CIOs may finally get a seat at the grown-ups' table

A recent framework called TBM promises to bring finances, utilization, and operational effectiveness into a whole to get IT focused on strategic value

CIOs may finally get a seat at the grown-ups' table

For as long as I can remember, CIOs have obsessed about getting a seat at the executive table, treated as colleagues on corporate strategy, and not merely operations guys whose only reason to talk to the board is to be reminded that IT budgets are too high and need to be shaved every year.

That obsession over getting a seat at the table doesn’t seem to have changed much in reality—most CIOs are still made to focus on continually reducing costs even as they are asked to support more and more technologies. They’ve tried learning the language of business, embedding IT pros into business teams, bringing business expertise into IT, and other forms of “business-IT alignment.” But little has changed.

But now, maybe something can change, and not only at those idiosyncratic companies where an individual CIO has figured out the secret sauce for his or her organization.

Four years ago, a consortium of enterprises was formed, called the TBM Council. (TBM stands for “technology business management.”) It formed around a vendor called Apptio that provided a financial tool for CIOs to understand and manage IT spend, creating what Apptio CEO Sunny Gupta calls a subledger for IT.

But TBM has evolved to be much more than that, driven by its independent council of enterprise IT executives. “If all you’re doing is the financial side, you’re wasting your time,” says Ralph Loura, the TBM-experience global CTO at skin care marketer Rodan + Fields, as well as a member of the TBM Council’s board of directors.

Surprisingly, IT organizations have never had their own management tool—nothing like ERP, CRM, HRIS, SCM, talent management, and the like. CIOs managed their budgets using their companies’ standard chart of accounts, typically in complex Excel workbooks.

The TBM Council founders saw that, with an IT-specific management tool like Apptio’s, they could create a standard model, framework, and taxonomy for IT resources, pulling in the data from the corporate chart of accounts but reorganizing the data around what IT actually does: create, deploy, and manage services.

That native view of IT resources lets CIOs see how well IT is operating not only in terms of spend but also utilization and resource allocations, including across systems that a standard budget would treat separately and as unrelated (storage, servers, network operations, database admins, technical support, and software licenses, for example, around an in-house system).

That still sounds pretty narrow and hardly something to get the CIO a seat at the executive table. But TBM users say it actually does because it lets IT focus on the value of what it does, both internally and for business users.

“CIOs are tired of hearing about the cost of IT and how to shave it further. By being able to discuss value, they can get a strategic seat at the table,” says Apptio’s Gupta. “They can take it to the level of a services construct, with cost metrics behind that. Security is a great example: The board asks why are you spending so much on security. With TBM, you can have a model of cost and value of security. That means you can talk to business executives at a higher level. And the transparency of the standard TBM model builds a foundation of trust.”

Thus, when a CIO comes to the board the discussion isn’t about “why are we spending so much on storage?” but “we can use these existing systems more effectively for these business needs if we invest more here and less there, or replace some with different technologies or cloud services. Oh, and do you realize we have these capabilities no one is using—should we redirect those resources or can the business start taking advantage of that investment?”

From there, a CIO can even cross the line into understanding how IT can enable better or different technologies, while also giving the board a way to gauge the value of what IT has been tasked to do by others—and an opportunity for the CIO to get out of “just an order-taker” mode. (Chargeback is a key component of the TBM framework, so the total cost and usage for each business initiative is known, to see if the result is what was expected, and if not where to consider changes, whether in business use or IT deployment.) 

“IT now has to support every part of the business. But you often end up with a disorganized state because of all those individual efforts over the years. TBM puts formal structure about how to clean things up,” says Carman Wenkoff, CIO at sandwich chain Subway.

But TBM is about more than cleaning up your legacy, Wenkoff says; it’s about managing technology proactively, in a world where change is constant. “You need to be willing to change and adapt. You need to manage like a business. You need to be entrepreneurial. You need to rethink when something is not working, and act accordingly. If don’t take control, you’ll be treated like and feel like a victim.”

Perhaps more important, the notions in the TBM model and taxonomy are repeatable—you can use them at at any company. That gives IT (and the board) ways to compare itself against other IT departments based on a shared model. It also lets companies model different approaches, from technology management (“which cloud approach and vendor mix is most effective for me?”) to technology directions (“where might machine learning have the greatest impact at my company?”).

Perhaps that’s why attendance at the TBM Conference, now in its fourth year, jumped from 800 a year ago to 1,200 last week.

Today, IT organizations rely on large consultancies like Gartner and PwC or on IT-economics specialty firms like Hackett Group and Computer Economics that come up with proprietary benchmarking models that may or may not be a good fit to an individual client. Plus, most of their models are black boxes that vary from consultant to consultant and, thus, from company to company.

By contrast, using a shared, open model like TBM for IT management is like using ITIL for IT systems management, GAAP for accounting, or agile for software development. Having a common model is what lets the industry as a whole advance and enable persistent change, because it’s no longer an ad hoc approach at each company, which changes every time the CIO or key business leader leaves.

Of course, no model is a substitute for good management. But visibility into IT that encompasses finances, operational effectiveness, results of technology usage, and technology-strategy modeling could give CIOs the tools to shift the discussion to what actually matters to the business: What value are we getting and can we get from our use of technology?

Organizations that use TBM say that’s the result they’ve gotten. It’s what lets CIOs have conversations with other executives about technology beyond speeds, feeds, and costs, and it’s what lets those conversations actually go somewhere afterward. “You want to build an investment view, not a cost one,” says Rodan + Fields’ Loura.

Loura used TBM at a prior company, chemical goods firm Clorox. (He’s now bringing it to Rodan + Fields, which he joined in February 2016.) “In the first year at Clorox, the CFO didn’t buy it when IT said it was special in terms of its financial model. So we positioned IT like a digital supply chain, where capital, utilization, and return on asset matter, and aren’t reflected in the standard chart of accounts. That helped us create a special model for IT based on familiar business examples.”

Still, Loura notes, “it took us a year to show the value, using TBM to show the ‘bill of IT’ and the details around it. And it took us three years to get good at this, realize the real issues—the icebergs under the water line. Like if the mainframe is retired, there’s still this big building with power systems that won’t go away and whose costs will get allocated elsewhere,” making one budget look better but another worse. “The goal should be to get rid of the building.”

Another TBM user is James LaPlaine, CIO at AOL. (He’s also a member of the TBM Council’s board of directors.) AOL is two years into moving its internal systems to the public cloud, and it used TBM to understand and demonstrate why abandoning its 35,000 (largely virtual) server nodes was a good idea. “We used TBM to show the cost of the services and the consumption. That fully loaded model changes the dialogue with the general managers,” he says, and that helped what had initially seemed like an internal—and expensive—IT issue be understood as a key strategic benefit for the company.

The use of TBM had another value: Because TBM tools enable chargeback to business departments, LaPlaine could show which individual business units had developers resistant to test-driven development—a critical shift needed for successful cloud development—because their applications required more support and more cloud resources and thus had higher chargebacks. The company’s chart of accounts could never show that causality and perhaps not even identify the issue. 

There are of course no silver bullets, and just as there are companies that go through the motions of ITIL, GAAP, or agile, there certainly will be those who misuse TBM. But as someone who’s covered IT management for more than a decade, it’s the first time I’ve heard of an approach that could work broadly and get IT not only the combination of strategic and operational view, but have the data to act on and adjust your technology efforts accordingly. It’s certainly worth investigating.


Copyright © 2016 IDG Communications, Inc.

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