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TFM emerges as a solution to the IT cost battle

As CIOs look to connect IT and overall technology costs with business services, best-in-class TFM tools provide the critical spend visibility across the enterprise. More and more CIOs are leveraging TFM products as a powerful bargaining tool in the constant budget battle, effectively aligning IT costs with the business services they enable and support (because business leaders want to cut costs—but not lose value).

However, Gartner estimates that one in three TFM implementations fail to deliver the expected benefits.1 Most of these failures result from one of these three mistakes:

Three ways TFM strategies fall short

1. Not knowing how to turn TFM data into actionable strategies

Today’s TFM processes and tools are increasingly easy to deploy. But for many organizations, the strategy stops there. Figuring out what to do with the data—what questions to ask, what metrics to analyze, and how to develop executable improvement plans—requires deeper knowledge gained from experience. In other words, while automated TFM platforms can quickly show a CIO where the money is going, there is no one-size-fits-all, out-of-the-box solution to the problem of how to optimize that spending. Without experienced guidance, these organizations are left with an expensive new pile of data—and little else.

2. Implementing TFM as a point solution

Plenty of IT organizations successfully make use of their TFM data— once. With IT budget pressure intensifying, deploying a TFM tool is often a reactive response to a specific call for cost-cutting or efficiency gains. IT leverages the tool to analyze the status quo, implements changes, realizes cost savings and declares IT spending officially “optimized.” Then, they continue on for months (or years) with this new, “optimized” status quo. But technology demands evolve literally every day in the digital enterprise, and small new inefficiencies can grow into significant waste in a matter of weeks. This point-solution approach to TFM represents what Gartner identifies as “low TFM maturity.”2 In fact, Gartner went so far as to title an entire report, “IT Cost Optimization Should Be an Ongoing Discipline.”

3. Limiting TFM to cost optimization: Focusing on the “run,” but not the “grow”

TFM tools offer a powerful way to optimize the “run” functions of an IT organization—the workflows, processes and costs that support basic operational needs of the business. But limiting TFM to optimizing the “run” also represents Gartner’s so-called “low TFM maturity”, where cost unpredictability means lower budget goals, more waste and less investment in innovation.”3 This approach still represents a reactive position, where IT is left defending the need for budget to support existing capabilities.

1 Gartner Report: Key Concepts in IT Financial Management: Transparency, Budgeting, Funding and Allocation, March 2016
2 Gartner Report: IT Cost Optimization Should Be an Ongoing Discipline, February 2016
3 Gartner Report: Key Concepts in IT Financial Management: Transparency, Budgeting, Funding and Allocation, March 2016

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