Like all industries today, financial services is fundamentally changing in the wake of technology disruptions. Ironically, in order to keep pace, most businesses in the sector are investing heavily in the very technologies that are disrupting them. Fidelity International is no different.

This arms race is driven by customers' demand for ever-increasing levels of service and lower costs, and it is resulting in a more judicious use of infrastructure technologies like compute, storage, and networking. In heavily regulated industries like financial services (post-2008's Great Recession), the need to recoup the costs of government oversight also is a major driver of cost recovery and efficiency. 

"The market is changing very, very quickly," said Noel Miles, COO of Fidelity's foundations team. "Technology is enabling that to happen and, to respond to it, we actively seek new opportunities and innovative ways to use technology, while ultimately putting the client at the absolute center of everything we do."

An impressive 50/50 CTB:RTB split

Even as demand for new technology increases, Fidelity's IT department is under intense pressure to deliver more capabilities with either the same or fewer resources. This means IT must find ways to shift budget from run-the-business (RTB) spending to change-the-business (CTB) spending. After doing this with spreadsheets for 10 years, Fidelity has managed to achieve a very respectable 50/50 RTB:CTB ratio—all while pulling a significant number of dollars out of the IT budget.

TBM and Apptio have only been in place for about 18 months, but adoption has already enabled the ability to examine costs in real-time. This cost transparency allows IT to provide line-of-business leaders with the levers they need to change consumption in a way that drives technology dollars to areas that will provide the most value.

"We were doing the best we could with the tools available, with data that was 9, 12, 18 months out of date," said Miles. "With Apptio, we're in the month, we're up-to-date. We know what we're doing. It gives us a fundamental shift in how we charge for our services because people are actually being charged properly for what they consume."

Fidelity's TBM team uses a bill of IT and chargeback to recover costs. They use unit pricing multiplied by volume so the business units can clearly understand what they are being charged month-to-month. Under the old system, business units were charged a fixed total each month, leading to significant over- and under-charging, with no easy-to-explain rationale as to why.

"If I were to say where the biggest step changes are between how we did things previously and how we do them today, without a shadow of a doubt, it would be about having up-to-date data and charging our business customers based upon relevant and near real-time infrastructure and pricing information,” said Andrew Cloke, Technology Business Manager, TBM.

"Under our old model, we would go through an extremely complex and lengthy exercise to calculate the cost we charged the businesses. And that figure, once settled upon, was charged monthly, fixed, flat, and without reference or modification. And so, by Month One, it was already significantly out of date because people had commissioned and decommissioned infrastructure and services but were still being charged the same fixed fee. What Apptio has done is allow us, every single month, to reflect the true requirements of the business from a consumption perspective."

Application rationalization and labor savings go hand in hand

These kinds of conversations have led to a lot of direct savings through application rationalization. Because Apptio allows IT's financial managers to see where every dollar is going, they can overlay that information with application usage to accurately gauge whether those dollars are providing value.

They can also compare applications by function, cost, and usage to find and remove redundancies and consolidate users on more cost-effective platforms. It also allows the TBM team to have fact-based conversations about the applications in use and the true, all-in costs of the infrastructure those applications are running on.

"You get the benefit from the business because they can see the cause and effect of what they're doing,” said Cloke. “So, when they commission or introduce new infrastructure, they can immediately see a unit rate times a quantity increase in their bill, and vice versa for any decommissioned infrastructure and services. And that works positively, both in their favor and in ours."

This visibility allows IT to repurpose existing hardware and software licenses to support the business' request for new applications and services or to expand existing ones to accommodate more users. Additional savings come from redeploying IT and service desk people in support of those more cost-effective applications and platforms.

Improving vendor management by following the contracts

Apptio's Cost Transparency module is also empowering IT to renegotiate contracts from a global perspective. Prior to the visibility that Apptio provides, Fidelity negotiated with vendors on a regional basis. Today, they are able to work with vendors to develop fixed pricing regardless of geography.

"Historically, we never had full visibility of global supplier spend," said Darren Rice, Technology Business Manager, TBM. "Now, via cost transparency, we can see where we've got agreements with the same suppliers in different regions across the globe, and we can then leverage the buying power of joining all of that together."

Taken together—application rationalization, improved vendor management, labor savings, reusing existing hardware and licenses, and not purchasing and provisioning new hardware— the team has freed up several million dollars to reinvest in technology during the past year.

"Our IT budget is broadly static," said Cloke. "And that's simply because we've recycled the dollars we've saved on the left-hand side of the equation and reinvested them on the right-hand side."

Using pricing to promote cloud

The ability to update pricing month-to-month is having the added benefit of moving the organization onto more flexible and cost-effective platforms like private and public cloud. In the past, without the ability to see the all-in costs of an application or service, IT was unable to incentivize user behavior. Now, because these costs are visible within TBM, it's much easier to show the business the all-in cost of using something like Tier 1 storage in a corporate-owned data center versus storing that information in a public cloud. And this fits nicely with Fidelity's newly-adopted cloud-first strategy.

"In the last 12 months, we have made a significant shift from physical servers to virtual servers," said Miles. "We've reduced our footprint in our data center by one-third, and realized the savings off the back of that. We price cloud according to market levels versus what a physical server costs so a business leader understands the incentive to move to either an internal cloud or an external cloud environment."

Aligning IT to the business

At Fidelity, technology is so interwoven into the fabric of what they do, there is almost no daylight between the business strategy and the IT strategy. What TBM does is add a layer of cost accountability to IT's side of the equation.

"At the absolute top level, we set our goals strategically and we align our IT strategy to that business strategy," said Miles. "We are a technology-powered organization. Technology drives a huge amount of what we do, how effective and efficient we can be, and how we scale up our products and our operations to meet the demands of our clients."

This approach is further endorsed by Nicola Feakin, Head of Business Management for Global Business Solutions at Fidelity International, who sponsored the project: “We’re delighted with the outcome, for all the reasons outlined above.  Moving to the Apptio model requires a commitment to the potential rewards and to educating the business, and we’re really seeing the results of that commitment come through.”

Ian Thompson, Chief Technology and Operations Officer at Fidelity International further noted, “I was pleased to support this initiative, and I wanted to be clear as to the outcome and benefits of moving to Apptio. The Fidelity team, working with Apptio, were able to articulate this and implement the product quickly. Personally, I think we’ve just touched the tip of the iceberg so far— I know there is much more the team wants to do with the product to drive efficiencies across the technology estate.”

Prior to TBM, Fidelity's IT financial managers did great work. They managed to put into place processes and reporting that saved the company millions. But this was hard and time-consuming, and the work was riddled with inaccuracies and gut-level judgments, out-of-date data and reporting that wasn't actionable. With TBM and Apptio, all that has changed.

"You literally do not have the transparency, the speed of response, the analysis, the scenario planning, and the tools available that Apptio will give you to make quick, sound, logical decisions you would not otherwise be able to make. Not without pooling together multiple strands, pulling together huge amounts of data, crossing your fingers, and making assumptions that it all comes together offline," said Miles. "Apptio gives you that."

twitter logoYou literally do not have the transparency, the speed of response, the analysis, the scenario planning, and the tools available that Apptio will give you to make quick, sound, logical decisions you would not otherwise be able to make. Noel MilesCOO, Fidelity

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