Understanding the Value of Technology Business Management (TBM)
Introduction to Technology Business Management (TBM)
Adopted by 3.6K companies worldwide, including 70% of the Fortune 100, Technology Business Management (TBM) is becoming an increasingly popular technology investment discipline that aligns organizations and their technology spend to business strategy and value.
According to the Technology Business Management Council, by creating a common language between an organization’s Business, Technology, and Finance teams, TBM enables leaders to “manage the business of technology, so they can react quickly to changing markets, make data-driven decisions, and align their organizations around common business objectives.”
TBM’s significance lies in structuring the management and comprehension of technological investments across a spectrum of areas, encompassing telecom, cloud services, SaaS licensing, IoT, and more within a defined taxonomy:
Figure 1: The TBM Taxonomy (Summary View)
The purpose of this taxonomy is to connect technology investments to business value. It essentially creates a “who, what, where, when and why” for every technology dollar spent and converts that spend into a language that the business cares about.
Figure 2: TBM Council Respondents ranked TBM value creation enablers
Common Challenges that Prevent TBM Adoption
Challenges Supporting the TBM Taxonomy Framework
TBM practitioners are constantly challenged by the need to manage a variety of swiftly changing technology sectors. With the explosive enterprise investments in cloud taking top-billing, other notable factors such as the transition from legacy networking technologies like Plain Old Telephone Service (POTS) lines to Voice over Internet Protocol (VoIP), and from Multi-Protocol Label Switching (MPLS) to cutting-edge solutions like Software-Defined Wide Area Networking (SD-WAN) and Secure Access Service Edge (SASE), have introduced new complexities. These advancements, alongside evolving SaaS licenses, and novel connectivity options such as IoT, have expanded the scope and intricacy of TBM practices.
This dynamic and multifaceted environment often results in inefficiencies and inaccuracies, particularly when managed through traditional, manual approaches. Automation in the invoice lifecycle management process emerges as a key solution to these challenges. By implementing automated systems for the retrieval, processing, and analysis of technology and telecom invoices, organizations gain a precise and comprehensive view of their IT expenditures. This automation not only simplifies TBM processes but also equips decision-makers with actionable insights, leading to more strategic and informed decision-making.
Integrating Diverse Technology Streams
One of the primary challenges in TBM is integrating and managing costs across various technology streams. The TBM taxonomy must account for expenses from traditional telecom services, evolving cloud technologies, SaaS platforms, IoT implementations, and the transition from legacy systems like POTS and MPLS to more advanced solutions such as VoIP, SD-WAN, and SASE. This requires a detailed and nuanced understanding of each technology stream, its cost structures, and its impact on the overall IT budget.
Disparate Systems and Manual Consolidation
Compounding the issue is that much of the data required to populate this taxonomy resides in disperate and decentralized enterprise systems. Manual consolidation can lead to errors, inconsistencies, and a lack of real-time visibility into spending. This not only affects the accuracy of the TBM but also hinders the ability of organizations to make informed decisions quickly.
Evolving with Technology Changes
The rapid pace of technological change adds another layer of complexity. As new technologies emerge and existing ones evolve, the TBM taxonomy must be flexible enough to accommodate these changes. This requires ongoing adjustments and updates to the taxonomy, which can be challenging to manage manually.
Figure 3: Barriers to TBM Adoption
How to Enhance TBM Practices with Automation
Enhancing Telecom and Technology Invoice Management with Automation
The landscape of Technology Business Management (TBM) is undergoing a significant transformation, thanks to the advent of automation in telecom and technology invoice management. This shift is pivotal in addressing the challenges posed by the complexity and rapid evolution of technology sectors.
Streamlining Invoice Processes
Automation introduces a streamlined approach to managing invoices. By leveraging Vendor Hyperautomation technologies such as Robotic Process Automation (RPA) coupled with advanced invoice-parsing techniques that include Optical Character Recognition (OCR), Machine Learning (ML) and Artificial Intelligence (AI) , organizations can automate the retrieval, processing, inventorying and analysis of telecom and technology invoices, minimizing errors and increasing efficiency.
Figure 4: AMI Example of Vendor Hyperautomation
Real-time Data and Analytics
Automated systems provide real-time visibility into technology and telecom spending. They analyze invoices and expenditures, offering insights into usage patterns, cost anomalies, and potential areas for cost optimization. This level of detail and immediacy is essential for making informed, strategic decisions in TBM.
Case Studies: Impact of Automation
- Global Automotive Telecom Spend: AMI Strategies automated the telecom spend management for a global automotive company, leading to significant cost savings and enhanced visibility into telecom expenditures.
- Global Pharma Business: In another instance, AMI Strategies automated invoice workflow for a global pharmaceutical company, streamlining their process and improving accuracy and efficiency in managing technology costs.
Enhancing TBM Accuracy and Efficiency
With automation, the accuracy of the TBM taxonomy framework is significantly improved. Automation ensures that technology and telecom costs are accurately categorized and allocated within the TBM framework, aligning with organizational goals and financial planning.
