If there is anyone that knows more about Technology Business Management (TBM) than Todd Tucker, VP of Standards Research and Education for the TBM Council, you would be hard pressed to find them. Apptio caught up with Todd during a rare break in his globe-trotting schedule this week to talk about the where TBM today is and where it is going tomorrow.
Allen: Hi Todd. Thanks for making the time to speak with us today. I want to start off by talking about the growth of TBM. I’ve seen some impressive numbers coming out of the council of late, specifically a 55 percent growth rate year-over-year. That’s impressive. Can you give us some insights into that growth?
Todd: Thanks. It’s great to be here. The 55 percent number is great, and we trained over 2,300 people last year around the globe, but we still think we’ve just reached the tip of the iceberg. There’s increasing awareness of TBM among CIOs, infrastructure and operations leaders, IT financial managers, and so on, but when you look at IT, corporate finance, and procurement — where TBM provides tremendous value — there’s still very little awareness of TBM. That continues to be one of our main missions, to increase awareness of TBM: what it is, why it’s necessary, how it applies to other jobs beyond just core TBM office or practice or program. So, yes, the short answer is we’re still at a fairly small enough in number that we should continue to see double-digit growth.
So what’s next for TBM? What are some of the new things you are focused on?
The future of TBM is connecting it to other disciplines within IT, within finance and, to some degree, within lines of business especially around digital and agile. By connecting TBM to those other disciplines, they’ll understand the relevance of TBM to their jobs.
Let’s say you’re a technology owner; maybe you are the person that owns cloud for the organization or you own a set of applications. With TBM, you now know what you’re responsible for in terms of consumption of your product or your service, the cost of that, the value that you’re delivering for it the business impact and so on, right?
To put it another way, as business becomes more technology driven, and not just technology dependent, managing the business of technology will become more prevalent.
The future of TBM is seeing it go beyond something that is thought of as IT finance to truly being the way the organization manages everything that it does.
And it does all of that simply by tracking the money?
It starts with the money. What TBM allows a CIO and a CFO to do is to create an incentive structure for the organization that drives the behaviors that you want. Because technology is everywhere and underpins business processes at every level of the organization, people begin to understand the connection between what they’re doing and how the business is performing.
It’s all tied to the financial model of the company. The ones that do this really well think about how to engineer their incentive model for key decision makers. Anybody who owns a budget, owns resources, manages people, etc. it’s really important that they are aligned with the common goal of the company. TBM enables them to do this.
The benefit of that is that you not only align what people do and the resources you have to the mission of your organization, you also improve things like security and risk through that accountability model.
How does that help organizations run better?
Usually, CIOs connect TBM to some bigger transformation like cloud or agile. Sometimes that transformation is to become a better service provider to the organization by defining services, creating accountability for services, and so forth. That’s really common but even more common today are two other major trends.
One is cloud and public cloud adoption in particular and using public cloud wisely; ensuring that, again, the resources that you’re consuming there line up to the mission of the enterprise by managing contracts and cloud service providers properly. And that the business, in turn, is consuming it properly, all that is really crucial. So cloud is one of the trends that TBM helps with.
The other is agile. Three years ago you would say “agile” to a group of people, and you’d get eyes rolling. Now, when we talk about it, what we find is that large and small organizations alike are embracing agile in almost every industry. We even see it in federal government, we’re seeing it big in financial services, we’re seeing it a lot in healthcare and so on. In industries that are very risk averse and yet they’re the ones that are often leading the charge on agile.
The hardest thing about agile is enabling a product manager and the business owners, the people who are responsible for the ongoing success and value of the products and services they’re delivering. And that requires business acumen; it requires a financial acumen. It requires those more than it requires a technical acumen.
Companies that have made this shift, they’re struggling because they’ve had all these technology managers who are having to change the way they look at things – shifting from a project mindset to one of products or services. Products and services outlive projects, and so their resources, investments, etc. have to be managed throughout their lifecycles.
It’s not looking at hours like you traditionally do with agile teams, you’re looking at where people are assigned and tracking their costs that way. Basically, TBM brings the financial and business discipline to help them do their jobs better. That’s where we’re going to see the greatest value in terms of how TBM is applied.
