Technology Business Management (TBM)
Definition - What is Technology Business Management (TBM)?
Technology Business Management (TBM)is an IT management framework that implements a standard IT spend taxonomy. TBM enables organizations to disaggregate IT spending into smaller, consistent categories to provide CIOs and other C-suite executives with a more accurate and detailed understanding of their organization’s IT costs. This allows CIOs to identify duplicative or unnecessary spending and to make better informed decisions regarding future investments.
Principles of Technology Business Management (TBM)
According to the TBM Council, the 10 core principles of TBM includes:
- Position for value: Define what IT offers and how the department is valued throughout the organization.
- Continuous improvement: Build a roadmap for TBM maturity by embracing TBM into the day-to-day business and ensuring TBM is at the forefront of every value conversation.
- Create transparency: Help define IT’s value by translating “spending, consumption and capacity into meaningful perspectives for technology and business decision-makers.”
- Shape business demand: Highlight cost and consumption trends across business units to inform future budgets and decisions.
- Deliver value for money: Offer valuable and cost-effective services and products.
- Plan and govern: Collaborate and align business units’ budgets with IT so all technology needs are met.
- Cost for performance: Offer innovative technology and services while maintaining an eye on the bottom line.
- Business-aligned portfolio: Build a portfolio that demonstrates how much value is offered by a service, product or processes compared to the level of spending.
- Investment in innovation: Assign resources to innovative projects throughout the organization.
- Enterprise agility: Respond quickly to opportunities and threats as they pop up in the industry.
TBM Roadmap to Maximize the value proposition of your IT
Technology Business Management (TBM) is the discipline that targets maximizing the value proposition of your IT. Making your expenses transparent will create the base for systematic optimisation. Maximized IT value propositions are possible by ‘managing IT like a business’ and are the foundations that a competitive edge is built on. Two essential principles describe the necessary TBM actions that optimise the value proposition of IT:
- Reducing ‘Run the Business’ costs to a sensible minimum
- Managing investments in ‘Grow the Business’ and ‘Change the Business’
Technology Business Management (TBM) is a value-management framework instituted by CIOs, CTOs, and other technology leaders. Founded on transparency of costs, consumption, and performance, TBM gives technology leaders and their business partners the facts they need to collaborate on business aligned decisions. Those decisions span supply and demand to enable the financial and performance tradeoffs that are necessary to optimize run-the-business spending and accelerate business change. The framework is backed by a community of CIOs, CTOs, and other business leaders on the Technology Business Management Council.
To gain alignment between IT, Finance, and Business Unit leaders, TBM provides a standard taxonomy to describe cost sources, technologies, IT resources (IT towers), applications, and services. The TBM taxonomy provides the ability to compare technologies, towers, and services to peers and third-party options (e.g., public cloud). Just as businesses rely on generally accepted accounting principles (or GAAP) to drive standard practices for financial reporting — and thus comparability between financial statements — the TBM taxonomy provides a generally accepted way of reporting IT costs and other metrics. A simple view of the TBM taxonomy is shown below.
The TBM taxonomy is needed in order to support the modeling of costs and other metrics. A TBM model maps and allocates costs and resource consumption from their sources to their uses, from the hardware, software, labor, services, and facilities IT leaders procure to the applications and services they develop, deliver, and support. In essence, the model is what translates between the layers of the taxonomy (e.g., IT Towers to Products & Services). The TBM model includes the taxonomy objects and layers plus the data requirements, allocation rules, and metrics needed to create transparency and enable the reporting that is needed for the value conversations of TBM.
Impementing Technology Business Management (TBM)
The U.S. General Services Administration and the U.S. Department of Education teamed up to share lessons learned through the creation of the Technology Business Management (TBM) Playbook. The playbook, which supports progress towards the TBM Cross-Agency Priority Goal was built to assist federal agencies as they start TBM implementation. While each agency will tailor its TBM plan to their organization’s current state and desired outcomes, this is a great starting point based on real life experience from some of the Federal Government’s early adopters. Each play includes a plan of action or strategy used to move toward a goal or objective. The 7 plays in this book will improve your chances of beginning a successful TBM implementation. They include:
- Identify key players and stakeholders: An effective TBM program consists of business stakeholders, financial analysts, and IT and acquisition professionals. Together, this team drives change through collection, analysis, reporting, and informed review of IT data.
- Determine current state: To understand what the TBM journey will look like for your agency, it’s necessary to understand current data collection and aggregation methods, financial systems, business processes, and models your agency already has to support TBM. No matter your current state, TBM can bring value.