Future-Proofing TBM Practices
As technology continues to evolve, automated systems can adapt and scale accordingly. This agility ensures that TBM practices remain relevant and effective, even as new technologies emerge and existing ones undergo transformations.
The Bill of IT
Understanding the Bill of IT
For TBM practitioners, the “Bill of IT” plays a crucial role. It represents a comprehensive and detailed statement of IT costs, akin to a financial report, that provides a clear view of technology expenditures across an organization.
The Essence of the Bill of IT
The Bill of IT is more than just a financial statement; it’s a strategic tool that aligns IT spending with business objectives. It breaks down the costs associated with various IT services, including cloud services, SaaS subscriptions, telecom expenses, and other emerging technologies. This level of detail is instrumental in enabling informed decision-making, ensuring that IT investments are aligned with business priorities and delivering value.
The Evolution from Showback to Chargeback
Most organizations begin their Bill of IT journey through providing showback reporting – or visibility into IT costs without necessarily charging these back to the business units. Typically, showback reporting evolves into chargeback reporting, where business units are directly billed for their IT usage. This shift represents a more accountable and transparent approach to IT spending, encouraging cost-conscious behavior and ensuring a more equitable distribution of IT resources.
Automation’s Role in the Bill of IT
Automation plays a pivotal role in the evolution and effectiveness of the Bill of IT. Automated systems ensure that IT costs are captured, categorized, and allocated accurately and efficiently. This not only enhances the reliability of the Bill of IT but also streamlines the process, making it easier for TBM practitioners to manage and update it in real-time, in line with the dynamic nature of technology expenses.
Making Strategic Decisions with the Bill of IT
With a comprehensive and accurate Bill of IT, organizations can make more strategic decisions about their IT investments. It provides insights into cost drivers, areas for optimization, and opportunities for cost savings. As a result, the Bill of IT becomes an invaluable tool for guiding IT strategy, budgeting, and overall business planning.
Integrating your ServiceNow CMDB
ServiceNow ITAM Integration in Technology Business Management
Integrating IT Asset Management (ITAM) solutions like ServiceNow into Technology Business Management (TBM) practices is a game-changer. This integration is vital for uniting service costs, financial codes, and contractual details, thereby enhancing the overall management of IT resources.
Harmonizing IT Assets and Financial Tracking
The core strength of integrating ServiceNow ITAM with TBM lies in its ability to bring together IT asset management and financial tracking into a unified system. This harmonization ensures that all IT assets, along with their associated costs and contract details, are accurately and efficiently managed and tracked.
Centralizing Data for Better Visibility and Control
With ServiceNow ITAM integration, organizations can centralize their IT and financial data, leading to better visibility and control over their IT spend. This centralization allows for a more streamlined approach to managing IT assets, from procurement to retirement, and aligns these processes with the organization’s financial practices.
Enhancing Cost Allocation, Showbacks and Chargebacks
One of the critical advantages of this integration is the improved accuracy in cost allocation and showback/chargeback processes. By having a clear view of all IT assets and their costs, TBM practitioners can more accurately allocate costs to different business units, making the chargeback process more transparent and equitable.
Driving Strategic Decision-Making
This integration empowers organizations to make more strategic decisions regarding their IT investments. With comprehensive data on IT assets and costs at their fingertips, decision-makers can better assess the value and ROI of their technology investments, leading to more informed and effective IT and financial planning.
How AMI Enhances the ServiceNOW CMDB through Scoped, Certified Applications
A critical aspect of integrating IT Asset Management (ITAM) solutions like ServiceNow into Technology Business Management (TBM) is the harmonization of IT assets and financial tracking. AMI Strategies showcases the efficacy of this integration through its scoped, certified ServiceNow applications, namely “mobilityNOW,” “wirelineNOW,” and “connectNOW.”
Connecting Assets to Costs and Contractual Details via the MACD Process
Through ‘mobilityNOW’ and ‘wirelineNOW’, AMI connects the Move, Add, Change, and Delete (MACD) activities of mobile and fixed connectivity assets to their respective monthly recurring costs. This connection extends beyond just cost tracking; it encompasses the contractual terms, conditions, negotiated rates, financial allocation details, software licenses associated with these assets, and their service histories. Such a comprehensive approach ensures that every aspect of an asset – from its operational status to its financial impact – is meticulously tracked and managed.
Enriching the ServiceNow CMDB with ‘connectNOW’
Once the connectivity assets are connected and organized, AMI’s ‘connectNOW’ application steps in to enhance the process further. This scoped and certified ServiceNow app regularly pushes the enriched inventory data to a client’s ServiceNow Configuration Management Database (CMDB). By doing so, ‘connectNOW’ not only centralizes the asset data but also enriches the value of the data contained within ServiceNow, offering a more cohesive and detailed view of the IT assets and their financial implications.
This integration exemplifies how modern ITAM solutions can effectively align with TBM practices, leading to more accurate and strategic decision-making in technology and telecom management.
Unit Economics in IT Spend
Creating Unit Economics in Technology Business Management
A fundamental aspect of effective Technology Business Management (TBM) is the creation of unit costs for IT expenditures. This approach involves breaking down the overall technology spending into identifiable and manageable units, providing a clearer understanding of where and how the IT budget is utilized.
