Managing COVID’s Severe Disruption with Automated TBM

The COVID-19 pandemic, and resulting economic uncertainty, has made organizations revisit IT financial and operational plans. Every CEO, CIO, and CFO must simultaneously manage IT costs and accelerate innovation to come out on the other side of the disruption stronger than before.

COVID-19 has done more than drive uncertainty—it’s shaken up assumptions on how to achieve business success. COVID-19 has mainstreamed digital transformation—at an unprecedented pace—into every industry. Take retail. Curbside pickup was a thing pre-COVID, but now it’s the thing; a mobile app was nice to have, now it’s a necessity.  Whole industries—from hospitality to banking, healthcare to higher ed—are using IT as a differentiator.

Organizations are looking to IT leadership for financial and operational plans that deliver in this environment—and IT leadership is relying on the principles of TBM to make it happen.  The pressure to manage spend, accelerate innovation, and define IT value—not just cost—is perennial. But in 2020, delivering on all three is table stakes. COVID-19 has made the consequences of not managing this pressure an extinction event—IT budgets will be gutted in 2021 if IT leadership fails to make the case that IT is a value center instead of a cost center.

An IT org (and its budget) will emerge stronger in 2021 by acting quickly, focusing on operational excellence and efficiency, performing complex scenario planning, and answering questions about technology spend and cost variability.

Unfortunately, home-grown, spreadsheet-based processes for IT financial management aren’t fit for the new IT operating model of cloud solutions and agile development.

IT financial management for the old IT operating model of on-prem IT was labor-intensive and error-prone. Much like the operating model itself. Three-year depreciation cycles of fixed assets made IT financial management a long game: predictable spend spread over a defined time horizon.  Not so for the new IT operating model. Cloud solutions burden operational decisions with an immediate financial impact (e.g., adding more EC2 instances or changing instance types). A manual IT financial management process cannot keep pace with the spend commitments of auto-scaling EC2 instances. Organizations need an automated IT financial management solution that supports accelerated decisioning to reduce spend, optimize cost, and reduce risk.

The new IT operating model allows surgical adjustments to technology investments in near real-time, but the cadence of the IT annual plan or once yearly replan is too slow to resolve cloud resources billed by the second. Financial management of the old IT operating model (e.g., manual data wrangling, centralized procurement, small buying committees) can’t keep up with the new (e.g., millions of rows of cloud data, DevOps teams purchasing and provisioning their own IaaS and PaaS, dispersed cloud purchasers).

Apptio and TBM in 2020

Since 2016 has served as the de-facto guide to helping IT leaders communicate the cost, quality, and value of IT through the TBM discipline.

Today, the conversation has broadened to embrace the new IT operating model that includes cloud services, agile and product-driven development, continuous delivery that creates a flow of business value, new revenue streams, improved operational efficiency, enhanced employee productivity, and greater competitiveness.

Our new book, “Automated TBM and the New IT Operating Model,” available in January 2021, will outline the value of TBM in this new era while sharing the anecdotes and stories of organizations who have leveraged TBM, and TBM automation, to manage swift and severe disruption—up to and including COVID-19.

Interviews with members of the TBM Council community surfaced common themes.  Regardless of industry, IT leadership sees COVID as an accelerator of existing trends, a forcing-function for change, and a stress-test of TBM.

Here are some of the notable quotes we will expand on in, “Automated TBM and the New IT Operating Model.”

“COVID has accelerated existing trends.”

We aren’t making face-to-face sales calls.  We’re developing tools and innovation to allow those sales calls to happen very differently in a more digital experience. We have always had a make-what-you-sell strategy for our entire supply chain. COVID has made it table stakes. There’s a lot of digital work to identify qualified suppliers to ensure we have a healthy supply chain. We’ve shifted from get-up-and-running to working out how to get back on our regular agenda. We are looking for opportunities for the digitization of our business—pressing the pedal now and going faster.”
—CIO, Manufacturing and Hardware

“We had a telehealth platform for years. COVID has just expanded the demand and application of it—devices at home, talking on a phone, interactions with your provider, and within the hospital. It’s forced faster adoption.  We took a base of 50 physicians trained to do Telehealth to 800 within a couple of weeks.”
—CIO, Healthcare

“Higher education might have been lagging for a while, but I think the one outcome of the pandemic is that it’s shown us that we must move faster.”
—Executive Director of Finance, Higher Education

“It was a good shift in the minds of many people that working from home, and being more decentralized, is the new normal.”
—Global COO, Financial Services

“Everyone was set up with collaboration tools. We already had that in place, and it was a very easy transition. So, we found that we’ve been more productive during this crisis than we were even before—probably from quality of life getting to spend a little time at home a little less time on the road.”
—CFO, Security Services 

“COVID made us work, and think, in a different way.”

