What, Why, How and

the state of the industry

Joel A Manfredo Managing Director, Acies Consulting 11-Jul-2013

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Background

What is TBM

Why TBM

The move to ITaaS

Questions & Answers

Technology Business Management

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Background

Gartner Trends

10 Critical Tech Trends For The Next Five Years 1. Organizational entrenchment

and disruption 2. Software-defined networks 3. Bigger data and storage 4. Hybrid cloud services 5. Client and server architectures 6. Internet of things 7. IT appliance madness 8. Operational complexity 9. Virtual data centers 10. IT demand

Top 10 Strategic Technology Trends For 2013 1. Mobile device battles 2. Mobile applications & HTML 5 3. Personal Cloud 4. Internet of Things 5. Hybrid IT and Cloud Computing 6. Strategic Big Data 7. Actionable Analytics 8. Mainstream In-Memory

Computing 9. Integrated Ecosystems 10. Enterprise App Stores

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Background

Source: “Building the IT Brand: Impacting the Front Office and Beyond”, Meehan & McMullen, Gartner Executive Programs, October 2011

…

Source: 37 Signals, Feb., 2011

Source: ComputerWeekly.com, August 2012

Background

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8

Background

Source: “CIO Business Vision”, Info~Tech Research Group, Jun 2013

1. Understand Business Satisfaction with the IT Satisfaction Scorecard

2. Demonstrate Business Demand with the IT Capacity Scorecard

3. Manage Business Stakeholders with the Stakeholder Satisfaction Scorecard

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Technology Business Management

Definition A practical, applied discipline for maximizing the value of the IT services investment portfolio by enabling technology leaders and their business partners to collaborate on business aligned decisions.

Relying on transparency, TBM defines a foundation for managing supply and demand by enabling financial and performance trade-offs needed to optimize run-the-business spending and improve change-the-business investments.

Focused On Running IT As A Business

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The TBM Council

COLLABORATE Create a network of technology executives who are passionate about the Council’s mandate and will openly share their points of view and key learnings

EDUCATE Synthesize, publish and promote a cross-industry framework and practical tools used to establish TBM as a professional management discipline

BENCHMARK Create openly available benchmarks for technology leaders to assess their adoption of the TBM framework and work products

TBM Council Mission:

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“To serve equally our members and our profession by synthesizing TBM best practices into a professional and recognized discipline for technology leaders.”

TBM Framework TBM Summits

The TBM Council

CIOs Establishing TBM as Standard

TBM Book

TBM Framework

TBM Index

TBM Summits

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TBM Framework

Developed by TBM Council board and principal members Emphasizes optimization of investment portfolio (Run the Business vs. Change the Bussiness)

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TBM Disciplines

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How can we use transparency to alter behavior and drive cost and quality trade-off decisions with our business partners?

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1

What adjustments can we make to our organization to more effectively manage the supply and demand of our services?

1

2

How can we get meaningful perspectives of our technology costs, investments, capacity and performance?

2

4

How can we confidently translate business expectations into an accurate technology plan, in turn safely reducing excess capacity?

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How do I create and sustain a performance-driven culture that continuously improves value delivery.

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Find the TBM Index at http://bit.ly/TBMindex

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TBM Disciplines

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How can we continuously improve the unit cost of our technologies and services while keeping cost and quality in proper balance?

1

2

How can we better focus our time and resources on the services, applications, technologies and vendors that drive the most value?

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3

How can my business partners and I be sure that we’re investing enough in the right projects and services?

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4

How can we enable our business to “pivot” more quickly to differentiate offerings, exploit market-driven innovations, and capitalize on new opportunities?

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OVERARCHING GOAL: Optimize run-the-business costs and better fund change-the-business investments.

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Find the TBM Index at http://bit.ly/TBMindex

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TBM Index

Number of Responses Questions

Weighted Scores

Level 1 Level 2 Level 3

Foundation 14 4.3 8.6 10.0

Understand / Benchmark 6 5.7 15.7 20.0

Transparency 3 4.0 14.7 20.0

Planning 7 8.9 17.1 20.0

Optimize Cost 6 .8 4.6 5.0

Rationalize Portfolios 5 1.8 3.8 5.0

Innovate 4 1.3 4.4 5.0

Transform 4 .8 3.1 5.0

Culture 4 3.5 9.5 10.0

Total 53 <31.2 <81.6 >=81.6%

Based on the scoring model, organizations can be classified as Level I, II or III maturity:

Level I: 0-31.1% Organizations with some services defined/published, GL-based cost management, basic allocation of costs, annual baseline budgeting, etc.

Level II: 31.2%-81.5% Those with some higher-level services defined/published, mostly GL-based cost management, more advanced allocation of costs, annual budgeting with quarterly or monthly forecasting and reviews, etc.

Level III: 81.6%-100% Those with complete portfolio of services defined/published, more mature costing of services, consumption-based allocation to

business partners, demand-based budgeting, service choices, etc.

Scoring Approach

Scores are captured by industry

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TBM Index

61%

50%

52% 69% 64% 40% 36% 47%

69%

Average Scores (Large Companies)

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TBM Index

61%

50%

52% 69% 64% 40% 36% 47%

69%

Average Scores (Large Companies)

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Another Way of Looking at TBM

Engineering & Operations

Deliver and support products and services on-time and on-quality

Sales / Account (Business

Relationship) Management

Work with customers to understand their needs, position the right products/services and ensure their success

Marketing (Office of the CIO)

Understand your market, define your unique value proposition and strategy

Product Management

(Service Owners)

Define and manage products/services to

profitably satisfy customer needs

Finance

Enable effective resource planning and governance to meet business goals and objectives

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Primary Driver behind TBM

Nine times in ten, CIOs tell us their biggest reason for adopting TBM is the need to free up resources for innovation.

