Technology Business Management (TBM) Value Creation, Challenges, and Future Opportunities

In an evolving technological landscape, businesses must navigate a complex maze of choices to maximise value and efficiency while minimising risk. Technology Business Management (TBM) has emerged as a crucial discipline that enables organisations to achieve this delicate balance.

In this article, we will delve into the critical aspects of TBM, its benefits, and rationale and explore some specific figures to demonstrate its value-creation potential.

An increasing range of options

The pace of technological advancements has significantly accelerated. Cloud computing was initially only utilised for new applications, but it has now become an integral part of the technology landscape. The adoption of Agile development techniques started as a grassroots effort by teams, but today, most organisations use Agile by default.

Additionally, since the pandemic began, there has been a surge in the use of Software as a Service (SaaS) as more organisations focus on supporting their mobile and remote workforce. It is crucial to manage your cloud solutions, Agile development, and SaaS portfolio the same way you manage other aspects of your business. With the rapid pace of technological advancements, the Technology Business Management (TBM) discipline has evolved to incorporate these new components of the IT operating model.

The role of technology in the business has changed

The pace of business and decision-making has increased dramatically in recent years. Decisions that were made every quarter four years ago are now being made on a monthly, weekly, or even daily basis by leading organisations. Top companies continuously assess their investments and portfolios to reallocate resources and discontinue underperforming digital initiatives.

Over the last decade, technology has played an increasingly important role in business. It has evolved from being a mere support system for operations to becoming a tool that translates business strategy into a technology roadmap. Technology leaders were once responsible for collecting, organising, storing and protecting data, but now they leverage data to uncover valuable insights that drive faster decision-making.

Today, business leaders expect technology investments to be future-proofed and focused on driving outcomes rather than just managing costs and reducing IT spending. These changes necessitate the need for Technology Business Management (TBM), which enables organisations to evaluate and review technology investments and align them with business objectives.

Understanding TBM

Technology Business Management is a strategic framework that allows organisations to manage their technology investments as a business. It brings transparency and accountability to technology spending, aligning it with business objectives. TBM involves processes, tools, and methodologies to quantify technology services' cost, consumption, and performance.

The Rationale Behind TBM

The rationale for adopting TBM is clear. Organisations increasingly rely on technology, and technology expenses are a significant part of their budgets. Without a systematic approach to managing these expenses, organisations risk:

1. Overhead Costs: Inefficient allocation of resources leading to bloated technology budgets.

2. Ineffective Decision-Making: Lack of insights into technology services' true cost and performance.

3. Opportunity Cost: Missing out on the opportunity to allocate resources to projects with higher potential ROI.

4. Risk Management: Inadequate understanding of the risks associated with technology investments.

5. Compliance and Security: Exposure to regulatory non-compliance and security vulnerabilities.

Key Aspects of TBM

TBM comprises several key aspects that enable organisations to optimise technology investments and create value:

1. Cost Transparency: Identifying and allocating technology costs clearly in TBM is essential. This includes direct costs such as hardware and software and indirect costs like labour and overhead. A taxonomy of cost is critical to identify cost structures from a financial, technology, and business-facing view with standardised terminology.

2. Service Portfolio Management: TBM helps organisations define their technology services, understand costs, and evaluate performance. This enables informed decisions on which services to invest in or retire.

3. Demand Management: TBM provides insights into the demand for technology services, allowing organisations to align supply with demand efficiently.

4. Performance Management: Through data-driven metrics and benchmarks, TBM enables organisations to evaluate the performance of technology services and make necessary improvements.

5. Financial Planning: With a clear understanding of technology costs and performance, organisations can make more accurate forecasts and budget allocations.

Benefits of TBM

TBM offers numerous benefits to organisations that embrace it:

1. Cost Optimization: By understanding the true cost of technology services, organisations can identify areas for cost reduction and efficiency improvements. In some cases, this can lead to significant cost savings, often in the range of 10-20% or more.

2. Business Alignment: TBM aligns technology spending with business objectives. This means that resources are directed toward projects and services that drive the most value.

3. Informed Decision-Making: TBM provides the data and insights needed for informed decision-making. This can lead to better investments, more accurate forecasts, and improved risk management.

4. Risk Mitigation: Organisations can better identify and address potential risks and security vulnerabilities through a comprehensive view of technology services.

5. Improved Vendor Management: TBM can help organisations negotiate better contracts with technology vendors, resulting in cost savings.

Real-World Examples

To illustrate the impact of TBM, let's look at a couple of real-world examples:

A few examples

Example 1 - A Global Retailer:

A multinational retailer implemented TBM to understand its technology costs better. Through the transparency TBM provided, they identified areas where they could reduce their spending, resulting in a 15% reduction in their technology budget. This saving amounted to ￡25 million annually, which they redirected to technology investments that improved customer experiences and boosted revenue.

Example 2 - A Financial Institution:

A large financial institution used TBM to optimise its technology services. By evaluating the performance of various IT systems and applications, they identified underperforming services that were costing them ￡10 million annually. By decommissioning these services and reallocating resources to higher-performing areas, they not only saved ￡10 million but also enhanced the overall efficiency of their operations.

Challenges and Future Opportunities

While TBM offers substantial benefits, it is not without its challenges:

1. Data Quality: TBM relies on accurate and comprehensive data. Poor data quality can hinder the effectiveness of TBM initiatives. Organisations need to invest in data quality improvement.

2. Cultural Shift: Implementing TBM often requires a cultural shift within an organisation. It necessitates transparency and accountability, which may encounter resistance.

3. Tool Complexity: TBM tools and software can be complex to implement. Organisations need the right tools and the expertise to use them effectively.

4. Constant Change: Technology is ever-evolving, and TBM processes must adapt continuously to keep up with changing technological landscapes.

However, TBM also presents exciting future opportunities:

1. Advanced Analytics: With the increasing availability of big data and analytics, TBM can evolve to provide more sophisticated insights, predictive capabilities, and real-time monitoring.

2. AI and Automation: Artificial intelligence and automation can enhance TBM processes by automating data collection, analysis, and decision-making, making TBM more agile and responsive.

3. Risk Management: As cyber threats continue to evolve, TBM can play a vital role in assessing and mitigating technology-related risks.

4. Sustainability: TBM can be extended to measure the environmental impact of technology investments, helping organisations align with sustainability goals.

The Path Forward

Implementing TBM requires a structured approach. Organisations should consider the following steps:

1. Assessment: Start with a thorough assessment of your current technology portfolio, spending, and performance.

2. Data Collection: Gather accurate data on technology costs and performance. Invest in data quality improvement.

3. TBM Tools: Choose TBM tools that align with your organisation's needs and goals.

4. Training: Provide training for your teams to understand and use TBM effectively.

5. Cultural Change: Foster a culture of transparency, accountability, and data-driven decision-making.

6. Continuous Improvement: TBM is an ongoing process. Regularly review and refine your TBM practices to adapt to changing technology and business landscapes.

More than a cost management strategy

In summary, Technology Business Management (TBM) is more than a cost management strategy; it's a robust framework for aligning technology with business objectives, optimising resources, and mitigating risks.

The benefits of TBM are significant, often resulting in cost savings of 10-20% or more while enabling better decision-making and risk management. Although challenges exist, the future of TBM promises advanced analytics, AI, and sustainability integration. By embracing TBM, organisations can create significant value and position themselves for success in an increasingly technology-driven world.