2021 State of TBM Report

Throughout 2021, the TBM Council engaged its community of over 10,000 members to better understand the adoption of TBM practices and principles, and to evaluate their impact on business outcomes. In August and September 2021, the TBM Council surveyed 103 members representing over $115 billion in annual technology spending to quantify those practices and outcomes. This report is the result of this research. 

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Executive Overview

Technology Business Management, or TBM, depends on a set of disciplines, tools, and data, to make informed decisions about technology investments and resources. TBM enables business-driven technology decisions by connecting resources (funding, people, resources) to delivered business value. This is why TBM has been adopted by thousands of companies and government agencies around the globe.

Launched in July 2021, the inaugural State of TBM Survey improves our understanding of how TBM is being used to drive business outcomes. The primary questions we address are:

  • How is TBM evolving as companies increasingly move away from on-premises technologies to public cloud services, and from project-based software development to more agile, product-focused approaches?
  • How does TBM maturity correlate with business outcomes, such as reduced costs per customer and increased  funding for change-the-business priorities?
  • What are the common practices associated with TBM maturity and how well are they adopted?

To answer these questions, we launched a comprehensive1 survey to TBM Council members around the world. We received 103 complete responses from technology leaders across North America, Europe, the Asia-Pacific rim, and other regions. This represents approximately $115 billion in annual technology spending2. We also conducted research through 22 different TBM Council open member meetings in 2021, running polls and discussing the questions above along with related topics. We also reviewed 43 applications for the 2021 TBM Council Awards, which recognizes excellence in TBM and celebrates the accomplishments of those programs that achieve business outcomes. Our data and research revealed clear answers to the questions above.

1 The survey included more than 50 questions, many of which included multiple parts.

2 Based on the mid-point of the questions to our question on IT spending (e.g., “$100 million to $250 million” translates to $175 million).

Table of Contents

TBM Evolution, Maturity and Practices

Let’s start with how TBM is evolving. For many organizations, TBM traditionally focused on costing IT services (especially shared IT services delivered by a central provider), benchmarking costs and consumption, and providing transparency to internal technology providers and line-of-business consumers. This version of TBM is akin to CIOs operating as a business within business. Our survey revealed that many firms still employ TBM for these purposes. However, as digital capabilities take center stage, many TBM programs have shifted to product-focused development and innovation. TBM is key to operating a digital business: understanding the technology costs of those products, revamping funding models to be product- (vs. project-) based, and managing to business outcomes is taking center stage.  Our respondents’ funding models reflect the shift to a product model. While still a minority of firms, approximately a quarter, fund products or agile teams or agile release trains (ARTs). Note that the funding question allowed multiple choices by each respondent, recognizing that a company could fund by both Projects and Products/Value Streams.

Which of the following mechanisms does your company use to fund software development work?

How would you describe your TBM office (program) maturity?

Maturity with TBM is less elusive than in the past. While nearly four in 10 still rated their program as “crawling,” more than six in 10 rated their programs as “walking,” “running,” or “flying” – all of which are characterized by regularly delivering value to their company.
 
  • Crawling
    We are in the early stages of our program or have not matured much from our starting point
  • Walking
    We have a regular cadence for TBM processes and are regularly delivering value to our department or company
  • Running
    We have a regular cadence for TBM processes, have developed advanced reporting and analytics, and are regularly delivering significant value to our department and our company
  • Flying
    Our TBM program is an integral part of how we plan, operate, and transform our company’s technologies

The benefits of TBM maturity include the financial improvements expected from investments in financially oriented disciplines. Think return on investment. Maturity also provides more strategic benefits, such as improved trust between technology leaders and their line-of-business partners, increased internal and external customer satisfaction, and enhanced operations with more reliable and readily available data. These outcomes are foundational for the close collaborations needed to build and enhance digital capabilities.

The survey highlighted common practices associated with TBM maturity. Executive sponsorship for clarifying purpose and aligning TBM efforts to strategy is key, as were forming a TBM governance group and having technology and finance leaders on the same page about TBM. Maturity is also tied to the more technical aspects of TBM such as cost and consumption modeling, data quality management, stakeholder reporting, and the use of TBM-specific tools. All of these practices are controlled by the TBM office with the support of executive leadership. None should be viewed as unachievable.

Technology Business Management Is Evolving

Since the TBM Council was founded in 2012, we have witnessed a continuous evolution of how TBM improves the business outcomes from using technology. In part, this evolution reflected the art and science of TBM — the standards, best practices, tools, and data have changed and improved. For example, the TBM Taxonomy – a standard, hierarchical set of definitions for what technology costs, how solutions are delivered, and how the business consumes those solutions – has undergone two major revisions and several minor ones since it was released by the TBM Council (as version 2.0). Some data sources, such as cloud billing data or agile lifecycle management records, were barely in existence at the time of the Council’s founding but are now commonplace in TBM implementations.

Technology operating models and business strategies have evolved. For many CIOs and other technology leaders, this meant embracing a business mindset within their technology organizations.

