Your mission: leverage a $6.3 trillion digital economy to transform your business

By Apptio  |  November 07, 2017

You are driving digital innovation.

That was the message Sunny Gupta, CEO at Apptio, delivered in his keynote address at the 2017 TBM Conference in Las Vegas.

A newly released State of the Global Technology Economy report paints a compelling picture of a digital economy valued at $6.3 trillion. This is a much bigger opportunity than traditional estimates of $3.4 trillion suggest, because the new report looks at the total cost of IT ownership—including the labor required to run and operate technology. This pushes total market spend much higher than previously estimated.

Not only is this digital economy vast, representing the third largest economic force in GDP and surpassed only by the US and China—it’s growing. In fact, it’s growing 2.4x faster than the global economy. Which means, Gupta said, technology leaders are in charge of an amount of spend that is on par with some of the world’s largest economies. Today’s IT leaders truly drive digital innovation and are at the center of organizational success. 

The evolving role of the IT leader

IT leaders have been engaged in digitization for decades. Since the 1960s, starting with payroll and inventory automation, IT has incrementally digitized every process and platform—to the point now, that technology is the business and IT is at the center of the business agenda.

The difference is that now instead of just adopting and layering IT over traditional processes, companies today are increasingly rooted in technology. Technology is powering every major business operation, with the potential to transform the business. That means IT leaders have the keys to a powerful engine, capable of driving agile innovation and continuously shifting (optimizing) run costs to fund meaningful transformation.

To drive innovation, it’s on leaders like you to run IT like a business

Leveraging the $6.3 trillion economy to drive digital business requires IT teams to embrace new methodologies like agile and cloud, as well as more strategic engagement with the business. Gupta defined agile as the ability to work at the speed of business. This methodology enables the flexibility IT needs to fail fast, in order to iterate and win big.

Cloud provides a platform for agility, giving IT a way to test new ideas without a big infrastructure investment and to scale quickly when needed. Gupta noted that many companies today are managing hybrid IT environments, balancing public and private cloud with significant legacy investments. Hybrid IT is complex and top of mind for today’s IT leaders working within core IT functions and aligning them to services they’re delivering to business units. 

»Related content: Embracing a Hybrid IT Mindset

Finally, one of the biggest shifts happening today is the maturation of the IT and business relationship. IT cost transparency is fueling a whole new level of engagement with the business by providing new insights into consumption and levers for optimization that help fund innovation. 

TBM is the business management system of record

Agile, cloud, and engagement are important areas of focus. But, it’s difficult to successfully manage these methodologies if you don’t have a system of record that provides a 360º view of IT costs and a way of tracking the associated value.

With 11,000 practitioners at 800+ companies on 5 continents, TBM has become the standard and de facto practice for IT teams leading successful innovation programs across the globe. The fact is, IT cost transparency is critical to transformation. Technology business management (TBM) provides the framework needed to create a single source for understanding the total cost of IT ownership that makes digital innovation possible.

With TBM, customers see incredible gains:

  • 3-5% budget shifts from run to grow
  • 30 days from TBM implementation to value
  • 75% customer satisfaction increase
  • 153% reduction in compute costs

TBM for every business

Gupta’s vision is TBM for everyone. Initially serving some of the world’s largest organizations, today the standard taxonomy defined in ATUM® underpins Apptio's applications and has been designed around a level of maturity that makes it applicable to a broader base of customers in a range of vertical markets and geographies.

Here's how Gupta described the path many companies take to embrace the ATUM taxonomy:

Level 1: Financials

Every organization has this data, whether via a general ledger, budgeting forecast system, or etc. Gupta notes this layer provides a lot of value as companies gain better insight into what’s driving costs.

Level 2: Infrastructure and cloud

Companies tend to move next to infrastructure and cloud. Apptio has catalogued twelve towers and has worked with AWS and Azure to map their taxonomies into ATUM, enabling customers to compare on-premises to public cloud costs.

Level 3: Applications, services, and projects

This is where data can be questionable. Gupta emphasized Apptio’s work over the past 12 months to overcome this barrier, citing an ability to tap into tribal data sources until better systems are in place.

Level 4: Business capabilities

Ten percent of Apptio’s customers get to the top business capability layer, but Gupta shared, based on conversations with customers and advisory groups, business capability is the desired future for many companies and is seen as an enabler of transformation.  

This taxonomy is underpinned by four core processes that support the lifecycle of IT: transparency, planning, optimization, and engagement. These are the processes supported by Apptio’s TBM applications.

How does TBM work with your other systems?

Companies already use ERP, ITSM, PPM, cloud expense management tools, and so on. So how does TBM fit in?

Eveline Oehrlich, VP, Research Director at Forrester joined Gupta on stage to describe TBM as the umbrella discipline that takes in feeds from all of those different methodologies. Highlighting “a tremendous acceleration of TBM,” Oehrlich described how the discipline rationalizes all that spending and helps leaders align IT with business goals. 

The majority of other platforms are used to manage a specialized layer of work. But Oehrlich described TBM and Apptio as a “system of insight”—a way to enforce discipline around business technology and the way IT leaders make decisions.

Systems of insight have three key criteria, according to Oehrlich.

  1. They have to be used by cross-functional teams in an agile way.
  2. They need to have data, insights, and actions.
  3. They take data from a system of record, necessary to fuel a system of insight.

