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Technology Business Management: The Four Value Conversations CIOs Must Have With Their Businesses
For many CIOs, the value they deliver is elusive. It’s not that they do not create positive business outcomes, it’s that they have a hard time demonstrating value for the money spent. As a result, many IT leaders find themselves trapped in a vicious cycle of defending their budgets, cutting resources when times are tight, and struggling to keep pace with an insatiable business appetite for innovation.
Meanwhile, business leaders increasingly rely on the cloud and other third parties for their technology needs, finding clear tradeoffs between cost, features, risk, and speed of delivery at their fingertips. CIOs must not only compete with these alternatives, they must embrace the new reality of a multi-sourced, service-oriented world.
Many IT leaders are taking a more proactive approach to optimizing value. By using shared facts about cost, consumption, quality, risk and performance, hundreds of CIOs have empowered value conversations centered on cost-for-performance, business-aligned portfolios, investments in innovation and enterprise agility. The tradeoffs they’ve illuminated changed the tone of their meetings and instilled a business mindset in IT decisions.
By reading this book, you’ll discover and learn the following:
- A practical, applied framework — called Technology Business Management — for creating and using shared facts to make better decisions about people, technologies, services and investments
- A standard taxonomy of resources, technologies and services for CIOs to translate between IT, financial, and business perspectives
- Creating transparency to empower decision makers, demonstrate cost-efficiency, shape demand and plan in step with the business
- What your technology business model says about the value you deliver and the disciplines you employ
- How to shift from project portfolio management to service portfolio management to both improve alignment and adopt more agile approaches to innovation and development
- How to optimize run-the-business spending by optimizing infrastructure, outsources, labor and services and rationalizing your portfolios for better alignment
- How to improve your ability to change the business by better governing innovation investments and improving enterprise agility
- How to create and execute a roadmap for improving data and decision making capabilities over time while reaping rewards at every stage of maturity
Meanwhile, business leaders increasingly rely on the cloud and other third parties for their technology needs, finding clear tradeoffs between cost, features, risk, and speed of delivery at their fingertips. CIOs must not only compete with these alternatives, they must embrace the new reality of a multi-sourced, service-oriented world.
Many IT leaders are taking a more proactive approach to optimizing value. By using shared facts about cost, consumption, quality, risk and performance, hundreds of CIOs have empowered value conversations centered on cost-for-performance, business-aligned portfolios, investments in innovation and enterprise agility. The tradeoffs they’ve illuminated changed the tone of their meetings and instilled a business mindset in IT decisions.
By reading this book, you’ll discover and learn the following:
- A practical, applied framework — called Technology Business Management — for creating and using shared facts to make better decisions about people, technologies, services and investments
- A standard taxonomy of resources, technologies and services for CIOs to translate between IT, financial, and business perspectives
- Creating transparency to empower decision makers, demonstrate cost-efficiency, shape demand and plan in step with the business
- What your technology business model says about the value you deliver and the disciplines you employ
- How to shift from project portfolio management to service portfolio management to both improve alignment and adopt more agile approaches to innovation and development
- How to optimize run-the-business spending by optimizing infrastructure, outsources, labor and services and rationalizing your portfolios for better alignment
- How to improve your ability to change the business by better governing innovation investments and improving enterprise agility
- How to create and execute a roadmap for improving data and decision making capabilities over time while reaping rewards at every stage of maturity
- GenresBusiness
334 pages, Kindle Edition
Published June 5, 2016
111 people are currently reading
60 people want to read
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July 20, 2017
Technology Business Management (TBM)
Introduction: Be the CEO of your technology business
Imagine you are the CEO of your technology business. Your revenues come as operating funds from business; you receive capital to buy or build assets; and you employ people, asset, and outside services to deliver value to your business partners. If your budget is in the tens of millions of dollars, you command more resources than many Silicon Valley CEOs.
Chapter 1: The business revolution in IT
IT must use facts to answer its own supply chain question:
How are your resources (money, people, and time) spent to deliver towers of infrastructure and other technologies? How are those resources used to deliver projects? How are your tower cobbled into applications and services?
Resources <=> Towers/Projects <=> Applications/Services <=> Business units
Define value conversations by setting standards including strategy alignments, IT portfolio planning, architecture reviews, and quarterly value discussions with stakeholders.
Fact-based conversations and data driven decision making are the core elements of TBM. Transparency is also the core for understanding, improving and communication value. Such as open kitchen, in which you see the chefs and cooks preparing your food.
More astonishing fact is cost transparency. IT transparency is an essential force for changing role of IT from order taker to strategic partner.
It is the wrong question to ask 'Are we spending too much, too little, or the right amount on IT?' It is like ask a manufacturer how much as a percentage of revenues that company should spend on robots. You will spend what you need so long as it is cost-justified based on business needs.
