By Greg Holmes, Apptio, an IBM Company

If you were asked to reduce your technology budget tomorrow, where would you start?

You could cancel a large supplier contract. Reduce the number of data centres. Stop a project or cut back on contractors.

Each might bring the bill down. But what would it mean for the business six months later? Would you lose something you depend on? Would you have to spend more to put it back? That is the problem I was talking about at Aramar’s recent Data, AI & Analytics Forum. Making a cut may seem relatively easy, but understanding which cuts make sense requires a much clearer picture of your technology spend.

It also helps explain why Apptio’s early story is so interesting.

Apptio was founded in 2007 to help enterprises manage their technology spending. Its early years coincided with the financial crisis, when the need to understand costs became particularly pressing.

For banks facing that pressure, technology presented difficult questions. Which services were essential? How many data centres did they need? Which contracts could they change without creating bigger problems elsewhere? By April 2010, Apptio already had Bank of America, JPMorgan Chase and BNP Paribas among its customers, helping them understand IT service costs, reduce expenditure and align technology with business priorities.

Think about the people who keep a critical system running. Reducing that team may produce an immediate saving. But if demand returns and the knowledge has gone, recovering that capability could be expensive and slow.

A supplier contract presents a similar challenge. The invoice tells you what you pay. It does not, by itself, tell you everything the business would lose if you stopped paying it, or all the functions that indirectly receive business value from that supplier.

Knowing the bill is only the beginning

Large organisations can have accurate financial records and still struggle to explain the full cost of an application or service.

A software licence is one part of the picture. There may also be infrastructure, support, development work and shared services. Those costs sit in different places, while several departments may depend on the same technology.

Apptio helps connect financial and operational information so organisations can understand those relationships and make better decisions about their spending. Technology Business Management, or TBM, provides a common framework for technology, finance and business teams to discuss costs and value.

Rather than looking at a large bill and deciding it must be too expensive, you can ask what it supports, who uses it and whether there is a better way to deliver the same service. And when you understand where your money is going, you can also see where you could free up budget for the next investment.

IBM faced the same challenge

IBM is a famous technology brand. But when looking at their own IT spend, they had questions.

Which applications are worth what they cost? Are we paying for the same thing twice? Where can we make savings so we can invest in something better?

The bills tell you how much you’re spending, but that’s not everything you need to know. So, in 2021, IBM brought in Apptio. It started with $1.5 billion of IT costs, then expanded to $2.5 billion. Suddenly, those questions became much easier to answer.

IBM turned a 12% annual increase in software and SaaS spending into a 5% reduction within a year. A team of just five people also used Cloudability, part of the Apptio portfolio, to help save $50 million in cloud costs.

Then, unsurprisingly after experiencing the technology first hand IBM bought Apptio.

That gives IBM a pretty powerful starting point when talking to you about IT costs: it has faced those questions itself and has results to show what’s possible. Apptio now sits in IBM’s software portfolio and IBM is set on bringing the benefits of Apptio to more businesses around the world.

Where would you start?

It’s not about questioning every technology purchase in the business. I would start with a decision you are struggling to make. Perhaps a significant renewal is approaching, cloud costs are rising, or you need to fund a modernisation project.

Can you explain the full cost of the service involved? Do you know who depends on it? Can you assess the consequences of changing it?

If finding those answers is difficult, that is a useful starting point for a conversation about Apptio.

Having worked at Apptio for seven years, the point I want to leave you with is simple: understanding your technology spending gives you a better chance of making decisions that help the entire business.

If you’d like to understand how Apptio could help your business or see a demonstration, get in touch with the Aramar team at contactus@aramar.co.uk

Why I Wish I’d Had IBM Apptio When I Worked in Finance