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Transforming IT to show cost of services: 5 best practices

Sunny Gupta, CEO Apptio | Feb. 8, 2011
IT has struggled for years to calculate and prove what its own services actually cost to deliver to the business. Consider these five strategies, as shared by CIOs who've already battle-tested them, says Sunny Gupta, CEO of Apptio.

2. Don't Wait for 100 Percent Clean Data: Many IT leaders are reluctant to kick off their transformation initiatives until they feel confident that their data is thoroughly clean and accurate. The rationale being that if you start with bad data you'll end up with a faulty output (i.e., Garbage-In-Garbage-Out).

However, as many companies who have embarked on their own transformation journey will attest, you're actually better off jumping in and letting the "data clean itself." Says Rebecca: "When I worked in supply chain we had a similar issue. We were going with a new tool and had two plant managers. One said he wouldn't use it until the data was 100 percent complete while the other guys said, 'I get it, it's 90 percent accurate now.' The one who was 90 percent accurate was actually 100 percent accurate within a month. The other one took a year. It's amazing how accurate the data becomes once you start using it."

3. Cost Accounting is the New IT Skill: Forget ITIL certifications. One of the most overlooked and essentials skills for tomorrow's IT managers is basic cost accounting. At Cisco, every single person in Rebecca's organization is going to be required to take a basic Web-based class on cost accounting. Without this foundational skill, IT managers are unable to provide meaningful cost analysis back to the business.

For instance, while calculating unit cost information at the server level might be of interest, understanding and communicating the variance in cost is considerably more valuable. As Charlie at Microsoft is fond of saying, "if you make the facts available, eventually rational minds will prevail."

4. Start With a Discrete Use Case: Because the tentacles of Technology Business Management (TBM) can extend across an entire organization, it's easy to become overwhelmed and not know where to start. Charlie counsels: "pick an initial use case that everyone understands and which you can show a quick win. For us, it was data center and power."

The beauty of this strategy is that once a proof of value is established, securing executive sponsorship for your broader initiatives will become that much easier. Other companies we've worked with have found early wins with storage optimization and directory services initiatives.

5. Make TBM Pervasive: Unlike other broad technology initiatives that might make more sense to launch in an isolated fashion (i.e., virtualization), all of the presenters agreed that making the business management of technology pervasive across the enterprise is key to long-term success.

 

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