We started embracing TBM and we made sure that TBM remains a philosophy and does not become [simply] a tool to implement. We're doing this at multiple layers: The first is how do we change ourselves culturally? How do we make sure that our service owners within IT have a business mindset? The second is that we have the tools and technologies in place so that we have transparency of information in a granular manner. The third is we have a discipline and incentives to use that information to make profitable decisions, while keeping our customers in the forefront.

Anupam Khare, SVP and Enterprise CIO for Oshkosh Corporation

The Rise of FinOps

TBM leaders, CFOs, and others have recognized the need to link their efforts to these rapidly evolving technology strategies.

Our IT organization created a robust technology strategy to respond to business needs and to build solutions that are more agile and take advantage of the cloud solutions' innovation and flexibility. We want to create innovative and cutting-edge products that will enhance the customer experience. It is really important in technology finance that we create our transformation agenda aligned to a technology strategy and provide key financial capabilities to manage a modern environment. We're creating a world where technology finance operates within this modern ecosystem of people, processes, and tools. Our plan is designed to adopt Apptio and Technology Business Management tools and processes in lockstep with our implementation of IT strategies.

Nicole Holmes, EVP, CFO of Technology for Wells Fargo

Holmes identified several key trends driving the evolution of TBM. The first is public cloud adoption. Businesses are increasingly relying on public cloud services for infrastructure, platforms, and software. While most technology spending remains with more traditional sources, public cloud services spend continues to grow unabated. In the last few years, a discipline related to TBM called Cloud Financial Operations – or just FinOps among practitioners – has emerged.

In our research, many respondents (31%) have established a FinOps practice, usually within Infrastructure and Engineering or DevOps (65% of those with a FinOps practice) teams; occasionally, FinOps resides within the TBM office (18% of those with a FinOps practice).

FinOps practices are now a fundamental program for organizations who need to manage the unit costs and economics of cloud computing.

Does your technology department have a Cloud FinOps practice in place?

The Shift to Products and Value Streams

Public cloud, in turn, has enabled another important shift mentioned by Holmes at Wells Fargo: the move to more agile methods of delivery.  More specifically, agile-at-scale methodologies designed to take advantage of agile methods across large groups of agile teams and correspondingly large and complex solution portfolios. With TBM, agile development costs increasingly factor into TBM cost models and in firms’ approaches to funding software development. In our survey, about 43% of the respondents said they include agile development costs in their TBM cost models. Nearly a quarter (24%) of the respondents reported that they fund Products or Value Streams. These percentages compared to the number (74%) reporting that they continue to fund Projects3, but we expect to continue to see them to grow as firms mature their financial and portfolio management disciplines to better support agile approaches.

More agile organizations also revealed stronger adoption of the standard TBM taxonomy(4). Among those who reported that agile methods are used for half or more of their total software development (i.e., those firms that are mostly agile or 50/50 agile and waterfall), nearly half (46%) reported significant use of the standard TBM taxonomy, compared to a little over a quarter (27%) of those who reported that agile methods are used for less than half of their development. This demonstrates the potential power of a strong taxonomy for agile work, whereby agile teams must understand the roles they play in the development of digital products and capabilities. The TBM taxonomy is not just about costing; it also helps with organizational alignment and instilling a business mindset.

Which of the following types of services, applications, and/or products does your technology department provide? (Choose all that apply.)

Infrastructure and Platform Services
91.5%
Workplace Services (office suites, email, etc.)
88.7%
Corporate Applications (ERP, HRM, etc.)
84.9%
Business-Specific Solutions
69.8%
Digital Platforms, Supporting Customer Engagement
80.2%
Tech-Based Product Lines that Drive Revenue
34.0%
Professional Services (consulting, software dev.)
61.3%
Security Services
75.5%
Other (please describe)
5.7%

3  Note that the funding question allowed multiple choices by each respondent, recognizing that a company could fund by both Projects and Products/Value Streams (or even Teams or Agile Release Trains).

4 The standard TBM taxonomy (version 4) can be found online at https://www.tbmcouncil.org/learn-tbm/tbm-taxonomy/.

Digital Business Like We Haven't Seen Before

These shifts to public cloud services and agile-at-scale methods have paired well with another trend: the rapid rise in digital investments. Prior to the COVID-19 pandemic, digital was often viewed as a differentiator or a growth play; since then, it is clearly viewed as necessary to survive. Digital has taken many forms, but in most cases is underpinned by the need to serve customers who cannot be served via a physical interaction. In our survey, a large majority (81%) of respondents reported that their technology department provides, among other solutions, digital platforms supporting systems of engagement for external customers.

Among those providing these digital platforms, more than one in five (21%) use their TBM model to report costs by product lines or digital platforms. These two elements were first included in the standard TBM taxonomy in version 4.0. The adoption speed of these digital-centric components of the standard taxonomy is remarkable.

The pandemic presented other challenges as well, such as supply chain disruptions. For technology departments, the pandemic often interrupted the acquisition of infrastructure such as servers and storage. Public cloud helped deal with these challenges.

