Are you spending too much or not enough on technology?

As a mutual company, State Farm is owned by its policyholders. This puts them at the center of every investment the company makes. The goal is to constantly improve the customer experience while providing desirable products at the lowest possible price. A big gap was understanding our cost structure. Even those of us within IT struggled to know where we were making investments and getting an appropriate return.

This lack of understanding hampered the company’s efforts to roll out the digital products that State Farm customers wanted. Case in point: Several years ago State Farm deployed an on-line quoting and application tool. Customers weren’t using it as expected because there were “dropout points” throughout the process.

State Farm used Apptio to lift the veil on IT spending by showing how technology spend is connected from the general ledger, through IT’s services and infrastructure to the application layer – and ultimately to the service. For example, business units (BU) can see the exact cost of developing and fielding a new application in terms of support, networking, development hours, internal and external labor costs, storage costs, cloud, and all the other costs that go into the process. Apptio and TBM also support endless “what-if” scenario modeling that allows IT to show how alternatives like sourcing the application from a cloud provider will impact the bottom lines of the BU and IT. In the past three years, IT cut $130M in storage costs. And with further insights into infrastructure costs, consumption, utilization, and capacity, they delayed or eliminated the purchase of additional hardware, software and service contracts in multiple areas, saving both CapEx and OpEx dollars.