Technology Business Management (TBM) is a value-management framework instituted by CIOs, CTOs, and other technology leaders. Founded on transparency of costs, consumption, and performance, TBM gives technology leaders and their business partners the facts they need to collaborate on business aligned decisions. Those decisions span supply and demand to enable the financial and performance tradeoffs that are necessary to optimize run-the-business spending and accelerate business change. The framework is backed by a community of CIOs, CTOs, and other business leaders on the Technology Business Management Council.
To gain alignment between IT, Finance, and Business Unit leaders, TBM provides a standard taxonomy to describe cost sources, technologies, IT resources (IT towers), applications, and services. The TBM taxonomy provides the ability to compare technologies, towers, and services to peers and third-party options (e.g., public cloud). Just as businesses rely on generally accepted accounting principles (or GAAP) to drive standard practices for financial reporting - and thus comparability between financial statements - the TBM taxonomy provides a generally accepted way of reporting IT costs and other metrics. A simple view of the TBM taxonomy is shown below.
Figure 1: The TBM taxonomy provides a standard set of categories for costs and other metrics
The TBM taxonomy is needed in order to support the modeling of costs and other metrics. A TBM model maps and allocates costs and resource consumption from their sources to their uses, from the hardware, software, labor, services, and facilities IT leaders procure to the applications and services they develop, deliver, and support. In essence, the model is what translates between the layers of the taxonomy (e.g., IT Towers to Applications & Services). The TBM model includes the taxonomy objects and layers plus the data requirements, allocation rules, and metrics needed to create transparency and enable the reporting that is needed for the value conversations of TBM.
The TBM model relies on the TBM taxonomy to bring into agreement often disparate and contentious definitions of IT cost components and object classes. This creates a common language so that the terms server and compute for example are understood by everyone (IT and non-IT stakeholders alike) to mean the same thing and to include the same types of underlying costs calculated using the same methods.
Figure 2: The TBM model translates from a finance view of costs to an IT view of towers, projects, and services and then into a business view of costs
By using the TBM taxonomy and model, CIOs can illustrate, for example, how user demand shapes the cost of applications, services, and technology architectures they maintain. And non-IT leaders can use the same data and insights to guide their consumption (demand).
Perhaps more importantly, these TBM tools allow for benchmarking and trend analysis of IT costs. This includes comparing the unit costs of technologies, such as a virtual Windows server or a terabyte of tier 1 storage, from one business unit, vendor, or data center to another. It also includes comparing unit costs over time, or even looking at ratios such as the IT cost per employee or the storage cost as a percentage of total IT spending.
These are powerful tools used more extensively in the private and public sectors including a diverse array of over 300 organizations: ExxonMobil, Microsoft, First American, Telstra, Zurich Insurance Company, U.S. General Services Administration (GSA), Fannie Mae, Federal Home Loan Bank of San Francisco, and the State of Washington.