The company used TBM capabilities with Apptio to allow itself to spend 80% of its time providing value-add analysis and only 20% gathering and reconciling data.
As a retail organization, cost management is a strong focus across all departments, including information technology (IT), especially since many in the company still consider IT an overhead expense. As the IT head of finance and TBM program director explained, “IT is seen as a cost center, so being able to talk to the value that IT is adding is critical to ensure we continue to invest in technology.”
The entire business operation at this Australian food retailer — from the back office to the stores and throughout the supply chain — relies on technology. Therefore, cost transparency of all technology spend is essential for business unit leaders to understand where their money is going and the value they’re receiving from their technology investments.
In addition, the organization is embracing more cloud and e-commerce solutions and shifting away from a capital expense (CapEx) model to an operating expense (OpEx) model, where decision-making needs accurate, timely data. “IT is becoming a variable cost, and decisions have live impact,” said the director. “It’s a very different world from where IT was a few years ago.”
But providing cost transparency across all technology spend was a challenge. This retailer relied on spreadsheet-based budgeting, forecasting, and financial management process that was time-consuming, labor-intensive, and prone to errors. “Our spreadsheet solution was unsustainable,” said the director. “Our process was too manual for our fast-moving industry. We could see cloud was coming … this variable cost world was coming … and spreadsheets weren’t malleable enough to allow us to be prepared for that world.”
To address these challenges, the IT finance team needed a way to automate their financial management and month-end processes, eliminate spreadsheets, and improve communications with their business units.
The team considered several possible solutions. They decided upon Apptio because the product automates data gathering, cost allocation, and modeling. “ATUM (the Apptio TBM Unified Model) was clear and efficient,” he said. “That’s what made the difference for us.”
The retailer first implemented Apptio’s solution for IT planning in 2017 and then followed that with Apptio’s solution for technology cost transparency in 2019.
Improved data quality and automated cost allocation
When cost data resides in disparate IT systems, getting quality data can be challenging. “Implementing Apptio was a key catalyst to get data accuracy across IT,” said the director.
This has enabled the retailer to refine their cost allocation model and present transparent technology costs back to the business. “We were able to create transparency to each business unit on what they were spending, what spending was under their control, and what the ongoing implications were of the investment choices they were making,” said the director.
Increased effectiveness and morale
Apptio was instrumental in helping to change the make-up and efficiency of his team’s work. “Pre-Apptio, we spent 80% of our time gathering and reconciling data and only 20% of our time doing the analysis,” said the director. “Now, that ratio has completely flipped to 20% gathering and reconciling and 80% on value-add analysis.”
This change has had a direct impact on team morale. Before implementing Apptio, 60% of the director’s team felt they didn’t have the necessary tools to do their job. After implementation, the number dropped to 20%. On top of that, the team now has the information it needs to uncover savings. The director explained, “Let’s say I wanted to look at vendor cost. Where is my vendor spend going? I now have a system from which I can pull that information, do a quick analysis, and answer that question.”
Fast, accurate budgeting and forecasting
The budgeting and forecasting process was difficult and time-consuming because spreadsheets supported it. “Rolling over hundreds of Excel files, sending out budgets, and collating the results took a lot of work. The rolling over function took four to five weeks. And of course, there would be errors because it was all manual work,” said the director.
With Apptio, the rolling over function is much faster and more accurate. “The (rolling over) time dropped to just a few minutes because all you have to do is press a button.”
While the overall budgeting cycle remains consistent, the key benefit is the IT finance team now spends most of that time doing financial analysis — working with the business units to find ways to help the organization — instead of building and manipulating spreadsheets.
Improved trust and partnering with business units
Apptio has provided a “single source of truth” for technology cost data at this retailer and has enabled the director’s team to be more productive. The ATUM model has given the team a simple and consistent way to communicate technology costs in business terms. This has allowed them to build rapport and trust with other business units. “Better business partnering ultimately leads to better financial outcomes,” he said. “I can unleash my team to be the best they can be and drive the right outcomes.”
This retailer has a 12-month roadmap of activities, including opening up Apptio to all cost center owners and digging into its cloud spend. “We are looking to go deeper on the cloud piece,” said the director, “so we can get greater transparency and control of our cloud spend.”
To learn more about how Apptio can help your organization, increase technology cost transparency, streamline budgeting and forecasting, and better manage your IT spend, visit apptio.com.