With Deutsche Bank’s commitment to cost efficiency and reduced IT complexity, the Deutsche Bank TBM Office has focused its efforts on improving the cost transparency of the bank’s IT environment to help achieve these objectives.
"Over the last two and a half years, TBM has enabled a step change in the way we communicate technology costs and consumption at the bank. Cost owners and consumers are now better able to understand and influence the costs within their control," said David Taylor, head of Deutsche Bank's TBM Office. "We've built up quite a healthy understanding of our technology spend and we feel very confident that our TBM information is contributing towards the understanding of how the bank will achieve its publically stated cost targets."
TBM has enabled a step change in the way we communicate technology costs and consumption at the bank.
Managing Director, Deutsche Bank
Cost transparency is enabling IT to engage each of the major business units in conversations based on consumption of IT services, not financial allocations, as was the case in the past. By moving from a spreadsheet-based process of collecting, analyzing, and reporting IT service delivery to a credible enterprise-wide solution, IT can now quantitatively show line-of-business owners what they consume and how the cost of consumption affects their budgets directly.
Perhaps more importantly, IT can also demonstrate the product options available to reduce their cost-of-consumption (by moving applications to less expensive cloud platforms, for example), how to reduce direct consumption (by pricing applications in ways that encourage or discourage use, for example) or, preferably, both. This is enabling IT to reduce cost and consumption.
"The TBM model enables us to understand not only what it costs the bank to run compute or a database, but also allows the CIOs in the bank to understand what their applications cost and the service components therein," said Mark Steckel, Director, TBM. "And with that comes the ability for them to influence their costs and consumption. While it was possible to have that conversation in the past, we were never able to do so with the level of information we now have available."
Even though cost is a primary driver of Deutsche Bank's TBM efforts, achieving cost savings and efficiency goals cannot happen without everyone working from the same playbook. Prior to TBM, that playbook didn't exist. With operations in around 60 countries around the globe, the company's infrastructure is diverse.
"What CIOs want are applications that work well, and it's our job in technology to provide an expected level of performance," said Michael Soos, Director, TBM "So, all we're doing is asking them: 'What are your requirements?' How we source compute power to run an application is something they shouldn't need to worry about. It's about driving the right conversation to get to what they value in technology, which is application performance and functionality. That should be the focus, not so much on the underlying technology that provides the compute to do it."
Beginning in 2016, Soos and his team started digging into technology spending bank-wide. This required them to unearth and understand every single IT vendor contract so they could project those costs forward, reconciling them to the actual spending along the way, all the while folding in a newly-signed large complex outsourcing deal.
Once this was done, the focus shifted to translating that spend from the cost centers at ground level, up through the organization into a product and service portfolio that Deutsche Bank's technology groups could understand and work with. They also had to translate financial information about applications and end-users services into something the line-of-business CIOs would understand and find actionable. Apptio allowed them to do both.
"For me, the biggest challenge was how to normalize all of that, based on the sheer complexity of our global organization," said Taylor. "We can now attribute our costs all the way up to the top of the model using defensible methodologies linked directly to consumption."
Because IT's cost and consumption are now well understood, TBM is impacting conversations at all levels within the bank. The IT financial data Apptio provides is being used to drive business conversations.
"Over the last year, we've really begun to fly," said Taylor. "Our CIOs are fully engaged and our Finance colleagues are using the TBM information at the top of the bank to support financial conversations with the business. That's a huge win for the businesses who have not previously had a comprehensive view of what they're spending on technology, including underlying transparency that can be discussed and challenged."
“Previously, CIOs managed technology spending from a corporate accounting perspective and could only compare actuals to internal targets at a high level. They could influence the top-line budget reductions, but could not easily understand the underlying components that were driving the spend,” said Zenith Ahmed, lead Technology Business Management Analyst.
"Now those same CIOs are able to view what is actually driving the costs and the underlying month-on-month consumption within our TBM toolset, and they now also understand the levers they can pull to influence their numbers."
Today, IT works very effectively with line-of-business CIOs to drive two important initiatives: application rationalization and improving the utilization rate of existing assets.
Like most organizations the size and complexity of Deutsche Bank, the utilization rate of its legacy compute infrastructure was historically low. This was driven by a number of factors including over-provisioning to meet peak demand, low visibility into existing resource use and allocation, and infrastructure and applications that provide overlapping functionality.
"Deutsche Bank continues to address its legacy technology platforms," said Taylor. "Our CIOs are focused on application rationalization, to identify the best-in-class applications that should be used, and are setting new standards for how to deliver our business processes. Apptio helps us to expose the cost of the legacy platforms and to support our CIOs' aspirations."
The visibility and cost transparency is also enabling IT to empower CIOs to re-use and re-purpose existing resources like storage, which can be very fragmented and viewed as a commodity across the organization. These incremental costs add up to become material. The result is over-inflated IT budgets, negative effects on key IT efficiency measures, and a reduced ability to innovate because budget isn’t available to fund new projects.
To combat this problem, the organization established dedicated product owners who own IT infrastructure products like compute, storage, or database. These individuals use Apptio to manage the spend for their product areas and help others in the organization see how their actions or requests for new services or functionality impact costs, not only in IT but at the business unit level as well. Conversations with the business leverage a service price x quantity model for products which shields the business from fluctuations in the infrastructure IT cost base and enables focus on demand for IT, which they can directly influence. Differentiated options for products enable the business to select the right technology at the right price point.
“For now, Deutsche Bank’s main goal is still cost reduction. But the power that TBM puts in the hands of IT will allow us to make significant contributions to the bank's future profitability,” said Soos.
The power that TBM puts in the hands of IT will allow us to make significant contributions to the bank's future profitability.
Director, TBM, Deutsche Bank
"What are we investing in? What products? What services? What's enabling the bank? What's driving the business process? And where do we go from here? The whole cost reduction subject, while it's noted and it's important, only reflects where we are at a point in time. Ultimately, we do know where we want to get to."
To position themselves for this eventuality, TBM shifted IT’s focus away from a resource allocation mindset to a product-based approach that seeks to provide the services, not just the technology, the line-of-business owners need to succeed. And, with cost transparency in hand, IT is halfway there, having greatly improved their ability to influence business’ consumption of technology in ways that both spur innovation and drive down costs.
"For me, it's about building trust," said Taylor. "The fact that we can now sit confidently in front of any business partner or any CIO and have a very reasonable and fact-based conversation about what they're spending and explain to them what we can actually do about it, is a definite step forward."