Public cloud has been essential for us to continue to be able to deliver business change and new workloads with lockdowns and restrictions in place. Entering our data centers and getting new equipment from suppliers has been a challenge. In public cloud, because obviously we're not having to rack, stack, and manage infrastructure, we've been able to deploy new applications effectively.

Alex Hullah, Director of FinOps and Cloud Economics at HSBC

TBM is increasingly employed to address the challenges and opportunities represented by public cloud adoption, the move to agile-at-scale, and the embrace of digital platforms. TBM leaders are increasingly supporting the decision-making needs of product managers, business owners, and corporate CXOs (e.g., CEOs, CFOs, and COOs). 46%  of respondents reported that they provide TBM reporting to Product Managers or Business Owners who manage the business outcomes of their technology investments.

The Best of All Worlds

All of this does not mean that the more traditional use cases of TBM are going away. Indeed, they are alive and well. Two-thirds of our respondents provide TBM reporting to IT Financial Managers for budgeting, forecasting, and expense management. Over half of respondents provide TBM reporting to IT service owners. These owners are often responsible for delivering technology-based services to internal consumers, such as line-of-business workers and application development teams. Nearly half of our respondents provide reporting to tower (IT resource) owners and over one-third provide reporting to IT procurement. 46% use TBM to provide a consumptive bill of IT, with over two-thirds of those charging consumers for their consumption.

Lastly, while TBM continues to evolve, the majority of those employing TBM for more modern delivery models – public cloud, agile-at-scale, and digital – also employ TBM for these more traditional use cases. For example, of those respondents who report that their organizations have adopted agile for software development5, 56% reported that they have used TBM “to accelerate or streamline budgeting processes” and 51% reported they have used TBM “to accelerate or streamline forecasting processes” (versus 39% and 44%, respectively, of those who have not adopted agile).  Unsurprisingly, these two outcomes reflect improvements in speed of decision making, facilitating efforts to improve agility.

Some traditional TBM disciplines are fundamental to newer delivery models. For example, a consumptive chargeback (or allocation) is a key element of the FinOps discipline (part of the “Inform” phase). With public cloud adoption, we find that it is more important to hold consumers accountable for consumption when those services are provided on-demand by a third party. For respondents with a cloud-centric strategy6, 48% reported using a consumptive bill of IT (compared to 33% of those who did not report a cloud-centric strategy).

Similarly, the move to agile-at-scale models with disciplines such as lean portfolio management (LPM) means that product managers and business owners must be held accountable for the new development work they manage and the spend associated with running products, too. This agile-oriented shift from projects to products is characterized by accountability for spending and costs across the entire lifecycle of technology solutions. Our data shows this to be true: 53% of respondents whose organizations have adopted agile also report that they provide TBM reporting to Product Managers or Business Owners.

5 As indicated by a response of “About 50/50 Waterfall and Agile,” “Mostly Agile,” or “Entirely Agile” to the question “To what degree does your technology department employ waterfall software development methods vs. agile development methods?”

6 As indicated by a response of “Public Cloud First,” “Public Cloud Only,” “Cloud-Native,” or “SaaS First” to the question “Which best describes your technology department’s current strategy for public cloud infrastructure and platforms (IaaS and PaaS) adoption?”

TBM Maturity Improves Business Outcomes

In our survey, we asked respondents to rate their TBM maturity as follows:

  • Crawling: we are in the early stages of our program or have not matured much from our starting point
  • Walking: we have a regular cadence for TBM processes and are regularly delivering value to our department or company
  • Running: we have a regular cadence for TBM processes, have developed advanced reporting and analytics, and are delivering significant value to our technology department and our company
  • Flying: our TBM program is an integral part of how we plan, operate and transform our company’s technologies

In our survey, nearly 40% reported they are crawling, while more than a third (34%) are walking, nearly a quarter (24%) are running, and just 2% are flying. The size of this last group is surprising, as more than half (56%) of respondents reported that executive leaders (e.g., CIO, CTO) communicate that TBM is an essential or important part of their technology department’s operating model and strategy (a defining characteristic of flying). This suggests that flying is aspirational, but few have reached this level of maturity. Since this group is so small, we combined the runners and flyers in our figures throughout this report.

That said, a little maturity goes a long way. The difference in the outcomes between walkers and runners was not significant while the difference between crawlers and walkers was often dramatic. 

Financial and Portfolio Management Outcomes

Which of the following types of outcomes has your TBM office or program accomplished or influenced or is working to accomplish or influence in the near-term? (Please choose all that apply.)CrawlWalkRun/Fly
Reduce or optimize application TCO32%53%54%
Optimize spending on vendor contracts24%53%42%
Manage or shape technology consumption by your business units19%41%58%

In terms of financial management and related portfolio management outcomes, maturity beyond crawling often matters significantly. This is especially true for outcomes such as reducing or optimizing application TCO, optimizing spending on vendor contracts, and shaping demand and consumption by business units. With those outcomes, the walkers were between 64% and 118% more likely to report progress than the crawlers.

