Red Ventures is a portfolio of digital businesses that strives to connect consumers and brands in the financial services, home services and media, health services, and education industries. Founded in 2000, the company builds integrated marketing campaigns and e-commerce experiences tailored to consumer preferences, connecting buyers with the brands and services they need and helping them make informed purchasing decisions. With over 3,000 employees and a rapidly-growing contingent of technology engineering talent, the company is headquartered in Charlotte, NC, with offices across the U.S., the United Kingdom, and Sao Paulo, Brazil, to serve its customers.
For Red Ventures, technology is a part of every customer experience, making IT one of the organization’s largest cost categories. Though a digital business, Red Ventures’ leadership faces a common set of challenges: managing the cost of goods sold (COGS), improving efficiency and making accurate strategic decisions. “We don’t have a physical product,” said James LaPlaine, Chief Technology Officer at Red Ventures. “The output of the work of our engineers and technologists is the output of our company. Understanding the costs to build technical solutions means we can make the right business decisions about which markets to go after and where to expand our services.”
Emerging from the dotcom collapse, Red Ventures understood it needed to reboot its corporate strategy. Leadership recognized the value in adaptability. Under this core philosophy, Red Ventures began driving exponential growth with acquisitions that rapidly expanded its portfolio to new industries and geographies. This growth created new challenges and organizational complexities, however. Chief among these was the identification and accurate allocation of all technology costs across the business. The leadership team now needed to ensure their strategic investments were not hindered by the technology they supported. But with its cost data residing in various systems across the business, Red Ventures was unable to get a complete picture of its IT spend.
Adding to the complexity, Red Ventures is shifting its entire IT environment to the cloud. Over the last two years, they have moved two-thirds of their production workload to the cloud and expect to complete this effort by the end of 2020.
The leadership team felt cost transparency was essential for operating the IT organization, but achieving it was a struggle. They were unable to measure consumption accurately and lacked a common language for communicating IT spend with business unit leaders.
The company tried to solve the problem by manually collecting cost data from different systems and analyzing it using spreadsheets. “We started a practice in early 2018 around reviewing technology spend across the company,” LaPlaine said. “We did that with spreadsheets in partnership with our finance team. But it was very manual. We had to do a lot of iterations before we had confidence the information was correct.” While this process provided some level of insight to the leadership team, it was time-consuming and inefficient.
Over time, shortcomings of their existing process soon became clear. As they combed through their general ledger and looked at the financial details, they had more questions than answers. Red Ventures realized it needed an IT financial management platform that would provide better insight on consumption and cost transparency. Understanding that spreadsheets and manual processes would not provide the transparency it needed, Red Ventures began searching for a solution. Led by the CTO LaPlaine, representing senior leaders from across the business and IT, Apptio became the clear choice. In July 2019, Red Ventures implemented Apptio Cost Transparency to inform migration decisions and Cloudability to allocate and govern cloud costs.
With two-thirds of its workload in the cloud and the remainder soon to migrate, Red Ventures needed a way to ensure it was using its cloud investments wisely. With Cloudability’s deep tagging features and analytics, the team is able to group cloud resources into meaningful buckets, identify untagged resources, and drill down into their consumption statistics, giving them the information they need to make informed decisions. “Having a good tagging strategy is important to us,” said LaPlaine, “so we can pull up information and see what is there. We’re now making better decisions on things like buying reserved instances from AWS or when to use the savings plan model; how much capacity we commit to versus how much we need as variable.”
In addition, Red Ventures has experienced other benefits with Cloudability. According to LaPlaine, the company has improved its use of spot instances and through the use of tagging has been able to automate turning off nodes and equipment during nights and weekends when they’re not in use.
Cloudability gives Red Ventures a taxonomy that enables them to allocate costs to its business units. In fact, within 3 months of deploying, Red Ventures was able to allocate 92% of its cloud costs in AWS to its business units.
With Apptio, Red Ventures not only has better IT cost transparency but also an effective way to communicate with the business in a clear, understandable language. This has helped foster accountability for spending and opened up new conversations about IT value. “To us, success is providing a better understanding of the value of technology to our non-technical leaders,” said LaPlaine. “It’s a way to show our business leaders how technology supports our business initiatives. And then, the real benefit is to see them use that information to make better decisions around technical solutions that make us a more productive and effective company for our customers.”
LaPlaine recognizes that driving cost transparency and financial accountability can seem overwhelming. But the results are worth it. His suggestion to other organizations struggling in this area is this: “Just start. You don’t have to know the complete picture or even understand the end state in the beginning. The important thing is to start building the model, so you can ask the next level of questions. Start with what you have and then follow the threads.”
Although Red Ventures is still in the early stages of its deployment, the leadership team is looking forward to expanding Apptio’s benefits to all their systems. The next step is to develop instrumentation for the company’s internally-developed systems and build consumption metrics for those applications, so the team can use Apptio to provide the same level of cost transparency and allocation for their internal systems as they do for their external ones.
Better cost transparency and business value insight has enabled Red Ventures to adapt to marketplace disruptions—such as those resulting from the recent pandemic—and to pivot toward new opportunities. And the company continues to look for new ways to use its newfound agility.