The case for managing your IT technology efforts and investments like a business is clear: In this age of digital disruption and cyber-security risks, technology is top-of-mind throughout the executive suite. And the role of today’s CIO has fundamentally changed — evolving from a traditional operational mindset into a transformational business leader.
Technology Business Management, or TBM, is the framework for a journey that can help IT organizations transform — with a step-by-step strategy and roadmap — from a spending and cost center into a driver of high-return investments.
“Our approach to TBM is all about aligning IT costs with business value driven from those investments,” says Jason Byrd, advisory managing director at KPMG Advisory. “That doesn’t necessarily mean simply cutting costs or having TBM become an accounting exercise,” he explains. “TBM is a lever that can be used to transform the IT organization to run IT like a business.”
KPMG’s 2016 Global Technology Business Management (TBM) Survey found that TBM significantly helps CIOs and IT leaders gain a full view and deep understanding of their IT services’ cost and performance. However, developing TBM proficiency is no short sprint. The path to TBM success is a winding journey with many turns along the way—but success is within any organization’s reach.
The organizations that become what KPMGcalls “TBM Leaders” are those that develop a series of important behaviors designed to boost performance against key capabilities for TBM. KPMG’s TBM Proficiency Index found that 15 percent of these successful organizations are running ahead of the pack — and you can get there too, by starting with these six habits.
Habit #1: Clearly define technical services
Want to boost the likelihood of TBM success by a factor of six? Start by clearly defining and publishing your technical infrastructure services, such as data center, network, and end-user computing. This creates the clear visibility you need to align service cost allocations — including hardware, software, personnel, and outsourced services.
For companies that are more advanced in TBM, take the next step by focusing on defining and publishing a set of end-to-end business services that aligns end users (such as your service desk) and application and professional services (such as project management, consulting, training) with your technical services.
Habit #2: Collect and maintain the right data
Data is the bedrock of TBM. After all, without high-quality data there is no credibility, and no ability to be fully transparent. The KPMG survey found that 81 percent of TBM Leaders follow a well-defined process for improving data quality, including collecting and maintaining the right information about technology costs/consumption, resource utilization costs, IT asset information, service performance data, and project time allocations.
“TBM is like a flashlight that drives data cleanup,” says Byrd. But “While lack of quality data can inhibit ultimate TBM success, it shouldn’t inhibit you from getting started on the TBM journey. It just illuminates what you need to do,” he explains.
Habit #3: Use specialized, modern TBM tools
KPMG’s survey found that TBM Leaders don’t rely on spreadsheets, as they can’t support the needs of an organization’s full TBM transformation. Instead, modern, specialized tools are critical for managing and maintaining the myriad complex data sources and allocation alignment between technology, application, and business services. These modern tools are vital for TBM proficiency to grow and last.
In fact, moving from spreadsheets to a commercial application/platform designed for TBM increases the likelihood of success by a factor of six, the survey found. And an overwhelming majority (83 percent) of TBM Leaders find their tools for financial management and reporting effective, while only 32 percent of other organizations do.
Habit #4: Build the right skills and processes to sustain the TBM journey
The right tools are not enough to make TBM effective. You also need the right people, skills, governance, and processes in place. KPMG found that TBM Leaders who prioritized organizational change management have doubled their success in moving toward TBM transformation.
The most high-impact skill common to TBM Leaders is the ability to articulate IT value in ways that appeal to business partners. Blending IT and business knowledge, and communicating it effectively, increases the likelihood of TBM success by a factor of 11, the survey found. But a host of other TBM-specific skills are also necessary, including the ability to: speak the language of business, finance, and IT; manage service capacity in response to changes in demand and supply; manage business relationships; and manage vendor/supplier partnerships.
Habit #5: Conduct periodic reviews of IT portfolios
The path to TBM proficiency requires regular review of various IT portfolios — something TBM Leaders do, at minimum, on a quarterly basis. For organizations that only do ad hoc reviews, moving to a regular annual review increases the likelihood of TBM success across service, application, vendor/supplier, and core technology/infrastructure portfolios by 4 to 5 times.
Why are frequent reviews so important? TBM Leaders, KPMG discovered, use the accuracy of cost transparency as a foundation for capitalizing on opportunities to reduce costs and improve service quality. A disciplined review process—driven by focused goals—helps organizations gain visibility into their costs, glean insight from their data, and drive real business value.
Habit #6: Put the CIO in charge of TBM
Without executive sponsorship, TBM will not be successful, says Byrd. And that executive should be the CIO, not primarily the CFO. “If finance leads the effort, they tend to not understand issues related to IT operations, from services to cost alignment,” he says. “TBM is a transforming engine for IT, so it most often makes sense for the CIO to sponsor it.”
Indeed, the CIO is the natural owner of TBM, as this position has intimate knowledge of the entire IT operation and how it aligns with the organization’s business processes. KPMG’s global survey has consistently found that a CIO leading the way boosts TBM proficiency by a factor of four; it will come as no surprise that 60 percent of TBM Leader organizations have the CIO leading the initiative.
Ready, Set, NOW
Success in TBM has nothing to do with your global reach or the size of your IT budget. Organizations of all sizes and business operating models can successfully implement a well-planned and thought-out TBM initiative that will derive real business value from IT—as long as they implement the habits and discipline that TBM Leaders use.
You can start your TBM journey today: Learn more about the KPMG TBM Proficiency Assessment or how KPMG TBM services can help your organization add IT value to the business here.