“Telehealth had complete buy-in from everyone. One of the major hurdles to Telehealth was reimbursement. Well, the government cleared that. The other was the adoption by physicians. But what else were they going to do? It’s the only way to see people. And patients didn’t want to drive to the clinic anyway.  People are starting to realize what you can do if you remove those types of barriers. That’s an awakening in health care that we’re going to have to see if we can hardwire.”
—CIO, Healthcare

“Pre-COVID, we would debate doing something for a year and a half, trying to find enough schools and centers to be interested in IT services—whether it be DocuSign licensing, Zoom, ServiceNow or Office365. It was an immense effort to get people on board and was high risk because we didn’t know people’s commitment.”
—Executive Director of Finance, Higher Education 

“COVID ripped the band-aid off some of the legacy requirements. We had the right security in place—that wasn’t the issue. We didn’t want to get in the way of people being more effective or efficient in delivering patient care. COVID lifted some things and allowed us to do new things, like nursing mobility. We built an HR cybersecurity functionality that could real-time process these nurses to get online quickly and do their job.”
—CIO, Healthcare Services

“We had been piloting and working on MS Teams and for months, and we were trying to get it just right. And then in two days, we said, ‘Okay, we’ve just got to do it.’ So, we ripped off the band-aid and rolled out Teams, and it was relatively flawless.”
—CIO, Sales and Marketing Services

“IT knows how to react to crisis because it’s the operational foundation of most companies. They know how to assemble themselves and as an incident response team that can connect. That’s the difference. You had super prepared ones, and then others, that made the jump. When I talk to CIO peers, one of the biggest surprises [from COVID] has been the CEO now ‘gets me.’ They got what I do for a living. They got the value of remote working. The crisis forced a reevaluation of needing someone to sit right next to them in an office.”
—CIO, Hospitality and Entertainment Services

“COVID validated our adoption of TBM best practices.”

“If COVID had hit a couple of years ago, and we were where we were without the trust, without centralized infrastructure, without an understanding of what we did and how much things cost, I don’t think we could have easily led the transition to remote work. Automating of IT billing was huge. It was a hot mess before. I can’t think how that would have looked during COVID-19. We would get stuff from different IT departments and cobble it together in a spreadsheet and send it out. But every month was a debate about whether something cost what it did. Billing also went out at all different times, depending on when we got the information. Now, it’s all automated. Now we get data from systems where the consumption happens and put it out on the fifteenth of each month.”
—Executive Director of Finance, Higher Education

“We were able to take emotion out of the process by using Apptio and the levers that we had already structured. We knew the vendors we needed to target and the levers that we needed to target, and we were able to pinpoint—to the penny—the amount of money that we could repurpose. We looked at the projects first and then basically what we could easily shut off as we’d already loaded projects with capital, OpEx, and the expected ROI. We make joint business decisions with our COO and our CFO: get rid of this one, defer this one to 2021, stop this, don’t do that one, etc.”
—CIO, Healthcare Services

“Way before COVID, we put ourselves in a quite good position because some of the conditions you need—digitizing your physical stuff—was already in place.  It was more difficult in other areas of the business because we didn’t see things in places. COVID showed us is that you need an infrastructure in place—tools, processes, people—that is resilient and recoverable.  Resiliency is key. The better your systems and organization, the better you’ll respond.”
—Global COO, Financial Services

“We had to repurpose our financials to support the decisions taken to support the hospitals.  It’s tough to take out costs when IT doesn’t get to a place where costs are transparent, tied to outcomes, and have an ROI. In 24 hours, we topped $100 million of inflight project work that we pinpointed within Apptio and moved it over to data and analytics, Telehealth, role-based access, and nurse training.”
—CIO, Healthcare Services

“We leveraged TBM to pull out about 14% of our plan to give that back to the business. We were focused on bottom-line contribution as well as improving our cash flow position, and we’re successful in both—having data helps you make swift decisions.”
—CFO, Security Services

“Let’s say I have $300 million that I spend on running systems. Part of the problem is you don’t know if you can do the essentials with $100M and repurpose $200M somewhere else. We did it project by project and vendor by vendor: two years ago, we would not have been able to it quickly. We did it in 48 hours. We have lots of vendors—more than I’d care to admit. Thanks to Apptio, we have a database of vendors and how much we spend with them, which gives you leverage. COVID has focused on the type of relationships we wanted to develop. If the vendor wasn’t in the strategic partnership realm, it went away.”
—CIO, Healthcare Services

Register for TBMC20

2020 has brought about significant change that has led to unprecedented levels of ambiguity and uncertainty.

The need to bring future forward while continuing to move at the pace of the market, has never been greater. How we adapt and recover will be key to setting our organizations up for success as we move forward in this new decade.

Starting November 9, we’ll launch the virtual edition of TBMC20, which will air over 100 on-demand sessions that can be accessed any time, any place and on any screen. We will also mix in live keynotes with surprises and special guests, host collaborative roundtables and workshops, and facilitate connections to other conference attendees. CIO Dive named TBMC20 a must-attend conference for 2020.

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