Better TBM Modeling and Reporting with Workday Integration

“All wealth is the product of labor.” - John Locke

The best technology leaders I work with are laser-focused on creating the most business value from their resources. The list of potential places to spend the next dollar or direct the employee’s next hour of effort is never-ending. Having a disciplined approach to making these decisions is critical and is at the heart of Technology Business Management (TBM).

While we at Apptio tend to spend a lot of time talking about strategically compelling concepts like App & Service TCO and Showback & Chargeback, I wanted to take this opportunity to talk about something a bit more fundamental, and completely foundational to the ability of an organization to innovate and compete. I’m talking about the people that actually make all of this happen. In TBM taxonomy terms this is referred to as “labor”.

At about 50-60% of IT spend in a typical organization, labor is generally the largest component of the budget, and the largest component of most discretionary spending. This is why including Human Capital Management (HCM) data in your TBM model is so important. There are obviously many vendors that provide HCM solutions, but with nearly 10% of the market and FY’20 growth in excess of 20%, Workday is the clear leader in this space.

Hence, we are excited about our recent integration work with Workday and the value it brings to our shared customers.

The need for labor data in your TBM model

As a large portion of overall IT spend, the merits of bringing good labor data into your TBM model can seem apparent, but let’s take a closer look at all the ways this information can strengthen your model and ultimately help you make better and faster decisions. Internal and external labor are two of the primary Cost Pool categories in the TBM Taxonomy.

Figure 1: The Cost Pool layer of the TBM Taxonomy

By introducing this information, you can conduct fundamental variance-to-plan analysis and start answering questions relating to how much you spend within your organization for various roles – even across geographies. You can also understand the impact of open headcount and evaluate the financial implications of outsourcing some of this capacity.

Because of the way many organizations track IT spend across multiple systems and spreadsheets maintained by different people, even this somewhat foundational level of insight is more than many organizations can pull together. However, the real value lies in the ability to allocate costs from Cost Pools up the model to Towers and then to Solutions (Apps, Products or Services) and finally to Business Units or other business-level objects.

In particular, these higher-level allocations provide for:

  • Application TCO, where you measure and analyze the labor used to develop, maintain, and support business applications. It’s not enough to simply understand the money you spend on assets like software and infrastructure. How much labor is spent administering the application? What about in development costs (don’t forget to amortize those)? Only by having the internal and external labor costs can we truly understand the fully burdened cost structure of our applications.
  • Shared service cost allocation to business units, where you allocate the cost of a solution to the business units based on consumption or consumptive factors. If you have a solution, such as a service, for which you understand the total cost structure, what is the best way to allocate those costs to the business units? If headcount can serve as a good proxy, such as for an email or collaboration service, then HCM data can be the key to this allocation. Furthermore, if you’re using application entitlements (i.e. user accounts with privileges to use a given application) to drive your business unit allocations, your HCM data will help you connect users to business units and make the allocation possible.

 

Figure 2: Allocating labor through the TBM model

 

For a deeper understanding of allocation strategies of varying sophistication, I’d recommend reviewing this whitepaper - The Six Best Practices for Cost Allocation.

What the Workday connector provides

Workday is the HCM market leader. Therefore, integration with Workday directly benefits many of our customers. As with the other ApptioOne integrations, the seamless integration with Workday is supported by our Datalink technologies.

Datalink provides pre-packaged data integration templates (connectors) that allow you to move data between source systems like Workday and Apptio on a pre-defined schedule. Once connections are configured, Datalink provides visibility into integration jobs, executions, and errors, which improves the consistency of data in your Apptio instance.

When it came to Workday, customers wanted connectivity to the Workday RESTful API endpoints, thereby enabling businesses to automate the upload of tables and fields from their Workday system into the TBM master data sets. For the connector, we focused on reports which enable users to bring in data such as ‘Pay Rate Type’, ‘Cost Center ID’, ‘Worker Type’, and ‘Compensation Rank.’ The connector allows us to directly populate the labor cost pools and ultimately allocate spend appropriately into applications, services, and business units.

Figure 3: Workday Datalink connector setup

Current customers can learn more about the Workday connector here.

The path forward

Data is a big focus for Apptio in 2021. This includes how we bring data into the system more easily, similar to the Workday connector, how we organize the data quickly with our upcoming release of automated data classification (summer 2021), and how we intelligently mine the data to present you with information that is both insightful and actionable. We’re just getting started and look forward to sharing more with you in the coming months!

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Gründer und technischer Berater des TBM Council