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Support the

Business

CEO’s Hierarchy of IT Needs

Does Not Crash

Does Not Embarrass

Does Not Cost Much

Keeps Business Happy

Extends Into New Businesses

Creates New Industry Define New Frontier

Expand the

Business

Get Fundamentals

Right

Increases Revenue

Optimize Business

Processes Decreases Costs

Increases Efficiency

CIO’s Innovation Sweet Spot

Source: Innovation Strategy & Mandate Workshop Overview, Info~Tech Research Group, Jun 2013

The CIO and Innovation

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IMPORTANT

Source: “Determining the Right Level of IT Operational Spending”, Gartner EXP, October 2012

How much Money?

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Two Major Problems

Components and Communication

But what if the customer wants…

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Transparency

Gartner

Source: “Key Concepts in IT Financial Management: Funding, Costing, Pricing and Chargeback”, Gartner April 2012

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Chargeback or Show-back: Allocation Methods

Basic Allocation methods: Subscription

Allocation

Usage

Source: “Key Concepts in IT Financial Management: Funding, Costing, Pricing and Chargeback”, Gartner April 2012

Transparency

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Transparency

Chargeback or Show-back: Strengths & Weaknesses

Source: “Key Concepts in IT Financial Management: Funding, Costing, Pricing and Chargeback”, Gartner April 2012

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Transparency

Chargeback or Show-back

Source: “Make a Smooth Transition to Service Pricing”, Gartner June 2012

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Transparency

Chargeback or Show-back

Source: “The Strategic Road Map for IT Service Optimization”, Gartner November 2012

process-optimizing, and then, service-optimizing

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Gartner

Source: “The Strategic Road Map for IT Service Optimization”, Gartner November 2012

IT as a Service

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Source: “The Strategic Road Map for IT Service Optimization”, Gartner November 2012

IT as a Service

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Service Pricing

What does internet access cost? Hardware: •Redundant Firewalls •Redundant Routers •Redundant Core Switches •IPS / IDS Hardware

•Monitoring (Orion) Servers •Content Filtering Appliances •Content Filtering Report Servers •DNS Servers

Software: •Firewall Security Software licensing

•Content Filtering Software licensing & Report Services

•Orion Monitoring Software licensing

•DNS Software (Unix and Wintel)

Data Center Facilities Contracts: •Redundant Internet Service Providers:

1.TW Telecom

2.VPLS (this is a fail-over service) •IPS / IDS monitoring Service

•Redundant WAN Circuit Contracts

•Redundant Firewall Maintenance Contract (HW and SW) •Redundant Routers Maintenance Contract HW and SW)

•Redundant Core Switches Maintenance Contract HW and SW) •Content Filtering Maintenance Contract •County ARIN IP and BGP AS Services

Depreciation: •Firewalls - Hardware and software Depreciation associated •Routers - Hardware and software Depreciation associated •Core Switches - Hardware and software Depreciation associated •Monitoring - Hardware and software Depreciation associated •Content Filtering - Hardware and software Depreciation associated

Other CEOIT Services: •Contracts & Procurement Management •Resource Management •Financial and Cost, Budget Analysis •Billing Processing

Labor: •Network Engineering Labor •Security Engineering Labor •Availability Management Analysis •Capacity Management Analysis •Incident Management (Service Desk) •Change Management •Management

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Service Pricing

What does internet access cost? Hardware: •Redundant Firewalls •Redundant Routers •Redundant Core Switches •IPS / IDS Hardware

•Monitoring (Orion) Servers •Content Filtering Appliances •Content Filtering Report Servers •DNS Servers

Software: •Firewall Security Software licensing

•Content Filtering Software licensing & Report Services

•Orion Monitoring Software licensing

•DNS Software (Unix and Wintel)

Data Center Facilities Contracts: •Redundant Internet Service Providers:

1.TW Telecom

2.VPLS (this is a fail-over service) •IPS / IDS monitoring Service

•Redundant WAN Circuit Contracts

•Redundant Firewall Maintenance Contract (HW and SW) •Redundant Routers Maintenance Contract HW and SW)

•Redundant Core Switches Maintenance Contract HW and SW) •Content Filtering Maintenance Contract •County ARIN IP and BGP AS Services

Depreciation: •Firewalls - Hardware and software Depreciation associated •Routers - Hardware and software Depreciation associated •Core Switches - Hardware and software Depreciation associated •Monitoring - Hardware and software Depreciation associated •Content Filtering - Hardware and software Depreciation associated

Other Services: •Contracts & Procurement Management •Resource Management •Financial and Cost, Budget Analysis •Billing Processing

Labor: •Network Engineering Labor •Security Engineering Labor •Availability Management Analysis •Capacity Management Analysis •Incident Management (Service Desk) •Change Management •Management

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Service Description

Service Catalog

Internet Service Provider

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Service Costing

Service Pricing

Direct

Indirect

Service Cost

What are some of the types of costs in each “bucket”?

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Service Costing

eBay example: Digital Service Efficiency http://dse.ebay.com/

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IT as a Service

eBay example: Digital Service Efficiency http://dse.ebay.com/

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TBM Council

Status

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Questions and Answers