It’s those three things: service transformation, cloud, and agile. All three of which, oftentimes, go hand-in-hand.
Okay, so I want to touch on the Taxonomy 3.0. Can you talk about that a little bit?
We are always re-evaluating the taxonomy. Our goal is to release an update once per year. That was the 3.0 release. What we found this year was impacted by agile and how organizations were organizing around services, so agile, and more specifically services, factored into a lot of the conversations that we were having around the taxonomy.
We recognized there are two major types of business services that were important to identify in the new taxonomy. One was the shared services that support functions across the organization. So things like HR management, procurement, or accounts payable.
And then we have those that are business unit specific, what we call business services. So if you’re in health care, for example, you might have IT-provided services that are related to clinical or labs. Both of these types – Shared Services and Business Services — are new to version 3.0 and replace the Applications and Services layer of the old taxonomy. We now call this layer “Products & Services,” to reflect the terminology used by many organizations.
The split into the two types is important. We’ve found that Shared Services are going to be very common across every industry. By for separating Shared Services from the rest, TBM implementers will be able to say, “Look, those match what we use.”The Business Services, on the other hand, these are very unique industry to industry. By separating these out, we are allowing for our community, working with our Standards Committee, to augment the standard taxonomy with industry-specific services in the future.
Basically, by providing a combination of industry-agnostic and, in the future, industry-specific products and services, we will enable IT leaders to adopt and deploy TBM faster and easier.
I noticed that the White House has endorsed TBM. Can you talk about that a little bit?
This past year, the White House administration issued what’s called the President’s Management Agenda. In that is a set of cross-agency priority goals, or CAP goals. And those CAP goals are really about how the agencies change the way they deliver on and execute their missions, especially in regards to the use of technology.
One of the things that they talk about is improving transparency so they can improve decision making, reduce costs accelerate missions, and so on. They made TBM a core part of CAP goal number 10. It sets a goal for all agencies to implement TBM by 2022. That’s great news.
However, we still find that administration is defining what it means to implement TBM, or “true TBM.” Many federal professionals seem to think it’s a compliance issue, but the Federal CIOs that we know who have implemented TBM well – at the General Services Administration and Department of Education, for example – compliance is a bonus of TBM, not its purpose. Instead, they focus on improving value for taxpayer dollars, which is a good thing for all of us. I hope more follow their example.
You’ve also recently established a European TBM Committee so what I’m curious about is what does adoption look like in Europe at the moment?
European companies tend to be very financially savvy in their IT organizations. They’ve had what they call IT controllership in place for years. And they’re often very mature about IT service management. Many adopted ITIL [IT Infrastructure Library] and IT service management long before most U.S. companies. ITIL was created there.
ITIL isn’t required for TBM, of course, but having it in place provides a foundation to build off and implement TBM. In Europe, though, the challenge is seeing TBM as more than just IT controllership, which is just financial management.
And as far as market adoption, it’s heavier in the UK, especially among financial services companies. I would say we’re just really starting to drive awareness and adoption outside of that. There are certainly some bright spots in both private industry and government in Europe, for example, the government of Sweden adopted TBM across eight of their different agencies including their tax agency.
How about Asia and Latin America, any uptake there?
There are some organizations that are adopting it but not quite at the rate we’ve seen elsewhere yet. We’re seeing some adoption in Australia, a little bit of traction in New Zealand, both government and the private sector. Largely banking. In Australia, you’ve also got some other industries represented like retail, some government.
There’s tremendous interest in Singapore because it is such a hub of large companies. Some are large Western companies with the Singapore operations, some are Singapore-based, so there’s a lot of interest there. We’ve also seen adoption in Japan in automotive.
This is all natural, of course. But I’m excited about the prospects. Japan, for example, was the first to adopt modern cost-accounting and quality management methods that were developed in the west. They perfected them and used them to great advantage. We could see the same thing with TBM…just because it was invented in the west doesn’t mean it won’t be perfected abroad.
There certainly seems to be a lot of opportunity for TBM to expand its reach.
We’ve really just scratched the surface. There’s tremendous opportunity. The companies that have adopted TBM are passionate about it. They’re vocal about it. They get very involved. It’s kind of amazing to see all that. You go to our conference, and the level of passion that people have for TBM is awesome.
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