Adopting TBM for your hybrid cloud
If you’ve been following us so far, you now fully understand how attractive hybrid cloud is from a speed, scale, security, and simplicity perspective and you are so excited to step into this journey with a full backpack of your applications. But, can you answer the following questions:
Do you have visibility into the total cost of running your applications?
Do you have insight into the average cost of running your applications across different platforms AND by different locations?
You’re going to want to know these things so you can create the right map to properly guide you through your hybrid cloud journey.
We, as hybrid cloud platform owners, are facing the same challenges as you — trying to understand the true end-to-end cost for what it takes to run applications and support vital business functions. We need to better understand budget and cost in terms of Platform as a Service, applications, and projects instead of general ledger-based costing departments and minors.
Enter Technology Business Management (TBM), a bridge between finance and IT. TBM is a framework that combines taxonomy, modeling, metrics, and unit economics that work together to provide full visibility and transparency into the cost of technology. This helps to drive and support:
- Enterprise agility
- Business value conversations
- Management, planning, and optimization of the cost and quality of technology investments
IT needs to be able to measure, optimize, and operationalize management practices for spending — both for traditional on-premises solutions and cloud-based IT. Measuring IT value is a metric-driven endeavor — for example, the total cost of ownership (TCO) of applications and IT. The outcome can be a change in the conversation with the business around trade-offs, IT complexity, and variable spend.
The whole TBM model sounds attractive, right? But really, how do we enable those great capabilities and truly benefit our day-to-day business? We decided that we needed a tool, Apptio SaaS solutions, which helped us consolidate financial and operational data into a single platform, creating a business-centric view of IT spending.
Here’s what the implementation helped us do to provide information and drive better business decisions:
1. Made TCO transparent for platform owners and application owners
By pulling from the costing department and minors in general ledger, we are grouping financial data through four big buckets: labor, vendor, fixed assets and other. In addition, it connects other billing data into this single financial dashboard, which massively increases efficiency for us.
The most important and frequently asked question is, “what do those financial numbers really mean to IT?” TBM and Apptio cost transparency model provides an industry standard taxonomy to translate financial data into IT Resources Towers, such as compute, storage, data center, end user, platform, and network. This makes it easier for IT leaders to understand what specific IT elements are costing.
2. Connected supply and demand of IT
As an application owner, understanding the TCO will help support your strategic planning and your selection of hybrid cloud solutions. As hybrid cloud platform providers, having insight into total capacity cost and utilization by consumers is the first step to understanding your unit rate and unit cost to recover your total costs through a chargeback process (a common internal finance process). By understanding how the platform cost is dependent on the business volumes and the excess capacity cost, platform owners can drive the conversation with application owners to effectively shape their demands. Instead of being asked, “Why should I deploy on this platform when it’s more expensive than the others?”, we’re able to change the narrative to, “Is this the correct amount of units I need for my application?”
3. Funded innovation and reinvestment back into the business
What’s the overall value by doing all these things we’ve highlighted above? Application teams can better manage their budgets while simultaneously generating the most value by deploying to the hybrid cloud platform. Platform providers are able to optimize costs by shaping consumer demands. Then, they are able to reinvest those savings into innovation projects or new technologies to bring application teams more advanced capabilities, while making the whole business engine run smoother and healthier.
If you’re starting your hybrid cloud journey and want to enable application and platform teams to make better, faster, data-driven decisions during their migration journey, your organization may want to consider the adoption of TBM to help:
- Create consumption transparency of your IT resources.
- Create a connection of supply and demand of your IT resources.
- Provide the ability to reinvest your savings into new and innovative technologies.
We’ve really been enjoying the amount of information we’re getting to allow us to make the right decisions at the right time.
Summer Yu Gu is a Delivery Manager for our Hybrid Business Management team within CIO Hybrid Cloud Platforms at IBM based in Armonk, NY. The above article is personal and does not necessarily represent IBM’s positions, strategies or opinions.
