The 4 Hallmarks of TBM Maturity are Achievable

The inaugural 2021 State of TBM Report highlighted the correlation between Technology Business Management (TBM) adoption and positive business outcomes, such as optimizing run spend to fund innovation or accelerating cloud-first initiatives to retire on-premises hardware. An organization’s TBM maturity reflects the extent to which it has adopted TBM processes (e.g., budget variance analysis, labor financial review, application TCO spend analysis).

We asked respondents to rate their maturity as follows:

• Crawling (“We are in the early stages of our program or have not matured much from our starting point.”)
• Walking (“We have a regular cadence for TBM processes and are regularly delivering value to our department or company.”)
• Running (“We have a regular cadence for TBM processes, have developed advanced reporting and analytics, and are delivering significant value to our technology department and our company.”)
• Flying (“Our TBM program is an integral part of how we plan, operate, and transform our company’s technologies.”)

In some respects, TBM maturity comes with time; learning comes from experience. However, the passage of time does not make TBM maturity inevitable. The report identified actions and behaviors that aligned to increasing levels of TBM maturity. Let’s explore the four hallmarks of TBM maturity that others have achieved to learn how to achieve them yourself.

1) Governance and executive sponsorship

Successful TBM programs are driven top-down, which means having proper governance and sponsorship. Whether a steering committee or an advisory group, a TBM governance group is one of the most critical aspects of TBM maturity. Without executive sponsorship, a TBM program can drift into irrelevance.

Establish governance and executive sponsorship with technology chiefs (e.g., CIO, CTO). Business leaders buy into the value of TBM when technology leaders articulate how it applies to the current (e.g., hybrid with cloud-smart) and future operating models (e.g., cloud-native apps replacing cloud-enabled and cloud-based applications) and corporate technology strategy (e.g., digital products or agile-at-scale).

2) Finance and technology organization partnership

TBM depends on two-in-a-box collaboration between technology and finance leaders. Finance teams bring financial data and tech brings operational data. Partnership is essential because TBM takes siloed data sources and combines them to look at IT consumption, costs, and value differently than before.

A unified voice between finance and tech leaders builds trust inside and outside of technology and shows that TBM promotes cross-functional collaboration in pursuit of business outcomes.

To build this partnership, identify and understand concerns that financial leaders might have about TBM. Allay concerns that TBM is “shadow finance” or duplicates existing financial management processes or tools. If the TBM office sits within Finance, TBM leaders should reach out to their technology counterparts. Their concerns might center on fears of transparency or the amount of work needed to provide the necessary data for TBM.

Share the executive sponsorship role between Finance and Tech. Often, TBM programs begin with both parties involved and their respective leaders sharing the executive sponsorship role. Investment in building the partnership pays off in program maturity and business outcomes.

Finally, address disparities in incentives that might undermine the goals of TBM. For example, if Finance uses a method of charging back IT costs to the business that is different than a consumption-based approach employed by TBM, resolve the disparity so that consumers pay attention to the true costs they drive.

3) A TBM model built with best practices

Every organization has some type of cost model to represent its IT expenditure. These models often use indefensible even-spread allocation strategies divorced from actual IT use. A TBM model requires a data-driven method for mapping and allocating costs and resource consumption from sources to their uses — powering value conversations with reports, analytics, and metrics. A standard taxonomy of costs aids this mapping. Mature TBM organizations leverage an automated TBM solution such as Apptio to ingest monthly financial and operational data to keep their TBM cost model current.

Employing the standard taxonomy to the highest degree possible can not only ease TBM adoption but accelerate it. Commonwealth Bank of Australia is a perfect example. The bank’s technology and finance leaders followed an “out-of-the-box” approach with Apptio, including the standard TBM taxonomy and a simplified general ledger. The bank allocated 100% of its IT and operations costs and halved the time it took Finance to publish IT financials.

To expand the impact and influence of TBM, increase the number of people who are TBM decision-makers. Roles aligning to organizations that self-report TBM maturity include service owners, product managers, business owners, IT financial managers, business relationship managers, enterprise and business architects, and business partners. Widely available TBM reporting creates widely impactful TBM reporting.

Model costs further up the TBM model. Many organizations can only model IT costs with a general ledger extract; they cannot extend their cost model to applications and services. An automated TBM model with a standard taxonomy can calculate application TCO — a common use case for TBM reporting. The State of TBM Report highlighted that a clear majority of mature TBM organizations model their application costs, while less than half of self-identified immature TBM organizations do so.

4) Staffing and enablement of the TBM office

Your goals, data sources, and TBM scope are unique, but most organizations start with a limited set of roles such as TBM program leader, TBM architect or consultant, and TBM analysts who are hands-on with the TBM tools and data.

Invest in staffing and skills as the TBM program matures. TBMO headcount often grows as the scope of TBM expands. Mature TBM processes require working with more complex data sources, sharing insights with business partners, and driving action — this often involves adding headcount or improving skillsets. Automation and self-service capabilities help with the expansion, but investing in professionals who can advise and support decision makers will prove incredibly valuable.

Identify TBM professionals within your organization. TBM leaders often ask how to source and enable staff for TBM. Demand for experienced TBM professionals often outweighs the supply. The best place to find a full-time TBM professional may be within your organization — someone who knows the business, understands operations, and has worked with TBM tools and data.

You should also get your staff trained in TBM. The State of TBM Report 2021 found that respondents who completed advanced training tended to have more mature TBM practices. Nearly 5,000 people worldwide have received the TBM Council’s TBM Executive Foundation training, and more than 2,000 people are certified TBM executives. Trained TBM professionals have the skills to drive business outcomes with TBM.

Learn from others to mature your TBM practice

Knowing how others have adopted TBM helps you avoid risk no matter where you are in your TBM journey. To find out more about each hallmark and review respondents by company size and vertical, access the complete State of TBM Report.