by Sarah K. White

What is TBM? A framework for driving value and innovation in IT

Feb 12, 2019
IT Governance FrameworksIT LeadershipIT Strategy

In offering guidance and best practices for IT-business alignment, the technology business management (TBM) framework can help your organization better understand IT’s value, increase collaboration and give deeper insights into IT spending and industry trends.

TBM definition

The technology business management (TBM) framework helps companies integrate IT into the organization, with the goal of running the IT department like a business. The idea of running IT like a business unit is a recent shift in the corporate world. In the past, IT typically functioned as a stand-alone business unit and was separate from main business goals. Today, technology is the foundation of many companies and nearly every business unit and employee needs access to applications, hardware and internal systems. This has shifted IT to the center of the business, forcing executives to account for IT and technology in decision-making processes.

The framework isn’t designed to be a prescriptive method for businesses to follow. Rather, companies should embrace TBM as a collaborative effort to establish a business management process that supports the entire organization. It’s a process that should grow with the organization, not one that defines or restricts the business.

TBM Council

The Technology Business Management Council is a non-profit organization that works to establish best practices for running IT as a business. As of 2019, the council has 5,800 members consisting of CIOs, CTOs, CFOs and any other IT executive or leader responsible for technology management — 40 percent work in I&O or finance, while 45 percent are CXOs. The council started as a biannual CIO executive summit run by Apptio — the company later founded the TBM Council in 2012.

The TBM Council was established to offer collaboration, standardization and education on technology business management practices. The group consists of CIOs and senior IT executives and membership gets you access to a network of IT professionals, early access to research and content from the Council and an invitation to the annual TBM conference and regional TBM summits. The current TBM Council board of directors consists of executives from companies such as Intuit, Apptio, AIG, Cisco and Micron, among others.  

TBM Index

The TBM Council partnered with McKinsey & Co. to develop the TBM Index, which acts as a standardized benchmark assessment. It’s designed to help organizations evaluate their corporate environment to see what TBM elements they already use, which ones make the biggest impact and which ones the company could adopt to improve TBM.

“The survey assesses a holistic set of capabilities that need to be in place to manage the business of IT. These include your IT operating model, service orientation, organization, tools and management capabilities. The survey also evaluates the financial impact and satisfaction from TBM,” according to the TBM Council.

The index was developed after conducting interviews with TBM leaders and by collecting benchmarking data from more than 250 enterprises in North America, EU and Australia. Companies can complete a 30-minute survey that compares your business’ answers against other organizations.

TBM benefits

TBM is designed to help IT leaders gain deeper insight into IT spending, budgets and resources. Spending is one of the biggest roadblocks for IT leaders who need to justify bigger budgets to maintain legacy technology and to adopt new or innovative technology in the future. TBM also gives executives outside of IT a better idea of how integral the IT department is to the entire organization. Ultimately, organizations using TBM want to align IT practices and priorities with business goals to ensure the business supports IT and vice versa.

According to the TBM Council, the 10 core principles of TBM includes:

  • Position for value: Define what IT offers and how the department is valued throughout the organization.
  • Continuous improvement: Build a roadmap for TBM maturity by embracing TBM into the day-to-day business and ensuring TBM is at the forefront of every value conversation.
  • Create transparency: Help define IT’s value by translating “spending, consumption and capacity into meaningful perspectives for technology and business decision-makers.”
  • Shape business demand: Highlight cost and consumption trends across business units to inform future budgets and decisions.
  • Deliver value for money: Offer valuable and cost-effective services and products.
  • Plan and govern: Collaborate and align business units’ budgets with IT so all technology needs are met.
  • Cost for performance: Offer innovative technology and services while maintaining an eye on the bottom line.
  • Business-aligned portfolio: Build a portfolio that demonstrates how much value is offered by a service, product or processes compared to the level of spending.
  • Investment in innovation: Assign resources to innovative projects throughout the organization.
  • Enterprise agility: Respond quickly to opportunities and threats as they pop up in the industry.

Examples of TBM

In a case study on JP Morgan Chase, the company wanted to shift perception of IT as “an expensive enigma with little relation to business value” by integrating IT into the busines. TBM was embraced to give more insight into every business unit and how their technology decisions impact the financial direction of the company. The IT department now fits into the organization and executives have a better understanding of how money is spent on technology and IT managers can operate their department like any other business leader. Ultimately, TBM increased transparency for application and infrastructure services costs, better visibility into cloud services and helped the company “embed TBM into the decision-making DNA of the company,” according to the case study.

According to a TBM case study on Washington State, the federal government spends $90 billion a year on IT, at minimum, and nearly 75 percent of that cost goes towards general maintenance of existing systems. TBM has been implemented at a state level in Washington with coordinated efforts between federal agencies, the CIO council and the Office of Management and Budget (OMB). It’s opened communication between CFOs, CIOs, acquisition professionals and non-IT staff and allowed IT leaders to better justify technology costs. A short list of benefits for Washington State includes better data, modernization, evidence of IT’s value, deeper analytics and easier reporting.  

TBM education and certification

The TBM Council offers a TBM Executive Foundation Certification alongside a course that covers everything you need to know about TBM. It’s recommended for heads of IT finance, TBM program directors, members of the Office of the CIO (OCIO), IT vice presidents, senior FP&A professionals, IT program and portfolio management (PPM/PMO) leaders, service management leaders, IT strategy and transformation professionals, senior IT project managers, IT governance and risk management professionals and independent consultants providing TBM, ITSM, IT4IT, GRC and related services.

In order to get certified you will need a bachelor’s degree or equivalent in business administration, economics, finance, management information systems, computer science or a similar field. You’ll also need five years of full-time work experience in technology, accounting, finance, internal audit, marketing or a similar department. Candidates must also submit a letter of referral from a current or past supervisor or another certified TBM executive. To maintain your certification, you will need to complete 40 hours of continuing professional education every two years and pay the certification maintenance fee, which changes yearly but never exceeds $300.

The two-day in-person course costs $1,495 and is offered throughout the year at different locations across the country. At the end of the course you’ll have the opportunity to take the certification exam online, but you’ll need to pay an additional $195 fee.