See all reported outcomes
Which of the following types of outcomes has your TBM office or program accomplished or influenced or is working to accomplish or influence in the near-term? (Please choose all that apply.)CrawlWalkRun/Fly
Accelerate or streamline budgeting processes32%44%71%
Accelerate or streamline forecasting processes43%34%67%
Reduce budget-to-actual variances27%34%46%
Improve decision-making about labor (internal and/or external)27%31%58%
Reduce asset lifecycle (cradle-to-grave) costs8%13%29%
Reduce or optimize application TCO32%53%54%
Optimize spending on vendor contracts24%53%42%
Grow and/or rebalance your investment portfolio(s)16%22%21%
Improve application and/or service portfolio management30%31%38%
Rationalize your application and/or service portfolios35%38%42%
Manage or shape technology consumption by your business units19%41%58%
Other(s) (Please describe in comments)11%6%0%

Impact of TBM Maturity on Cost to Serve Customers

TBM maturity also appears to have a significant impact on reducing the cost to serve customers. More than three in four (78%) of walkers, runners, and flyers report that TBM has reduced the cost to serve customers, while just one in five (20%) of crawlers do. 

  • Minor improvement in cost efficiency: estimated 5-10% reduction/avoidance/redeployment
  • Moderate improvement in cost efficiency: estimated 10% to 20% reduction/avoidance/redeployment
  • Significant improvement in cost efficiency: estimated 20% or greater reduction/avoidance/redeployment

To what degree has TBM enabled or contributed to reducing the cost to serve customers (internal and/or external) over the last 12-24 months?

Trust, Customer Satisfaction, and Operations Outcomes

Quantifiable benefits are important. However, TBM is often used to change the way that important decisions are made. By providing a foundation for decision-making, TBM helps improve outcomes for qualitative factors such as trust, customer satisfaction, and day-to-day operations.

Our approach to our TBM implementation has been one of collaboration, dedication, and iteration. For CBP and OIT, TBM has helped us to focus on our most critical problems, frame how we think about the data, and help us become a more data-driven organization.

Patricia (Patty) Howell, Director, Financial Management Division of the U.S. Customs and Border Protection (CBP)

Improved Trust

TBM maturity appears to have had a significant impact on the level of trust the respondents’ business partners have in their technology departments since they began their TBM program. Nearly three in four (73%) of walkers, runners, and flyers report that TBM has improved the level of trust, while less than four in 10 (37%) of crawlers do. 

Our partnership between IT and our business partners has allowed our organization to exceed the financial goals and organize a comprehensive pandemic response in the same year. TBM has given me the opportunity to earn credibility and trust with the executives across our organization. With the help of TBM I have that data and that information at my fingertips to build that trust.

Jeri Koester, CIO for Marshfield Clinic Health System

To what degree has TBM affected the trust your business partners have in your technology department since the program began?

Increased Customer Satisfaction

We also asked respondents to rate the impact of TBM on internal and/or external customer satisfaction. While this might appear counterintuitive, many TBM programs support specific technology department goals related to customer or user satisfaction and they use TBM to help achieve those goals. 22% of the respondents maintained key performance indicators (KPIs) for internal customer satisfaction and 20% maintained KPIs for external customer satisfaction. These percentages were consistent across all maturity levels. TBM maturity appears to have contributed to a significant improvement in customer satisfaction. Nearly half (47%) of walkers, runners, and flyers report that TBM has improved customer satisfaction, while less than a quarter (23%) of crawlers do. 

To what degree has TBM helped improve internal and/or external customer satisfaction?

Crawl

Walk

Run/Fly

Continuous Operational Data Improvement

A core feature of TBM is the continuous data improvement. TBM data spans financial sources (e.g., your general ledger, fixed assets system, payroll system), IT operational systems (e.g., your IT asset database or CMDB, project and portfolio management tools, vendor invoices, cloud usage data), and line-of-business datasets (e.g., organizational chart, product lines, transaction counts, revenues). These data sources are not only vital for TBM-driven decision making (e.g., TCO reporting,  billing based on business consumption), they are essential for many other technology, corporate, and line-of-business decisions.

Data quality management remains a goal of many businesses and their technology departments, but those efforts often fail to yield improvements. TBM often succeeds where other data quality efforts fail. It does so by emphasizing data quality reporting, providing financial incentives for fixing errors, and (with the right tools) utilizing automation to address data quality problems. TBM best practices dictate that data quality problems are addressed at the source, not in the TBM tool (e.g., if software asset management (SAM) records are out of date, fix them in the source SAM system). Data quality improvements help anyone using the SAM data, not just those using the TBM reporting.

This virtuous cycle of data quality provides benefits for cybersecurity, regulatory compliance, software license compliance, and many other outcomes. Furthermore, it often accelerates decision making, a benefit reported by many of our interviewees.

