Technology Business Management or TBM as a term was coined around 2012 although many of the concepts making up this framework have been around for almost as long as there has been IT. In its simplest form, TBM represents the integration of business, technology, and finance to provide the data necessary to make better informed decisions on IT investment.
It is designed to institutionalize IT and run it as a business. The goal is to create structure including – solutions, strategies, methodologies, and tools that can quantify the cost and value of investment in IT.
TBM came about as CIOs, CTOs, and CFOs struggled to understand the seemingly limitless request for funding by IT. It grew out of the fact that technology investment seemed to have very few guardrails for the funding ask, and no one could really quantify the value received from these investments.
Business Units, Finance, and Information Technology have historically been separate entities each with their own objectives and goals without formalized interaction. This has resulted in strong silos of knowledge and understanding of the individual components but a lack of transparency that leads everyone involved thinking the other legs of this tri-leg table function as a black box.
The goal of TBM is to break down those barriers and help to describe the interaction of each of these disciplines. Digital transformation is a new buzz word to describe how systems and processes need to be reimagined to meet the needs of a changing organization and customer base.
The rate of change happening throughout IT is almost staggering. Where businesses once had annual activities to define strategic direction and objectives now find that the market dictates that products and services change monthly or in some case weekly.
IT is being asked to pivot quickly to meet the demands upon them but struggle to describe what these requested changes will bring back from a value perspective. Where the business describes a product and can hopefully explain the value proposition and a return on investment, such notions have proven to be difficult for IT to explain.
Using a TBM framework, the goal is to set up a discipline that can describe IT services in terms of business capability, cost efficiency, and alignment with overall objectives to make the organization successful.
The benefits of TBM fall into four primary categories: Optimization, Rationalization, Innovation, and Transformation.
Optimization is designed to collect and analyze the unit cost of technology and find ways to provide IT services in the most efficient way possible. As you can imagine, this becomes an exercise in data collection and analysis. The problem of course is that in many organizations, finance has not been involved with technology decisions or management. There are gaps in understanding how much an IT service costs to implement and more importantly cost to maintain. Each product or service or group has different methods of valuing IT and hence no consistency exists to compare IT services costs across the enterprise.
Rationalization provides the organization to make the best use of the finite resources it has available. The goal is to provide the ability to focus time and money on those IT services that provide the best value. As you will see, this has similar challenges to optimization. The definition of service value has not been standardized and in most cases IT has difficulty providing any measurement of which services give the most business value especially across multiple business units. This function also has a strong bearing on vendor management. The number of IT vendors tends to creep over time with little or no oversight. The result is a multitude of vendor relationships each consuming resources (time, people, or money). The goal in this area is to provide a mechanism to evaluate each vendor relationship to minimize those that are adding only small incremental value.
Innovation comes about as business needs begin aligning with technology investments. By identifying which applications, services, or programs are important to realizing business value, TBM will show where inefficiencies exist, and which need more investment. This is also the area of greatest value as the organization moves from an on-premises monolithic application model to a service-oriented cloud environment that allows changes to be made and deployed quickly.
Transformation builds upon the innovation benefit above to provide business partners with greater agility and allow the organization to pivot quickly to exploit the innovations or market changes that have occurred. This transformation piece is normally where most TBM implementations begin. During the pandemic of 2020, businesses were required to change and change rapidly as the world managed business differently. TBM was introduced as a way to try and quantify the cost of these changes and hopefully understand the value that would be received making these investments.
As with any framework, TBM will be as successful or unsuccessful as the commitment it receives at all levels of the organization. Senior management will look at TBM as an opportunity to finally understand what they are getting from their IT investment. Finance will see this as a way to better understand the costs of IT. IT will be able to make more informed funding requests that can show not just the costs of an investment but the value it provides to give realistic break-even analysis and give them an easier way to manage resources.
The changes required to implement TBM will not be short-term, nor will they be easy. Most efforts of this kind fail when they are tried to be implemented across an already mature organization or portfolio. The quantifiable benefits will not be realized as it is going to take more data and in a lot of cases changing organizational alignment or culture.
Where many companies find success is to focus on smaller areas to grow out the practice and to test how changes required by TBM are received and maintained. Take a segment of the business you want to model with TBM and begin to evaluate what data is necessary to be collected and maintained to feed the decisioning model. If the data management or collection is too arduous, it should be pared down to keep the value without introducing too much additional work.
TBM does not require a separate group whose only job is to measure the efficiency of IT. In fact, having it separated especially when implementing in many cases leads to “ivory tower” thinking. Instead, the concepts of the TBM framework need to be incorporated into existing groups and processes as simply another customer of the data collected about a process or application.
Technology Business Management can provide more transparency and a better decisioning model for IT investment. It should be incorporated into the overall organizational culture. The goals of TBM must be clear with expected output and compliance to be successful.
Is this another quest for a holy grail of solving the challenges about IT investment? Not really, but it is yet another in an evolving toolset that brings greater clarity around investment and what is expected as a result of that IT spend. Building small and extending capabilities as the organization becomes more mature will pay dividends allowing the company to manage IT investment like they do other business opportunities.
0 Comments