The relationship between the business and its IT organization has not fared well in recent years. Here at Apptio, we reported on a recent survey by McKinsey & Co. that illustrates this reality in stark numbers. Executive confidence in IT has dropped from 57 percent in 2012, down to a painful 35 percent today. Nearly two-thirds of executives now hold either an ambivalent or negative view of IT’s role in business growth.
To what can we attribute this shift? To be sure, it’s not simply one factor. There are broad and far-reaching macro changes impacting CIOs and their business partners that have only grown in complexity over the past decade.
One of these factors is the recognition that the role of the CIO is fundamentally changing. When Apptio was founded seven years ago, we recognized that forward-thinking CIOs needed a business management system to enable them to be broker of IT services – whether such services were procured externally or built internally. The rise of the cloud made this IT-as-a-service reality possible and many CIOs embraced this approach as a method for increasing their influence. By providing their business partners with choice levers related to the IT services they were providing, the business was finally getting insight into the cost, quality of service and value of their IT needs.
Yet, a services orientation and the cloud alone are not responsible for the changing relationship between CIOs and their business partners. For that answer, one must turn to a core disconnect between IT and business leaders: language. Unsurprisingly, IT leaders communicate in the language they know – technology. And business leaders do the same, only their language is finance. This lack of understanding has, more than any other factor, led to the current state of the IT/business relationship.
To remedy this problem, CIOs came together to create a new category and discipline that connected their technology services with the business’ tactics. This category is called Technology Business Management (TBM). TBM is more than just a discipline; it is a method for optimizing spending, fine-tuning resources, and ultimately quantifying and communicating the real value of IT in a language that business understands.
To further bridge this gap between IT and the business, a TBM model was needed to translate the “geek-speak” of IT into the financial language of the business. Today’s industry-standard for this translation is called ATUM, or the Apptio TBM Unified Model. ATUM allows CIOs to speak to their business-level counterparts about the true costs and value of IT services, rather than their budget alone.
ATUM takes a comprehensive look at IT’s investment portfolio that spans base foundational services like infrastructure all the way to end-user computing. The model also goes one step further by layering in the cost of applications and ultimately business services so CIOs and their counterparts have a truly complete, business-level view of their spend.
With TBM, CIOs not only have a mechanism for communicating the impact of their investments on technology, but they also have a means for measuring the value of those investments. Many of our customers use TBM to measure how much money they spend on running the day-to-day operations vs. innovating. Or, determining the balance they’ve struck between operational and capital expenses, fixed vs. variable. With TBM, CIOs are able to measure the cost and value of their IT services into a grow-sustain-run-transform model.
By changing the way they deliver IT services, CIOs also shift the conversation with their business partners. As a result, today’s leading CIOs are adopting business management systems similar to those used by their counterparts in marketing, HR and sales to measure and communicate the value of their investments.
With a true IT business management system, CIOs are empowered not only to manage technology but also the business of technology. These systems help IT leaders to apply analytics to the cost and consumption of IT; as a result CIOs are now able to more confidently and strategically make fact-based decisions.
Suddenly, modern CIOs can own their vital place at the C-suite strategy table and can impact the competitive strength of their organization. With TBM solutions like Apptio in hand and the renewed respect of colleagues, modern CIOs are fully equipped to transform their IT organizations into indispensable and accountable partners in the businesses.
As more CIOs adopt TBM, I predict we will see an end to the slump in that executive confidence metric, and business will be better for it.
Sunny Gupta is the co-founder, president and CEO of Apptio, responsible for company vision, strategic direction, planning and execution. Sunny’s enterprise software career spans more than 20 years with roles in general management, strategic marketing, product management and business development. Before founding Apptio, Sunny was executive vice president of products at Opsware and was responsible for all Opsware product businesses up to its acquisition by HP for over $1.6 billion.