The data that we're using for TBM isn't just for us. It is used in various places including up to building an IT strategy. Knowing we trust the data and knowing we have clarity around the data makes us more confident in our business decisions. We are making better decisions because we trust the data and people are building better business cases because of that trust.

Nick Harvey, Head of Nuclear IT Services for EDF Energy

Survey respondents largely reported the same benefit. More mature organizations were significantly more likely (63% to 37%) to agree or strongly agree that TBM has helped them improve the data they use for day-to-day operations.

In summary, TBM maturity is closely correlated to both financial and non-financial benefits. The financial benefits range from reducing the cost to serve customers to improving funding for change-the-business priorities. The non-financial benefits include improved business trust, greater customer satisfaction, and more reliable data for decision making.

Agree or Disagree? TBM has helped your technology department improve the data it uses for day-to-day operations.

The Hallmarks of TBM Maturity Are Achievable

To some degree, TBM maturity comes with time. However, the passage of time does not make TBM maturity inevitable, and maturity itself can be accelerated. Our survey revealed nearly 9 in 10 crawlers (89%) are less than three years in the making; 44% of walkers achieve their level of maturity in less than three years as well, showing there is a big difference in the pace at which the crawlers and the walkers evolve their programs.

Maturity appears to be somewhat correlated with some of the following traits:

  • Vertical Industry: Financial services firms, including Banking, Insurance, and other FSI firms are more likely to have mature TBM programs. 62% of our respondents from Financial Services firms rated their programs as walking, running, or flying.
  • Centralized vs. Federated technology organizations: More mature organizations tend to come from Federated organizations, whereby many technologies are delivered from a central organization, while many are provided by/within the lines of business, than crawlers (who are more likely to have centralized models).

However, maturity appears to be much more dependent on certain hallmarks that are far more controllable by technology and financial management executives, TBM office leaders, and other senior stakeholders. Let’s explore the most significant of these hallmarks.

How long has your TBM office been in place for your company?

Governance and Executive Sponsorship

More mature TBM programs are far more likely to have proper governance and sponsorship. Successful TBM programs are driven top-down. Let’s start with this: only 27% of crawlers report that they have a TBM governance group in place, vs. 72% of the more mature programs. A TBM governance group can take different forms and names, such as TBM steering group or TBM advisory group. For the survey, it was defined as a group of senior technology department leaders and stakeholders who collaborate on setting TBM goals, defining the TBM roadmap, and escalating issues.

Governance is performed by a TBM steering committee that meets monthly and consists of finance and technology leaders and technology product owners as well. Their role is to make sure that strategic decisions about maturing the TBM practice are done. We ensure alignment to business objectives and remove obstacles for the TBM program.

Lawrence Kim, VP and CFO of Technology for Liberty Mutual

From an executive sponsorship perspective, we looked at the degree to which executive leaders reinforce the role that TBM plays in the organization’s operating model and strategy. There is a remarkable difference between the crawlers and the rest: only 30% of the crawlers report that their executive leadership demonstrates that TBM is essential or important, whereas 72% of the non-crawlers do the same.

According to your technology department’s executive leadership (e.g., CIO, CTO), to what degree is Technology Business Management a part of your technology department’s technology operating model and strategy?

  • Essential
    TBM is a fundamental part of how we operate and evolve our technologies
  • Important
    TBM is a valued part of how we operate and evolve our technologies
  • Optional
    TBM is a chosen part of how we operate and evolve our technologies, but we could do so without TBM
  • Uncertain
    We are evaluating the role TBM plays in how we operate and evolve our technologies
  • Not Specified
    Our executive leadership has not made clear the importance of TBM to our operating model and strategy

It is unclear if some executives struggle to understand how TBM fits into their operating model and strategy or if they’re failing to communicate this connection. Lack of clear executive sponsorship is a frequent problem faced by crawlers: 48% of crawlers cite it as a significant barrier to using TBM to improve business outcomes, while only 29% of more mature organizations do. Sponsorship remains one of the most important aspects of TBM maturity and success, and yet too often the lack of sponsorship stands in the way.

For those who have not established proper governance and executive sponsorship, begin with the technology chiefs (e.g., CIO, CTO) articulating how TBM fits into the current or future state operating model and who should be using TBM reporting to make decisions. Sometimes, this group needs to be educated on the art of the possible with TBM. Many organizations start with the Office of the CIO (or equivalent); once this important group of leaders is on the same page about TBM, you can begin to build the necessary governance group and work your way outward and downward.

Finance and Technology Organization Partnership

TBM depends on a strong partnership between technology and finance leaders, at a minimum. Partnering minimally or failing to partner (or worse) are strong inhibitors to maturity. Exactly half of walkers and three quarters of runners and flyers have a strong partnership between their tech department and corporate finance on TBM, whereas only 16% of crawlers do.

Which best describes the partnership between your technology department and your corporate finance department in promoting, enabling, and maturing TBM?

