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“When you start thinking about what application or what service this cost is driving, it changes the way you think about costs. And people [in the business] understand that conversation.”
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“When you start thinking about what application or what service this cost is driving, it changes the way you think about costs. And people [in the business] understand that conversation.”
Origin Energy executives needed a better understanding of how the company’s technology spend supported the business. As a result, the central technology organization established a comprehensive business service, technical service, and application catalog, leveraging the Apptio Technology Business Management (TBM) framework in conjunction with the ServiceNow CSDM 3.0 model. Tight integration between Apptio and ServiceNow ensures cost data is now accurately allocated, giving company executives a more complete and defensible view of the total cost of ownership for their business applications.
Origin Energy is a major electricity generator and retailer of both electricity and natural gas in Australia. The company has become one of the leading providers of energy to homes and businesses in the country, serving 4.5 million customers. Headquartered in Sydney, they employ 5,000 people and are committed to providing ‘good energy’ that is reliable, affordable, and sustainable.
As a large company with many business units, Origin Energy has a federated IT model. There is a central IT division that supports essential services, but business units have the freedom and authority to pursue their own technology initiatives and investments.
With a federated model, allocating costs for technology services to the business units requires a structured approach and a clear understanding of the fully burdened cost of IT services and applications. As a result, the company implemented TBM, the industry standard framework for managing the business of technology spend, using Apptio.
As the business evolved and the technology landscape changed, however, the TBM model that Origin Energy implemented became outdated. It needed to be revised to keep up with the business, reflect new device and application information, improve their understanding of costs, and ensure cost allocations were accurate and defensible.
In 2021, Mark Johnson, TBM specialist at Origin Energy, saw an opportunity to address these challenges. At the time, the company was in the process of upgrading their ServiceNow CSDM (Common Service Data Model) to Version 3. Johnson felt they could revise their TBM model to align with elements of the CSDM framework, integrate Apptio with ServiceNow, and improve their cost allocations.
“There was a real need for us to understand the cost of technical versus business, both for applications and services,” Mark Johnson said. “Our leaders wanted to understand the full cost of a technical service, but they didn’t want to expose those costs to the business. They just wanted to show the total cost of ownership of a business application or a business service offering.”
To meet this requirement, Origin Energy implemented a two-layer TBM model in Apptio — a technical layer and a business layer. This enabled them to allocate costs first onto technical applications, and then reallocate the technical costs onto the business applications. There was also the requirement to support cost allocations from the business services layer onto the consuming business units within Origin using the IT Finance-defined cost consumption drivers.
“Once the decision was made to go with a two-layer model,” Johnson said, “I went to the ServiceNow configuration manager because we needed to link technical applications and technical service offerings to the business configuration items (CIs).” There was also the need to embed the cost drivers from business service offerings to the consuming business units within ServiceNow and give the technology owners end-to-end control for cost allocations for the services they managed.
Working together, Johnson and his ServiceNow colleague customized the ServiceNow framework to create a mechanism where they could have both a targeted allocation — technical CI to a business CI — as well as a spread allocation. For the business service offerings, Origin leveraged ServiceNow’s OOTB functionality along with some customization to deliver the final allocation to business units for the defined organization cost drivers.
Johnson said, “We had a close working relationship. I gave her the requirements — what Apptio needed from ServiceNow for cost allocation to work the way we wanted it to — and she built the customization in ServiceNow to make it happen.”
With support from finance, service owners, and application owners, Johnson improved their TBM model. Leveraging Apptio’s data connectors, he integrated data feeds from key systems such as SAP, ServiceNow, and Apptio Cloudability to create a more accurate cost allocation model that was closely linked to operational CIs, making Apptio the centerpiece for ingesting and aggregating cost data across the organization. In fact, the integration between Apptio and ServiceNow was so thorough that service owners could now control how costs were allocated in Apptio using a dropdown menu in ServiceNow to select the preferred consumption method.
Johnson held showcases across the organization to educate stakeholders, refine the new model based on feedback, and gain support. In less than five months, the work was complete, and a new end-to-end, fully automated TBM model was put into production.
Through the integration of Apptio and ServiceNow, Origin Energy has changed the view of technology and how it supports the business. According to Anthony Kaelin, Origin Energy’s head of automation and insights, this has delivered significant results across the organization.
Origin Energy service owners have complete control end-to-end for cost allocation utilizing the ServiceNow CSDM framework. This allows for fact-based conversations with the business partners. There is also a greater understanding of the TBM framework and its alignment with Origin Energy’s mature ServiceNow implementation.
Kaelin summarized the importance of TBM to the company and the work the teams did to rebuild the model. He said, “Leveraging the TBM framework in conjunction with the ServiceNow CSDM 3.0 model, Origin Energy invested time with strategic technology owners to define a comprehensive business and technical service and application catalog. This model now underpins technology within Origin — cost transparency and allocation strategies, IT service management, business criticality, data classification, and much more. All resources in central technology understand the importance and need for accurately capturing this data, and adoption across the wider business is now following suit.”
Regarding the impact of this, Kaelin added, “Almost all cost allocation is now defensible, and owners have greater accountability and control for their areas. Service owners have a great investment in ServiceNow and the data they manage. Governance on this data, reviewing software asset management (SAM), CSDM, and TBM is now underway, and our end users are understanding the criticality that each of these disciplines bring into Origin Energy. Having data automation in the right areas ensures we are not spending unnecessary time and effort keeping information up to date.”
Rebuilding their TBM model and integrating Apptio and ServiceNow was a significant achievement for Origin Energy.
When asked if he had any advice for others who may be considering a similar project, Johnson said, “Focus on your applications and your services. When you start thinking about what application or what service this cost is driving, it changes the way you think about costs. And people [in the business] understand that conversation. Then, you can talk about what application or what CI the cost belongs to, and they get it. When I started thinking like that, it was a massive game changer for me.”
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