Chapter 2: the tools of TBM
54% of line-of-business executives view IT as an obstacle to their mission, while only 33% of CIO feel the same way.
TBM framework defines the essential elements of a TBM program, including organizational considerations, essential disciplines, and value conversations TBM inspires.
Use TBM taxonomy to create a common language for finance, technology, and your line-of-business partners. A value conversation is an interaction that focus on the trade offs between cost, consumption, capacity, performance, and risk in the pursuit of better business outcomes. When you have a value conversation, you are using the TBM taxonomy to break down the language barriers between IT and the business by shifting the focus away from budgets and technology to the business outcomes those elements enable.
Use TBM model and recommended datasets to allocate costs resources, and other metrics to the towers, applications, services, projects, and other objects consumed. Y the business and other decision makers.
Use TBM Metrics and KPIs to help convey the value of your technology organization delivers.
Chapter 3: Positioning for value
IT value proposition must clearly articulate how IT enable the business to execute its strategy.
It is no longer acceptable to operate as an expense center. Manage business value by optimizing intrinsic value along with cost for performance and business alignment your establishing roles for service ownership, business relationship management, and where needed, business process owners. Business relationship managers and business process owners are responsible for defining business value and managing demand. The roles bridge the gap between the business's processes and its IT services. Therefore they are essential to deliver value.
Chapter 4: creating transparency
Start with the corporate financial data as your source of financial truth, and include other data, such as asset lists, project data, tickets, and more to allocate and model your costs.
Plan to employ part time TBM analyst or architect, best hired inside your team, to manage data, run reports, perform analyses, and make recommendations.
Chapter 5: delivering value for the money
Employ benchmarking to assess cost-effectiveness by comparing your actual costs and investments to relate to industry peers, third party providers. Use benchmarks primarily to set targets for unit costs, cost ratios, and other metrics, and then balance them against non cost considerations, such as security, reliability, compliance, and performance.
Unit costs are simply your total costs on a per unit basis for your services, technologies, people, and other inputs or outputs. Unit costs reveal a lot about your cost effectiveness.
Spare or idle capacity is a significant source of inefficiencies.
Project spending often accounts for 20% or more of IT budget. Measure and manage project spending in terms of both resources and costs.
Chapter 6: shaping business demand
Use transparency to shape business demand. Business partners see consumer technology cheaper, as a tax that weighs on their profit margin, than what they are getting from you!Business transparency can be performed at several levels; portfolio level for executive steering; business unit level for business leader choices; and individual level for creating more informed consumers.
Chargeback is a proven m charisma for creating accountability for IT consumption.
Define, setting and communicating unit of consumption for IT towers, applications, and services with business partners.
Shaping demand requires the creation of levers to manage consumption, costs, and value. 1st lever, variable cost ratio, reflects the degree to which total costs respond to volume changes. Try to cut down fixed cost by renegotiating contracts, consolidating infrastructure, automating processes etc. 2nd lever is discretionary costs which are your cost and services and projects that can be stopped at the discretion of the business.
Chapter 7: planning and hovering for value
IT planning in many organizations fails to provide business value; it is a slow process too often disconnected from business plans and goals. The traditional planning approach sends IT leaders into a tailspin of defensive budgeting',forcing them to creatively allocate the dollars they do have, so they can support the inevitable changes and variances.
Employ a hybrid approach to budgeting- combination of baseline budgeting and zero based budgeting to provide greater fidelity to your discipline plan.
The new, more iterative and interactive approach does not replace the existing corporate financial planning process. Instead, it augments that process by injecting IT into business planning process throughout the year.
Chapter 8: optimizing your business
The goal of TBM is to provide transparent information on cost and capability so that you and your business partners can make good decisions on how IT investments can drive value in your company.
Evaluate your resource consumption to ensure a solid alignment to business priorities. Manage your services and applications, technology and platforms, vendors and suppliers, and Sara centers as portfolios, allowing both for trade offs and tough decisions.
Use a combo of cost metrics and performance metrics to assess cost for performance.
Chapter 9: transforming your business
TBM has become a core part of many technology organizations are becoming service providers to their business partners and an enabler of that broader business transformation.
Project spending often accounts for 20% or more of IT budget, including a large portion of your overall labor spending. The more alarming finding is that one in six projects actually had cost overruns of 200 % and schedule overruns of 70%. These massive failures are referred as black swans. Projects are delivered differently than in the past, often using agile development methodologies. These approaches promises to improve the success rate of technology project by improving business collaboration, allowing for more course corrections, and delivering software sooner with a precise emphasis on continuous improvement. In contrast to waterfall approaches which begin with a well defined project plan and budget, agile employs a spiral-intro-accuracy methodology for delivery with more flexible view of project funding and milestones, getting more accurate as the project progresses. Agile team don't prepare a soup-to-nuts project plan but continuously review the project spending.
