Navigating the Growing Complexities of Technology Spend Management

The complexity of technology portfolios has only accelerated in recent years, necessitating a modern approach to manage costs and drive performance.

One thing you should know about me is that cars are a personal passion. In particular, I have an affinity for V8-powered sedans and sports cars. While I appreciate the impact electric vehicles have had on the environment, they do lack a bit of soul (they’re basically computers on wheels). But I’m also passionate about technology, and as a leader of a SaaS business, I appreciate the innovations electric cars have driven. They’re also emblematic of something my old CEO at VMware, Pat Gelsinger, now at Intel, used to say: ‘Tech is breaking out of tech.’ Every company is now a technology company, whether automotive, manufacturing, retail, financial, etc. And while you can work on a V8 at home, you can’t do anything when you pop the hood on an EV – the tech is just too complex. That’s the future we’re moving into where you’re no longer manually turning a wrench, you need proper tooling and are looking to automate software updates at scale.

In that vein, the strategic importance and purview of technology leaders has changed dramatically in recent years. As a domain, technology footprints have quickly expanded in both size and scope, becoming increasingly distributed and complex, making it impossible to manage by hand.

Technological Advances Create Ripple Effects

Artificial intelligence (AI) and cloud computing represent areas of technology that continue to evolve. With AI, we’ve seen waves of innovation, most recently with generative AI – leading to a flurry of recent investment. Similarly, the adoption of cloud computing has continued to accelerate. Both of these modern technologies are energy and resource-intensive, requiring significant investments to support associated projects.

But the complexity isn’t limited to innovation in software and hardware. The expansion of diverse technology footprints increases cybersecurity risk and invites further regulatory compliance and governance considerations. There’s also the matter of shifting from CapEx to OpEx and variable spend models along with decentralized provisioning, making spend less predictable.

Cost Management is More Essential Than Ever

Factoring in all the above, it’s easy to see how costs can quickly spiral out of control. How do you effectively wrap your arms around such a vast and multi-faceted technology footprint? Over half (55%) of business leaders say they lack key information regarding their technology spend decisions. And despite the promise of cloud – including scale, security, flexibility, and faster innovation cycles – the vast majority (75%) of enterprises cannot boast a solid ROI from cloud transformation.

Managing costs becomes an absolute imperative – and costs can accumulate in a multitude of places. To name just a few, tech leaders must keep an eye out for redundant applications, overprovisioned infrastructure, underutilized software licenses, the technical debt of legacy systems, and inefficient vendor contracts. The variable spend model of cloud also introduces a host of new challenges, including risks of overprovisioning, leaving resources idle or underutilized, and just navigating the labyrinthine pricing and discount models across public cloud providers.

Even though Gartner predicts an 8% increase in IT spending in 2024, increased technology budgets come with very serious provisos – company leadership wants to see performance. Not just technical performance of the solution but positive outcomes for the business. Tying investments to outcomes when operational and financial data is spread across a multitude of systems and business units can feel like a monumental task. It gets more challenging still when you’re trying to connect technology spend to key corporate objectives like operational efficiency, agility, resiliency, risk reduction, or revenue. No matter how difficult, these are the expectations technology leaders face.

Harnessing Tech Investment Growth Requires a Modern Approach

In the past, when businesses grew and inevitably became more complex, you could solve complexity through personnel. Just hire more people to throw at the problem. However, technology is accelerating too quickly, and you cannot solve an exponential problem with a linear solution. The wrench is no longer useful. Modern technology management requires proper tooling and automation – a single source of truth for monitoring and optimizing investments. There’s just no other way to keep pace in this dynamic environment.

At Apptio, an IBM company, through Technology Business Management (TBM), FinOps, and Enterprise Agile solutions we’re providing our customers a way to efficiently collect operational and financial data from across the enterprise and, importantly, translate that data into terms that stakeholders across the business can understand – outcomes. This is how you get beyond conversations of cost and start collaborating to drive performance. Equipped with data-driven insights you can get to the meaningful work of building a cohesive strategy.

Our customers have seen the impact of having this comprehensive view. As the CFO of Global Business Services at Unilever, Gopalan Natarajan, shared, “Today, Unilever supports a platform-based strategy, leveraging technology business management (TBM) and Apptio to align IT capabilities to enterprise strategy via cost transparency. Within 15 months, the IT team has established complete end-to-end ownership of services with clear visibility into costs.”

With tech investments working in alignment with corporate objectives, the business of managing technology can move from a focus on basic run-the-business costs to grow-the-business innovation. This evolution is where we see companies take the reins of their technology spend and use it to successfully accelerate into the future.

I invite you to join the Technology Business Management Council to engage with your peers on how to drive more value from your technology investments. Also, be sure to check out our latest innovations announced at IBM Think that help drive cost transparency and business performance.

Additional Resources