Technology Business Management Framework Todd Tucker VP Standards

Technology Business Management Framework Todd Tucker VP, Standards, Research & Education Published: April 2018

Copyright © 2018 Technology Business Management Council, Ltd. All rights reserved. Printed in USA. Technology Business Management Council Confidential Information. The content in this presentation may not be copied, photocopied, reproduced, translated, or reduced to any electronic medium or machine readable form, in whole or in part, without the express written consent of the Technology Business Management Council, Ltd. The presentation and the content it contains is confidential and may not be distributed without the express written consent of the Technology Business Management Council, Ltd. The information contained in this presentation is subject to change without notice and does not represent a commitment on the part of the Technology Business Management Council, Ltd. Revision Date This deck was updated in April 2018. 1 © 2018 Technology Business Management Council, All rights reserved.

Demand & Consumption Quality How important is really good IT to the success of your business or mission? Do you have enough IT resources (people, skills, money, assets) to meet the demands (wants) of your business partners? Do your business partners expect IT decisions to be data-driven? Do your business partners want a choice in what they get and how much they pay? Are you investing enough in changing the business vs. running it? Value Performance & Risk Cost Speed & Agility 2 © 2018 Technology Business Management Council, All rights reserved.

3 © 2018 Technology Business Management Council, All rights reserved. Began research in 2012 Interviewed 22 different board members and 55 principal members Developed or participated in 21 TBM award finalist case studies Held numerous workshops and ran six different workgroups over two years Incorporated lessons learned from TBM software deployments including roadmaps, cost models and outcomes achieved

TBM Framework Continuously Improve Plan and Govern Run-the-Business Deliver Value for Money Cost-for. Performance Change-the-Business. Aligned Portfolio Investment in Innovation Value Conversations Create Transparency Position for Value 4 © 2018 Technology Business Management Council, All rights reserved. Enterprise Agility Shape Business Demand

The Four Types of Value Conversations Spending and investments used for ongoing operations of the business Spending and investments used to grow or transform the business Run-the-Business Cost for Performance Change-the-Business. Aligned Portfolio Investment in Innovation Enterprise Agility Value Conversations We deliver the right performance for the best possible price. 5 We spend our resources to get the biggest return possible for our business. © 2018 Technology Business Management Council, All rights reserved. We maximize our innovation dollars and ensure value over our investment lifetimes. We improve the speed at which our business – including IT – responds.

Position for Value What is your Technology Business Model and are you aligned to do it? Technology business model affects value delivered Many CIOs use TBM to move up the value chain CIO+ means delivering business capabilities beyond IT Business Driver Business Capabilities Business Application Services Value Partner Tech / End-User Services Service Provider IT Towers (Resources) Expense Center Cost 6 © 2018 Technology Business Management Council, All rights reserved. organizational focus Value

Create Transparency How do you empower tradeoff decisions based on facts? Business Units or Capabilities Business Unit or Business Capability Services Business Unit or Business Capability Business Application Services Delivery Services Platform Services Infrastructure Services Emerging Compute Storage Network Output End User Application Delivery Security & Compliance IT Management Cost Pools Describe the type of asset or service purchased using terms and groupings relevant to both IT and Finance Internal Labor External Labor Outside Services Hardware Software Facilities & Power Telecom Other TBM Taxonomy (V 2. 0) provides standard management categories to support standards-based modeling. 7 © 2018 Technology Business Management Council, All rights reserved. Internal Services Finance View Data Center IT View Describe the technology functions supported by IT spend in terms and groupings relevant to the owners and consumers of those functions Business Unit or Business Capability End User Services Describe the products or output delivered by IT and consumed by business units IT Towers Business Unit or Business Capability Business View Describe the consumers of the technology supported by IT spend

Best § § List of ERP apps Infra. Mappings Support time tracking Internal project hours, § Consultant/ vendor hours § Simple app list § Server and storage mappings § Support time tracking § Project data (hours) § Inventory of all end user devices § Inventory of apps § Infra mappings § Network mappings, including WAN links § Support time tracking Better § List ERP apps § Infrastructure mappings § Support personnel with time estimates § Simple app list § Server and storage mappings § Support personnel with time estimates § List of ERP applications § Infrastructure estimates § Support estimates § Simple app list § Server counts and storage estimates (%) § Support estimates (%) § Inventory of all end user devices § Inventory of all workplace apps § Server counts and storage estimates (%) § Support estimates (%) § Inventory of desktops and laptops § Office & other workplace apps § Server counts and storage estimates (%) § Support estimates (%) Workplace Services Good Quality of Data What About the Data Needed for Modeling? Corporate ERP Top 20 Applications Scope of Data 8 © 2018 Technology Business Management Council, All rights reserved. § Inventory of corporate, BU and cloud apps § Infra mappings, including public cloud § Support time tracking § Project hours § Inventory of corporate and BU applications § Server counts and storage estimates (%) § Support estimates (%) § Inventory of corporate applications § Server counts and storage estimates (%) § Support estimates (%) All Applications

