with IT tactics | Leads with business strategy |
| IT spend is the lead KPI | Revenue growth is the lead KPI |
| IT spend isn’t aligned with revenue generation | IT support for business goals shown to C-suite peers |
| Defines IT success with operational metrics | Communicates IT success as a business differentiator |
| Legacy solutions are a brake on digital transformation | The new IT operating model drives digital transformation |
| CIO is cost center leader | CIO is a business leader |
| Judged by operational efficiency | Judged by contribution to revenue growth |
| CIO provides operational support for IT tactics | CIO is the go-to person to make technology a business differentiator |
| A CIO is a nominal member of the C-suite | Trusted collaborator with C-level peers |
| Siloed view of corporate IT | Supports C-suite peers revenue growth |
| Tools first, behavior second | Behavior first, tools second |
| Accept the culture as unchangeable | Drive culture change by thinking big and acting small |
| Stay in swim lane of IT | Build a reputation quickly and align with C-suite peers |
Establish a common language with improved financial transparency
Transformation begins with getting your peers on the same page. Too often, IT leaders cannot get past operational issues and have little time to work with stakeholders to address new capabilities or support transformation. Even when the time is carved out, a CIO, CEO, and CFO fail to share a (financial) language.
Look no further than the financials. Every technology resource – people, hardware, software, vendors, and facilities – shows up in your financials. If it was paid for, the financials capture it, and money becomes the common language that the CIOs and their peers speak in.
In the old IT operating model, the CIO is often regarded as the custodian of a department cost center with little strategic value. Fail to deliver financial transparency, and you are doing your part to keep that narrative alive.
Improve transparency:
- Speak in business terms. Provide views of financials that address the different needs of stakeholders. These views require more than (static, error-prone) spreadsheet manipulation. Multiple views of IT spend (e.g., by initiative, RTB/GTB, project, vendor) gives stakeholders agency, and access to financial transparency.
- Commit to specific views. Gartner recommends CIOs master four views of the budget: the traditional view, the technical view, the business services view, and the investment view.
- Demonstrate IT as a growth-contributor. Establish and maintain good rapport with the C-suite. One of the fastest ways to do this is to display financial acumen and demonstrate how IT drives top-line growth.
Accelerate decision-making with actionable insights
Given enough time and people, you can provide these data points, but they can’t keep pace with the demand for information and insights with spreadsheets. Time is your enemy. A software-driven approach is your best weapon.
Apptio’s Insights & Action Plans automatically notifies users of opportunities for optimization, areas of hidden spend, and variance from forecast.
Accelerate decision-making:
- Adopt a software-driven approach to surface and capture insights. To effectively manage finances and communicate value on a continuum, CIOs need multiple categorizations of the budget. These views are critical to elevating the strategic business impact of their investments. Different stakeholders have different expectations from IT spending and investments—serve them a financial view that meets those expectations.
After establishing a common language with improved financial transparency and accelerated decision-making with actionable insights, you are ready for the following:
- Establish a culture of fiscal responsibility
- Baseline and benchmark against peers
- Improve budgeting and forecasting mechanics
- Drive continuous cost optimization
