IT Benchmarking: Finding Cost Efficiencies in IT Delivery

IT Benchmarking Hero

“We plan to have benchmarking become a part of financial target-setting to provide insight and improvements. They are an important input to targets, as well as a divining rod of sorts to see where we need to explore further opportunities.”

Corporate overview

This study features a large, US-based healthcare provider that employs 8,200 people.

Executive summary

Health care firms are facing unprecedented pricing pressure from insurers and regulators. Without the ability to pass cost increases on to consumers, health providers are looking for cost efficiencies in IT delivery. A large, mid-western healthcare provider terms it a “cost reform program”, and has turned to Apptio for assistance by licensing Apptio® Cost Transparency, Apptio® IT Planning, and Apptio® IT Benchmarking. IT benchmarking is helping this provider execute cost reform program to offset health IT cost inflation and to keep prices down.

Business needs

Comparing IT infrastructure costs to industry peers is important for this large healthcare provider because they need to consistently find cost reform opportunities while avoiding the trap of under-investing in IT delivery. However, traditional IT benchmarking efforts, which have required a 6-week to 3-month effort, have resulted only in point-in-time snapshots of IT costs, as well as being incompatible with ongoing calculations.

Needing a way to formulate their budget with a targeted $6M in cost structure reform, this mid-western healthcare provider selected Apptio’s TBM applications.


Given a 30-day timeline to provide actionable recommendations for the budget, the healthcare provider chose Apptio IT Benchmarking to help generate cost reform recommendations. The organization investigated opportunities within its IT infrastructure and used Apptio IT Benchmarking to make comparisons with organizations of similar size, industry, geography, and complexity.


  • IT spend as a percentage of revenue
  • Infrastructure categories including networking, storage, PCs, and servers
  • CapEx versus OpEx data
  • Fixed versus variable costs

The healthcare provider used ongoing IT costs already being calculated through Apptio Cost Transparency as the starting point for the benchmarking comparisons. Because these costs are calculated via a standard cost model of IT towers, sub-towers, and financial cost pools, they were able to compare directly against the Apptio IT Benchmarking database.

Through Apptio IT Benchmarking, the healthcare provider focused on asset utilization and discovered that while they were highly virtualized relative to their peers, their storage costs were a clear area for cost improvement.

The healthcare provider also discovered a lack of storage tier definitions in the environment and used the standard benchmarking taxonomy, along with investigating policy changes, to begin moving low value data onto cheaper storage frames. The company plans to further leverage Apptio IT Benchmarking to provide storage infrastructure owners visibility into how storage is being utilized and where opportunities exist for additional cost reforms.

In addition, integrating Apptio’s dynamic benchmarking into quarterly planning and budgeting reviews has given the healthcare provider better visibility into its performance, and into new opportunities to provide more services with fewer resources.


The executive in charge of the healthcare provider’s benchmarking explained, “We plan to have benchmarking become a part of financial target-setting to provide insight and improvements. They are an important input to targets, as well as a divining rod of sorts to see where we need to explore further opportunities. ”

Less than 2.5-weeks to justify additional budget

Less than 2.5-weeks after the initial request, the IT infrastructure team was able to prepare recommendations based on insights gained through Apptio IT Benchmarking. They presented them to the CIO and had them accepted and included in their fiscal plan.

Apptio IT Benchmarking not only aided with cost takeout targets, but helped to justify additional investments in IT for the year and provided directional guidance for investment levels, giving the CIO confidence to make planning requests. Further, even with high virtualization levels, the healthcare provider identified opportunities to transform the data center and was able to explore scenarios that include building a new data center in partnership with their parent organization.

Apptio IT Benchmarking delivered insights that were easy to understand and highlighted a new view of the total costs which are now manageable within the operational cadence, such as internal help desk costs per ticket, internal storage costs per terabyte, and total data center costs.

Identified $6M in IT cost reductions

The large, mid-western healthcare provider used Apptio IT Benchmarking to meet the rugged new demands of a difficult market environment by providing insights to achieve the targeted $6M in cost takeout. Finding storage opportunities proved to be the low hanging fruit. Using the standard Apptio cost model, the healthcare provider is developing policies and procedures to guide the reorganization of its storage environment, reducing its run rate, and enabling $6M of run costs to be used for new value-added investments.

Quarterly IT planning informed by peer benchmarks

Leveraging a large selection of out-of-the-box metrics within Apptio IT Benchmarking, the healthcare provider self-publishes a quarterly scorecard of performance against peer groups and monitors changes in the environment over the course of the year. The benchmarking team-lead explained, “We are building dashboards and KPIs around key benchmarks to track progress against our new fiscal roadmap.” The organization’s CIO intends to use these quarterly metrics to maintain and improve key areas highlighted in the reporting.

Finally, because the Apptio IT Benchmarking module integrates with the Apptio suite of TBM applications, IT leaders at the healthcare organization can continue to demonstrate the ongoing value of IT through an understanding of both unit cost performance, as well as volumes driving overall or demand-based costs higher. Already, the company is taking its practice to the next level with dynamic “what-if” modeling to provide insight into the cost sustainability of new services, locations, and types of services to provide going forward.

Additional Resources