Today’s sophisticated TFM tools can help CIOs achieve the “quick wins” of cost attribution and optimization. However, there remains a tremendous opportunity to look beyond the “run” and move beyond a reactive stance, leveraging TFM insights to anticipate the technology needs that will unlock growth. But, as Gartner succinctly states, “IT cost optimization is not a project; it’s a discipline.”1 And like any discipline, success is about diligent processes. Moving from low to high TFM maturity—and from reactive to proactive growth support—is a journey through five key stages:
The first step is building awareness of how technology is being invested today—and what value that technology is bringing to the business. Most businesses lack this awareness because most IT organizations don’t fully understand it themselves. IT operational data and financial data remain in separate silos, making it extremely challenging to attribute detailed financial data to specific technology assets. Fortunately, today’s best-in-class TFM tools seamlessly integrate with other operational solutions, connecting rich IT asset management data with advanced cost allocation and categorization capabilities. This enables IT organizations to better align IT costs with IT services and, ultimately, with business services. This extensive cost attribution enables a smarter approach to IT cost optimization, moving an organization into the next phase of TFM maturity.
With business leaders keenly aware of the total technology investments in overarching business growth strategy, the IT organization begins gaining credibility as a group that can be relied upon to deliver specific, strategic outcomes to the business. These outcomes no longer revolve around cost-cutting. The CIO can directly respond to business unit needs in near-real-time, no longer battling the CFO over costs, but instead enjoying the credibility that technology investments are the key drivers of business outcomes. Though an IT organization has achieved a significant level of TFM maturity at this stage, it’s important to note that the CIO remains in a reactive position: The business units dictate both the growth strategy and the corresponding technology needs; the IT organization reactively delivers.
With increased credibility and growing involvement of IT in the strategic business planning, business leaders begin recognizing the connection between IT services and business outcomes, and begin looking to IT to provide advanced metrics and analytics to help inform business strategies and decisions.
The CIO is now able to demonstrate how existing technology spending delivers specific, measurable business outcomes—and can begin offering predictive insights into how potential technology investments will impact the business.
With increasingly visible and integrated data, IT organizations leverage this comprehensive visibility and awareness to intelligently manage and optimize the “run.” Equipped with a detailed understanding of how IT spending ladders up to business services, the IT organization can identify where it can streamline operations and contain costs—without impacting service levels or removing business value. For example, with all the information at hand, it’s easy to recognize the redundancies and inefficiencies that result from decentralized technology spending among disparate business units. Ultimately, this stage is all about increasing the IT organization’s level of involvement in technology spending decisions—monitoring, management and executive decision-making.
In the final stage of TFM maturity, the CIO becomes a key contributor in developing business growth strategies. The IT organization is leveraging its TFM data to extract predictive insights. IT is not only anticipating the technology needs of business units—IT is identifying the technology investments that will unlock growth opportunities. Moreover, the entire growth planning process has been altered and enhanced: Instead of mapping technology investments to high-level business goals, the high-value technology investments assist in defining the growth goals. The CIO has finally moved into a proactive, offensive position—and earned a seat at the executive table as a strategic growth partner.
1 Gartner Report: IT Cost Optimization Should Be an Ongoing Discipline, February 2016