Breaking Down IT Spending
The process of establishing unit costs allows TBM practitioners to categorize various aspects of IT spending, such as cloud services, software licenses, connectivity costs, and hardware investments, into distinct units. This breakdown is crucial for several reasons:
- Enhanced Visibility: It offers a granular view of IT expenditures, making it easier to identify specific cost drivers and areas of high expenditure.
- Strategic Allocation: By understanding the costs at a unit level, organizations can allocate their IT budget more strategically, ensuring that investments are aligned with business priorities.
- Cost Control and Optimization: Identifying unit costs aids in controlling and optimizing IT spending. Organizations can pinpoint areas where costs can be reduced without impacting service quality or business operations.
Importance in Chargeback and Showback Models
In the context of chargeback and showback models, the creation of unit costs is particularly valuable. It provides a clear and transparent method for attributing generalized IT costs to different business units or departments based on their actual usage or consumption. This not only fosters accountability but also encourages cost-effective behavior across the organization.
Supporting Informed Decision-Making
Ultimately, the creation of unit costs supports more informed decision-making within the TBM framework. It allows organizations to assess the ROI of their IT investments, identify opportunities for cost savings, and make data-driven decisions about future technology investments.
Running the Business vs. Investing in Innovation
Transitioning from “Run-the-Business” to “Change-the-Business”
For TBM practitioners, a significant shift is occurring – from merely “running the business” to “reinvesting in innovation.” This transition represents a strategic pivot in how organizations approach their technology investments and IT operations.
Shifting Priorities in IT Management
Traditionally, IT management has focused on maintaining and supporting the existing technology infrastructure – essentially, keeping the lights on. While this is still important, there’s an increasing emphasis on leveraging IT to drive innovation and business growth. This shift involves:
- Investing in Emerging Technologies: Moving resources from traditional IT operations to areas like cloud computing, Artificial Intelligence (AI), and advanced analytics.
- Encouraging Innovative Thinking: Fostering a culture where innovation is encouraged and rewarded, leading to new ideas and approaches that can drive business success.
- Aligning IT with Business Goals: Ensuring that IT initiatives and investments are closely aligned with the broader business objectives and strategies.
Impact on TBM Strategies
According to to their 2023 State of TBM report, the TBM Council stated that 81% of respondents say TBM has improved their run-the-business costs, while 79% say TBM insights improved funding for change-the-business investments. These attributions can be closely correlated to:
- Strategic Allocation of Resources: Resources are allocated not just for maintaining existing systems but also for exploring new technologies that can offer competitive advantages.
- Redefining IT’s Role: IT is increasingly seen as a strategic partner in the business, involved in decision-making and contributing to the overall success of the organization.
- Measuring ROI of Innovation: There’s a greater focus on measuring the return on investment (ROI) of innovative projects, ensuring that they deliver real value to the business.
Driving Long-term Business Growth
Ultimately, this shift from running the business to reinvesting in innovation is about positioning the organization for long-term growth. By leveraging TBM principles, organizations can ensure that their IT investments are not just cost-effective but also contribute to business transformation and future success.
Final Thoughts: Embracing the Future of Technology Business Management
Technology Business Management (TBM) is not just about managing costs; it’s about aligning technology investments with business objectives to drive innovation and growth. The integration of advanced tools like AMI Strategies’ ServiceNOW applications, the creation of unit costs, and the transition towards innovation-centric strategies are reshaping how organizations approach technology management.
Key Takeaways
- Complex Challenges, Automated Solutions: Automating telecom and technology invoice management tackles the complexity of TBM, enhancing accuracy and efficiency.
- The Strategic Role of the Bill of IT: The Bill of IT, especially when automated, becomes a strategic tool for transparent and accountable technology spending.
- The Significance of ServiceNow ITAM Integration: Integration with tools like ServiceNow is crucial for a comprehensive view of IT assets and financial management.
- A Shift Towards Innovation: The transition from traditional IT operations to a focus on innovation positions organizations for future success.
Engage with AMI Strategies
To navigate this complex and evolving landscape, partnering with experts like AMI Strategies can provide the necessary tools and insights. Our solutions, tailored to the unique needs of your organization, can help you make the most of your technology investments.
- Subscribe to Our Newsletter: Stay updated with the latest insights in TBM by subscribing to our newsletter.
- Book a Meeting: Discuss your specific situation with our team and explore how we can assist you in optimizing your technology and telecom costs.
Technology Business Management is more than a framework; it’s a pathway to strategic growth and innovation. Embrace it, and unlock the full potential of your technology investments.
David Sonenstein - Vice President of Product Strategy
AMI Strategies
With over 20 years in the industry, David helps orchestrate AMI’s vision for vendor hyperautomation. While contributing to AMI’s adoption of automation technologies, system integrations and technology frameworks, his research focuses on enterprise market and technology trends and where automation solutions can help organizations achieve their desired business outcomes. He currently serves on the executive board of the Enterprise Technology Management Association (ETMA) and is an associate of the Technology Business Management (TBM) Council.