Cost-for-Performance § Service cost? § Portfolio alignment? § Service demand? § Service value? 9 How can you help them be successful? © 2018 Technology Business Management Council, All rights reserved. Loss Leaders Mobile App Top Performers Pipeline Community Catalog Retiring SCM 2 Size = TCO Advantageous Who manages… Essential Service portfolio matrix: Value vs. Cost Business Value Class Differentiator How do you improve cost-for-performance in light of business value? Demand Profile Growing www. com SCM 1 CRM Divestment Candidates Below Expectations Subsidizers Above Expectations Cost-for-Performance Best in Class Declining Legend

Business-Aligned Portfolio How do you align IT spending and investments with business priorities? 10 TIME vs. Project Purpose reveals investment portfolio alignment Leverage TIME or similar model for apps and services Classify projects by outcome (e. g. , New, Enhance, Maintain, Replace) © 2018 Technology Business Management Council, All rights reserved.

Investing in Innovation How do you get more value from your innovation investments? Projects 11 …shifting focus to… Waterfall approach is waning in favor of agile development, which frustrates ITFM practices Up-front time and cost estimates are impractical, often inaccurate Projects are only a small part of your spending on services © 2018 Technology Business Management Council, All rights reserved. Services Service funding models allow stable teams (6 months to 1+ years) Service orientation is better equipped for Dev. Ops and spiral-into-accuracy Agile software development Services connote value and support more effective portfolio management

Investing in Innovation Protecting Program Funds Innovation Program Other BC 1 (by Business Capability) BC 3 BC 2 versus Run Grow Transform Innovation Comingled Funds 12 © 2018 Technology Business Management Council, All rights reserved. In this model, the innovation fund that covers both IT and non -IT resources is set aside. As new services or enhancements are introduced, they roll into the standard funding model. Run Grow Transform Run/Grow/Transform IT Funding

Enterprise Agility How do you improve speed-to-market and responsiveness to new demands? Variable cost ratio is a powerful tool to create agility Carries risk of increasing costs when volumes rise but do not fall Variablizing costs is more possible today with advent of public cloud Better data quality speeds decision making and improves confidence Strong correlation between data maturity and speed of delivery IT data quality is bolstered by using the TBM model 13 © 2018 Technology Business Management Council, All rights reserved.

Metrics & Key Performance Indicators Run-the-Business Cost-for. Performance Investment in Innovation Enterprise Agility § IT Delivered by Cloud § Unit Costs vs. Targets (Towers) § TCO by Corporate Outcomes § Run-the-Business vs. Change-the-Business § Unit Costs vs. Targets (Services) § TCO by Business. Facing Services § Investment by Value Category § Performance of Services (SLAs) § TCO by TIME § Projects On Time, On Spec and On Budget § Customer Satisfaction Scores 14 Business. Aligned Portfolio Change-the-Business © 2018 Technology Business Management Council, All rights reserved. § TCO by Vendor Category § Economic Value Added of Investment Portfolio § Variable Cost Ratio of Services § Services Delivered via Agile § Discretionary Project Spending § TBM Data Quality Index

“ Complete transparency is the goal, including the data behind the metrics, so that folks have no question whether these costs are made up based on arbitrary rules. TBM helps us tie dollars to decisions…As they see not just costs but services we provide, what drives their cost, and that their decisions and consumption actually impact the cost structure, it builds these secure, safe places to have all kinds of dialogues and move the transformation agenda forward. ” James La. Plaine Former CIO AOL, Inc. 15 © 2018 Technology Business Management Council, All rights reserved.

“ Technology Business Management — or TBM — helps companies across industries realize their full potential. The advent of digital, the Internet of Things and mainstream cloud are bringing new innovative capabilities to the forefront. TBM brings the business translation to these technological advances so you and your people can quickly decide on tradeoffs and new investments to improve competitiveness, customer engagement and the bottom line. ” Mike Brady Global CTO AIG 16 © 2018 Technology Business Management Council, All rights reserved.

“ We've used Technology Business Management to enable this transparency between IT and the business…and there is no more perception that IT is expensive or that IT is slow, because I have the fact base. It's really helped those business conversations. It's helped us build that fact base for sustainable investment decisions and actually the value case for IT. ” Debra Bailey CIO Nationwide Building Society 17 © 2018 Technology Business Management Council, All rights reserved. Debra Bailey CIO Nationwide Building Society

“ Technology Business Management is new frontier for CIOs. We've got cloud computing and all these great things we should all be looking at, but without TBM I don't know how you are going to be able to justify moving something to the cloud unless you've got transparency on the cost of that particular application or function. ” Larry Godec CIO First American Financial 18 © 2018 Technology Business Management Council, All rights reserved.

“ At Cisco, we recognized that in order to drive business value and innovation, we had to become a competitive provider of IT services. This meant, among other things, that we had to change the very conversations we were having internally and with our business partners. Our conversations and our vocabulary needed to move beyond technologies, SLAs, and projects, to discussions about the tradeoffs needed to balance cost, quality, and value. Only in doing so could we free up resources for business growth and strategic execution. These tradeoffs are at the core of Technology Business Management. ” Rebecca Jacoby Chief Operating Officer (Retired) Cisco Systems 19 © 2018 Technology Business Management Council, All rights reserved.

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