In chapter three of the Technology Business Management (TBM) eBook, the TBM Council discusses how to use models to create proper transparency for decision making. Data models—as applied using a technology like Apptio’s—transform existing information into meaningful perspectives so that the right people can make the right decisions. (See my previous blog post for more on “meaningful perspectives.”)
Apptio and TBM are not the first to leverage such models, nor to recognize the need to transform cost data in order to more effectively manage the business of IT. Corporate general ledgers, which capture and report cost information to support financial reporting, simply aren’t up to the task—nor are they meant to be. Instead, they sacrifice rich analysis for comparability with other businesses and for comparisons between reporting periods. After all, manufacturing companies, patient care providers, home loan providers, and many other types of businesses all use analytics to transform general ledger data into meaningful cost perspectives. Why should IT, which is just as complex, be any different?
The next installment in our series of management summaries for the TBM eBook focuses on how to use data models for TBM. Again, while we recommend that TBM practitioners read the entire eBook chapter, these management summaries can be used to help your corporate finance partners understand the approach you’re taking to cost modeling, beginning with why it’s needed. Topics covered in this latest management summary include guidance on how to:
- Find the various types of data that are needed
- Build a layered cost model
- Choose the right allocation methods
- Handle cost elements that warrant special attention
- Incorporate service performance into the model
- Use a core cost model as a template for other useful models
- Overcome data quality issues
- Benchmark cost and performance
- Create trust in our models
Chapter three also explores how to make the transparency enabled by your model sustainable and scalable. We will cover this in our next management summary, which is coming soon. You can find all of the management summaries here as they are published.