IT leaders need a way to elevate above operational inputs to understand how the combination of those elements is serving the business. Apptio provides purpose-built software that translates those inputs into meaningful TCO. From end-to-end, this gives IT leaders a view of run versus change investment that helps drive digital innovation.

TBM and Apptio is not just an automation of a financial management [system] or something alike. It is actually a system of insight. Eveline Oehrlich,VP, Research Director, Forrester

TBM at McDonald's: a real-world example

McDonald's isn’t what you typically think of when you think of a digital innovator. But guest presenter, Tom Dillon, VP, Infrastructure and Services at the largest restaurant business in the world, stressed his company’s commitment to enhancing the experience of 71 million customers daily and the correlating focus on using technology to do it.

McDonald's expects to have their global mobile app deployed in 20,000 restaurants by the end of 2017, initially with order and pay capabilities and soon after to leverage CRM functionality to drive personalized offers and loyalty programs. The company also plans to expand home delivery, already a $100B business across the globe, to 10,000 restaurants worldwide by the end of 2017.

In addition, McDonald's is in the midst of a multi-year project to modernize restaurants across the globe with digital menu boards, self-order kiosks, and the underlying technology to support table service. All of which help the restaurant meet customers where and when they want to order.

TBM is helping Dillon and team fund these growth accelerators. To meet the growing demands of the business, IT is using Apptio to elevate financial controls, insights, and analytics to ensure McDonald's maximizes every dollar spent on IT. Dillon cites the built-in standards that enabled his team to get started quickly, the “superior” reporting and analytics, and the robustness of the system to consolidate and configure data from disparate systems as the reason for choosing the Apptio suite. 

Apptio’s relationship with the TBM Council was also incredibly important to Dillon. 

“We knew we need more than just a technology solution,” Dillon told the audience. "The opportunity to adopt a methodology backed by a large community of supporters was very attractive to us and it’s really paying off.”

»Related content: How McDonald’s Finance & IT partner to supersize IT value & minimize spend

We’re very excited about the growth opportunities within McDonald's, and we absolutely see Apptio as a key enabler, to make sure we continue to invest in the right areas that are going to drive growth in the business.Tom Dillon, VP Infrastructure and Services, McDonald's

TBM at Metlife: a real world example

MetLife’s Binu Thomas, SVP, Global Technology Services, also joined Gupta on stage to illustrate how TBM plays a key role in helping the company evaluate and migrate to cloud to serve their 100M customers.

MetLife initially leveraged a cautious approach that started with applications, but Thomas described reaction to some of the first bills coming in from cloud. “We got the bill and I thought, ‘There’s something wrong with this. But it turned out, the bill was right.”

With Apptio, Thomas and his team developed real-time usage and cost models to allow their business partners to see their consumption and make adjustments. “To make the journey to cloud or hybrid IT, you really have to understand your applications. You really have to know what your application patterns are. Using TBM and Apptio, we developed a cloud fitness assessment module, because not all of our workloads are fit to be in the cloud. We used this module to increase the speed of our decisioning and the quality of our decisions.”

For Thomas, the greatest breakthrough in cloud is not faster time to market. It’s really about understanding the DNA of business processes and how IT brings those business processes to life. "When you know your business processes, you come to understand why your customers choose you over your competition. You understand the efficiency of your business transactions. For us, we’re understanding how we do claims processing better than anyone else. That knowledge is true power.”

Intelligent systems such as Apptio and frameworks such as TBM and EBM give us knowledge to delight our customers, anticipate their needs, and improve lives. At Metlife, embracing hybrid IT has been a key strategy for our success in modernization. With TBM, our senior IT leaders are able to make real-time business decisions based on current spend trends and patterns, and we’re able to model cost scenarios to discover the most cost-effective hosting solutions for our business. We use it to ensure that all of our technology investments align to broader business strategies, and that allows us to measure the efficacy of the cloud. Binu Thomas, SVP, Global Technology Services, MetLife  

It all comes back to YOU

With $6.3 trillion on the table, IT is truly in the drivers seat—ready or not. Technology is now the life blood of every company, which means those managing and optimizing technology have the potential to dramatically transform the business.

TBM provides the foundation for understanding costs in a standardized way, enabling you to make economically sound decisions about innovations that improve agility and engagement with customers. Apptio provides the applications that enable you to achieve this objective.

1: Example based on purchase of Apptio Cost Transparency Foundation module and implementation services. Forrester applied its methodology to actual data provided by Apptio and interviews with Apptio customers.

2: Apptio commissioned Forrester to review the Apptio ROI model in June 2016 using Forrester’s proprietary Total Economic Impact™ methodology. Forrester deems that the Apptio ROI model conforms to the TEI fundamentals and principles of a sound business case. The intent is for Apptio to guide customer prospects through a questionnaire and the ROI model to solicit inputs specific to prospect business and technology environment. Forrester believes that this analysis is representative of what companies may achieve with Apptio services based on the inputs provided and any assumptions made. Forrester does not endorse Apptio or its offerings.

Given your ability to drive innovation in today’s digital economy, you must have an accurate view of IT costs and value across the IT landscape. To embrace agility and cloud, and truly engage the business in transformation, TBM is an essential ingredient. This is the key to CIO success in the new digital economy. Sunny Gupta, CEO, Apptio  

To hear Sunny Gupta's keynote presentation at TBMC17, visit Apptio TV on Livestream.