Crawl

Walk

Run/Fly

Change management is always a challenge for a large organization and having Technology sponsor this effort, initially, without an engaged finance partner created some natural questions and reluctance. Once we had our new finance partner on board, our partnership with finance has really helped move this forward.

Amy Little, Senior Director for TBM at Lowe’s Companies

Why is this partnership so important? Clearly, each party brings a significant amount of the data needed for TBM modeling and reporting. Finance brings financial data; tech brings operational data. In our experience, though, data ownership is not the primary reason why partnership is important. Instead, a strong partnership is essential because TBM is about presenting new perspectives of financial information–looking at cost information differently than ever before. If finance and tech leaders aren’t on the same page about these views, the TBM program will struggle to improve accountability among various decision makers, both inside and outside of the tech organization. This is especially true for your line-of-business leaders who consume technology solutions and own their P&Ls7.

To create this partnership, the technology chief and the corporate CFO must be on the same page about TBM. If the TBM office sits within the technology organization, TBM leaders should identify and understand concerns that financial leaders might have about TBM. These concerns often stem from the belief that TBM is “shadow finance” (i.e., tech leaders doing financial management work) or that it duplicates existing financial management processes or tools. If the TBM office sits within finance, TBM leaders should do the same with their technology counterparts. Their concerns might center on fears of transparency or the amount of work needed to provide the data needed for TBM.

Often, TBM programs begin with both parties involved and their respective leaders sharing the executive sponsorship role. For those where this is not the case, the investment in building the partnership will more than pay off in terms of not only program maturity but the corresponding business outcomes that come as a result.

7 Profit & Loss statements, which in this case refers to income statements that show revenues earned and expenses incurred for each business unit.

TBM Model and Practices

This next category of hallmarks will highlight the more technical aspects of TBM. Many are the practices adopted by the TBM program leader and team and are largely under their direct control. Let’s look at a few of those, starting with significant use of the standard TBM taxonomy.

Employing the standard taxonomy to the highest degree possible can not only ease TBM adoption, but accelerate it. Commonwealth Bank of Australia is a perfect example. In 2018, the Bank implemented a bespoke model and highly customized instance of Apptio that was unable to scale and deliver the level of transparency required to execute their technology simplification and business process digitization strategies. In response, the Bank’s Technology and Finance leaders decided to re-implement using an “out-of-the-box” approach with Apptio, including the standard TBM taxonomy and a simplified general ledger. With this implementation (which they called “Apptio 2.0”), the Bank achieved value in less than 12 months and halved the time it took Finance to publish IT financials.

TBM PracticeCrawlWalkRun/Fly
Report significant use of the standard TBM taxonomy (e.g., cost pools, towers, solutions)19%47%58%
Report some or most technology leaders regularly drive unit cost reduction24%34%54%
Perform TBM insight hunting at least twice per year14%34%42%
Utilize a consumptive bill of IT (vs. no billing or a gross allocation)14%50%67%
Use special-purpose software (e.g., Apptio, ComSci, CostPerform, Digital Fuel, Nicus, etc.) for TBM43%69%92%

Apptio 2.0 covered 100% of our IT and Operations costs. Key to our success was adopting the industry-standard TBM taxonomy and deploying Apptio fully out of the box. We reduced a two- to three-year timeframe adapting the solution to our needs to a one-year deployment, with a focus on adapting the organization to the solution whilst delivering value.

Richard Spalding, General Manager Program Delivery ES Finance, Commonwealth Bank of Australia

Other practices also have a strong correlation with maturity. For example, a purpose-built  software for TBM makes a significant difference. While some organizations attempt to use spreadsheets or corporate financial management tools, these solutions take more time and effort to implement and cannot replicate the best practices and lessons learned across other TBM implementations. Many times, these solutions – especially spreadsheets – fail to provide a solution that scales and provides a trustworthy “single pane of glass” for decisions across the enterprise. These deficiencies hinder program maturity and value delivery to the point that only 31% of those in our survey reached the walking level of maturity and only 9% reached the running level of maturity using more generalized or homegrown toolsets.

Breadth of TBM Reporting

A practice that likely determines TBM maturity as much as it benefits from maturity is the breadth of decision makers supported by the TBM program. We asked our survey respondents to rate the transparency they provided to various roles and whether those roles exist. Those roles for which reporting is most closely correlated with maturity are service owners, product managers and business owners, IT financial managers, business relationship managers, enterprise and business architects, and business partners. The more roles to which TBM reporting is provided, the greater the impact on maturity (or, conversely, the greater the maturity, the more roles to which TBM reporting is provided).