- Identify measurable desired outcome: Identify how your agency can deliver the right IT services for the best possible price as you work with stakeholders to identify priority areas to focus your TBM efforts.
- Start aligning data: Based on your agency’s current state and desired near term outcomes, it’s time to start working with financial data. Starting from the bottom up is recommended - aligning financial data to cost pools before moving to tower and service mapping.
- Look for insights" Now that you have started mapping your data, where does that data lead you? Focus on examining the data to see how it provides insights into issues or benefits around the identified outcomes.
- Rollout and adoption: Now that you have completed the first iteration of your TBM implementation, start integrating TBM principles, data, and value discussions into meetings and funding reviews.
- Keep maturing the TBM implementation: Assess your maturity and identify opportunities to maximize your TBM implementation.
TBM Management Framework
Technology Business Management (TBM) is a framework specifically designed to help CIOs to run their IT structure as a business in its own right, managing conflicting priorities by creating and automating IT cost transparency. Having a clear view of IT systems allows decision-makers to define their needs more effectively, making it easier to manage business demand and sourcing delivery. There are several important considerations for CIOs when thinking about how to streamline costs, and TBM has been specifically designed to respond to each of these challenges.
- Managing business demand for services: In order to effectively manage conflicting demands across your business, a cost transparency model is vital to help you understand the total cost of service, rather than its units. Joining up the process in this way gives you a much more accurate view of your IT outgoings so that you can provide accurate reports to your business and end-users, charging back the costs where appropriate.
- Reaching your savings goal: Every CIO knows how critical it is to identify new opportunities for cost savings to help reach those all-important targets. Through accurate, automated and up-to-date IT cost data, you can analysis your spending, understand the key cost drivers and the consequence of decisions made in the delivery model, allowing value based decisions on whether “uniqueness” is a differentiating factor or purely a cost burden.
- Negotiating more effectively with vendors: Having access to accurate cost data will level the playing field between you and your vendor. Being able to track data from each vendor means that you can look at your expenditure versus the market rate, and negotiate more effectively with your vendor once you’ve identified the areas where savings can be made.
- Realising value from your sourcing agreements: Cost transparency will help you to define the costs of various services and identify the areas which would be suitable for outsourcing. From there, you can also manage your costs by vendor, tower, resource unit or end-to-end service, depending on what works best in line with your operating model.
Implementing this form of framework provides significant opportunities for you to streamline your processes and manage IT as a complete business entity. In order to make this work in reality, buy-in from your stakeholders is vital. Knowing what your customers, end-users and business stakeholders want is key to making sure that your strategy is aligned with their objectives.
TBM Implementation Challenges and Recommendations
A summary of high-level implementation challenges and recommendations are listed in the table below:
Benefits of TBM
TBM is a way to manage IT like a business, support value conversations, maximize the benefit achieved through IT spending, and align with business needs and strategy. Some key benefits of TBM include:
- Optimizing uses of funding and rationalizing portfolios such as platforms, applications and vendors
- Aligning technology spending and investments to business priorities
- Discussing budget in terms that business partners can understand
- Shifting IT into the role of a service broker instead of an order taker
- Reflecting total costs with supporting detail
- Providing a better understanding and method to communicate the IT budget to customers
- Supporting Federal efforts to promote cost transparency and improve IT management
- IT Financial Management (ITFM)
- IT Cost Allocation
- IT Chargeback
- IT Cost Optimization
- Federal IT Acquisition Reform Act (FITARA)
- Total Cost of Ownership (TCO)
- IT Strategy
- Defining Technology Business Management (TBM) cio.gov
- What are the Core Principles of Technology Business Management (TBM)? cio.com
- Technology Business Management - Maximizing the value proposition of your IT Inditango
- Introduction to the TBM Taxonomy tbmcouncil.org
- Succesfully Implementing TBM Performance.gov
- TBM Management Framework Nigel Hughes
- TBM Implementation Challenges and Recommendations ACTIAC
- Why TBM? Tech at GSA
- Technology Business Management: The Four Value Conversations CIOs Must Have With Their Businesses Todd Tucker
- 6 Steps to Implementing Technology Business Management at Your Agency TCG
- Improving Outcomes Through Federal IT Spending Transparency Performance.gov
- Technology Business Management: the Road to Performance Excellence and Change ISG
- What is Technology Business Management and What is it Supposed to Do? Joe Antoshak
- How to win with Technology Business Management Jason Gray
- Technology Business Management’s Role in BPM BP trends