Transparency (reporting) is provided by the TBM office or program to the following roles in your technology department or company. (Percent of those reporting the role exists and reporting is provided to that role.)CrawlWalkRun/Fly
Service Owners who manage the end-to-end costs of IT services or applications, along with service consumption and value38%63%67%
Product Managers or Business Owners who manage the business outcomes of technology investments35%47%63%
Business Partners such as line of business leaders who consume tech services or use technology products to achieve business outcomes41%59%71%
See all reported roles
Transparency (reporting) is provided by the TBM office or program to the following roles in your technology department or company. (Percent of those reporting the role exists and reporting is provided to that role.)CrawlWalkRun/Fly
IT Financial Managers who assist decision makers with budgeting, forecasting, and expense management49%72%83%
IT Procurement Managers who ensure technology resources are acquired cost-effectively32%41%33%
Tower Owners who ensure technology resources are provisioned cost-effectively41%44%54%
Service Owners who manage the end-to-end costs of IT services or applications, along with service consumption and value38%63%67%
Product Managers or Business Owners who manage the business outcomes of technology investments35%47%63%
Business Relationship Managers who wield the catalog or portfolio in collaborating with Business Unit leaders on spending and investments24%34%71%
Enterprise or Business Architects who manage the design, standards for and technology composition of capabilities or processes27%41%38%
Business Partners such as line of business leaders who consume tech services or use technology products to achieve business outcomes41%59%71%
Corporate Partners such as the CFO, CEO, COO and other CXOs who use the information to shape overall corporate investment and spending49%47%54%

Which of the following costs are included, measured, and reported by your TBM cost model? (Please choose all that apply.)

Depth of the TBM Model

Depth of the model is also a factor of maturity (or a factor in maturity). Generally, more mature organizations are modeling costs further up the TBM taxonomy “stack.” For example, only 32% of crawlers model the costs of technical services, vs. 59% of walkers and 79% of runners and flyers. Application TCO is a common use case for TBM reporting, and a clear majority of walkers, runners and flyers model their application costs, whereas less than half of the crawlers do so.

Chart Definitions:

  • Cost Pool (e.g., labor, hardware, software, outside services, telecom, facilities)
  • Towers (e.g., Compute, Storage, End User, Network, Platform, Security & Compliance, IT Management)
  • Technical Services (e.g., Infrastructure Services, Platform Services, Delivery Services)
  • Public Cloud Infrastructure (IaaS) and Platform (PaaS) Services
  • Applications (i.e., direct app costs plus their consumption of resources such as infrastructure and support)
  • Public Cloud Software Services (SaaS)
  • Corporate & Shared Solutions (e.g., Financial Management, Workforce Management, Vendor & Procurement)
  • Business-Line Specific Solutions (e.g., Manufacturing Resource Planning, Customer Care, Product Development)
  • Costs by Business Units
  • Costs by Business Processes or Capabilities
  • Costs by Product Lines or Digital Platforms

Frequency of Financial Reviews

Finally, let’s look at the frequency of the different types of reviews performed. In general, the greater the TBM maturity, the more frequent each type of review is performed each year. It’s worth noting that even crawlers have implemented regular financial reviews, and regular reviews are an important rigor of TBM. Given the overall number of reviews, it’s important that TBM leaders automate as much of the reporting needed for these reviews. These reviews should result from routine processes, avoiding the level of manual effort often associated with infrequent, non-routine processes.

Average number of times per year the following reviews are performed

Staffing and Enablement of the TBM Office

Perhaps the topic most often discussed on the TBM Council’s community site is the recommended size and structure of the TBM office. There is no one-size-fits-all approach to this. For example, how many data sources do you have? How many decision makers are you supporting, and from how many different roles in the organization? What is the quality and availability of your data sources? And, of course, what is the scope of your TBM program?

On this last point – the scope of your program – staffing for the TBM office is normally limited to roles such as the TBM program leader, the TBM architect or consultant, and TBM analysts who are hands on with the TBM tools and data. In a few cases, the roles associated with the TBM office are more varied. Therefore, it is most helpful to look at the median number of full-time equivalent employees (FTEs) for the TBM office when reviewing the survey results.

Let’s start by looking at some simpler factors that might be driving TBM office size. First, there is some correlation between TBM program maturity and the number of FTEs in the TBM office. The average and median numbers of FTEs correlate with maturity: the higher the maturity, more staff. There is also a strong correlation between age of the TBM office and the number of FTEs for TBM.  TBM teams tend to grow, if only modestly, over the years they exist and as the TBM programs mature. Finally, there is a strong correlation between the amount of technology spending and the number of TBM office employees.

TBM Maturity vs. Number of TBM Office FTEs

TBM Office Age vs. Number of TBM Office FTEs

Tech Spending vs. Number of TBM Office FTEs

It’s important to note that we had a couple of outliers in our data. Two organizations report 46 and 50 FTEs for their TBM office size. We know these programs to include staff that are not traditional TBM office staffers, and include roles such as IT planners, business relationship managers, and service owners. Therefore, paying attention to median figures is more meaningful than averages.

Methods of Sourcing TBM Office Skills

TBM leaders often ask us how to source and enable staff for TBM. Unfortunately, the demand for trained and experienced TBM professionals often outstrips the supply. Your best source of TBM professionals may be within your own organization. There you’ll find professionals who know your business, understand your operations, and have worked with the tools and data upon which TBM relies. Indeed, some may have been in not-so-dissimilar analyst roles, where they have been using non-TBM tools and data to help your people and your business make decisions.

TBM analysts and managers – those professionals who are directly involved in the TBM program – often see TBM as a step in the right direction for their career. Regardless of how TBM skills are sourced, those professionals learn a lot about how the business employs technology through the unique lens that is TBM.

How has your department or TBM office acquired TBM analyst staffing and skills? (Please choose all that apply.)CrawlWalkRun/Fly
Leveraged existing employees who were in similar roles38%69%75%
Reassigned and enabled employees from other roles19%34%63%
Hired TBM analyst employees from outside the company22%34%46%
See all reported sources
How has your department or TBM office acquired TBM analyst staffing and skills? (Please choose all that apply.)CrawlWalkRun/Fly
Leveraged existing employees who were in similar roles38%69%75%
Reassigned and enabled employees from other roles19%34%63%
Assigned offshore employees3%6%4%
Hired TBM analyst employees from outside the company22%34%46%
Hired consultants or contractors for the role22%28%17%
Outsourced TBM analyst services8%13%13%
Other (Please describe in comments)3%3%8%
N/A - We have not acquired TBM analyst staffing/skills27%13%4%

TBM brings teams together, and I appreciate collaboration, I appreciate having a single source of truth. I also enjoy having the ability to pivot or create business case scenarios outside of the fiscal year budgeting process. And, to be honest, I just have a little bit of fun around understanding the business itself versus the reconciliation of the numbers.

Charles Walker, Department Manager for IT Business Management, Enterprise Holdings

Have members of your TBM office received any of the following training or certifications that provide important TBM-related skills and knowledge? (Please choose all that apply.)

TBM-Related Training of Staff

Finally, let’s look at how TBM staff are trained. TBM leaders of all maturities have invested in TBM-related training for their people. Impressively, at least half of the respondents reported that some of their people have received the TBM Council’s TBM Executive Foundation training. To date, nearly 5,000 people worldwide have received this training, and more than 2,000 people are Certified TBM Executives (CTBMEs). However, the correlation between many types of training and TBM maturity is not terribly strong, except for one: advanced product (tool) training is most closely correlated with maturity.

Anecdotally, the skills and experience of the TBM analyst (TBMA) cannot be understated. Having a strong TBMA often means your program can respond to tough requests from decision makers. They can build or customize reports for decision makers. They can integrate data from almost any source. The capabilities of this role should be a focus of any TBM program leader.

Conclusion

This inaugural State of TBM research revealed many important findings, such as the linkage between maturity and business outcomes and the hallmarks of successful and more mature programs. We hope you found this valuable.   

To learn more about the TBM Council and membership, go to https://www.tbmcouncil.org/. If you have any questions or needs related to our research efforts, please email us directly at Research@TBMCouncil.org. 

Appendix: Research Overview

Primary data collection for our research was conducted through an online survey of TBM Council members between July 15 and September 24, 2021. We collected 103 complete responses from around the world, of which nearly two-thirds were from North America. Of our survey respondents, financial services (banking, insurance, other), government, and healthcare made up over half of our respondents. The average annual spending of our respondents was between $437 million and $1.1 billion, with a midpoint average of $777 million. Nearly half (49%) of our survey respondents report having a Federated technology organizational model, whereby many technologies are delivered from a central organization, while many are provided by/within the lines of business. Another 43% reported having a Centralized model whereby most technology is provided by a single organization. 

In addition to our survey-based research, we also discussed many topics of TBM adoption through 22 different open member meetings in 2021. The meetings included those of our TBM Council Strategy Communities, which span five vertical industries (banking, insurance, manufacturing, healthcare, and government) as well as the interest areas of public cloud and agile adoption. Our meetings also included our Standards Committee open forums, which brought together members to discuss the committee’s work, which focused on TBM metrics and cost allocation and modelling methods in 2021. During our meetings, we run live polls to gather quantitative feedback and we openly discuss topics related to TBM best practices and adoption. Collectively, these meetings brought together over 220 different professionals throughout the year.

Where is your technology department primarily based?

What is your company's primary vertical industry?

For the current fiscal year, what is your technology department’s annual technology budget (in US dollars) across both operating and capital expenditures?

Which of the following best describes your company's technology organizational model?

0 %
Centralized: most technology is provided by a single organization
0 %
Distributed: most technology is provided by the lines of business
0 %
Federated: many technologies are delivered from a central organization, while others are provided within the lines of business
0 %
Others

About the Technology Business Management Council

The Technology Business Management (TBM) Council is a nonprofit business entity focused on developing a definitive framework for managing the business of IT. It is governed by an independent board of business technology leaders from a diverse group of the world’s most innovative companies. The TBM Council established a set of tools and best practices including organizational traits, management disciplines, a common taxonomy, and metrics. Members are encouraged to develop and contribute to their understanding of TBM through the Council’s research, standards, education offerings, and community engagements. Members collaborate with their peers through an annual global conference, regional meetings, and an online community.
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