Many IT leaders are shifting from project management to service management. CIOs tend to establish a stable team for each of their services and match investment levels to the business values of their services. In managing service spending levels in this way, you create a more business-Agi led portfolio.
Variablizing costs for your business partners helps you transform the way you deliver IT services and the way your business partner consume them. Transform more fixed cost to variable cost helps to improve the agility of your business.
Many IT leaders have learned that shadow IT is nothing to be feared. Business partners not only have the right to buy the third party products and services they need, but they are often best situated to do exactly that. I.e. Many CMOS are more adept at choosing marketing automation tools than their IT departments are.
Chapter 10: continuously improving value
TBM is a journey not a destination. Define very clear business goals. These should map well with the value conversations of TBM framework: cost of performance, business aligned portfolio, investment in innovation and enterprise agility, which will give you the KPI to measure goals.
Establish proper governance of your TBM program. Shared ownership of TBM that is based on partnership between IT, corporate finance, and your line of business partners.
TBM office can be built into other functions, such as PMO especially when it owns service portfolio management duties. The program director should have a proven record of driving something strategic and building strong relationships with both IT and non-IT business leaders.
Chapter 11: expanding the business partnership
By linking technology and business outcomes, TBM helps technology centric business make major business decisions, such as taking on new business opportunities.
Chapter 12: the best time to start
Waiting for the right time to start TBM is a mistake. Now is the right time to start because your business needs a cost effective technology partner that is well aligned to both its needs and strategy.
Introduction: Be the CEO of your technology business
Imagine you are the CEO of your technology business. Your revenues come as operating funds from business; you receive capital to buy or build assets; and you employ people, asset, and outside services to deliver value to your business partners. If your budget is in the tens of millions of dollars, you command more resources than many Silicon Valley CEOs.
Chapter 1: The business revolution in IT
IT must use facts to answer its own supply chain question:
How are your resources (money, people, and time) spent to deliver towers of infrastructure and other technologies? How are those resources used to deliver projects? How are your tower cobbled into applications and services?
Resources <=> Towers/Projects <=> Applications/Services <=> Business units
Define value conversations by setting standards including strategy alignments, IT portfolio planning, architecture reviews, and quarterly value discussions with stakeholders.
Fact-based conversations and data driven decision making are the core elements of TBM. Transparency is also the core for understanding, improving and communication value. Such as open kitchen, in which you see the chefs and cooks preparing your food.
More astonishing fact is cost transparency. IT transparency is an essential force for changing role of IT from order taker to strategic partner.
It is the wrong question to ask 'Are we spending too much, too little, or the right amount on IT?' It is like ask a manufacturer how much as a percentage of revenues that company should spend on robots. You will spend what you need so long as it is cost-justified based on business needs.
Chapter 2: the tools of TBM
54% of line-of-business executives view IT as an obstacle to their mission, while only 33% of CIO feel the same way.
TBM framework defines the essential elements of a TBM program, including organizational considerations, essential disciplines, and value conversations TBM inspires.
Use TBM taxonomy to create a common language for finance, technology, and your line-of-business partners. A value conversation is an interaction that focus on the trade offs between cost, consumption, capacity, performance, and risk in the pursuit of better business outcomes. When you have a value conversation, you are using the TBM taxonomy to break down the language barriers between IT and the business by shifting the focus away from budgets and technology to the business outcomes those elements enable.
Use TBM model and recommended datasets to allocate costs resources, and other metrics to the towers, applications, services, projects, and other objects consumed. Y the business and other decision makers.
Use TBM Metrics and KPIs to help convey the value of your technology organization delivers.
Chapter 3: Positioning for value
IT value proposition must clearly articulate how IT enable the business to execute its strategy.
It is no longer acceptable to operate as an expense center. Manage business value by optimizing intrinsic value along with cost for performance and business alignment your establishing roles for service ownership, business relationship management, and where needed, business process owners. Business relationship managers and business process owners are responsible for defining business value and managing demand. The roles bridge the gap between the business's processes and its IT services. Therefore they are essential to deliver value.
Chapter 4: creating transparency
Start with the corporate financial data as your source of financial truth, and include other data, such as asset lists, project data, tickets, and more to allocate and model your costs.
Plan to employ part time TBM analyst or architect, best hired inside your team, to manage data, run reports, perform analyses, and make recommendations.
Chapter 5: delivering value for the money
Employ benchmarking to assess cost-effectiveness by comparing your actual costs and investments to relate to industry peers, third party providers. Use benchmarks primarily to set targets for unit costs, cost ratios, and other metrics, and then balance them against non cost considerations, such as security, reliability, compliance, and performance.
Unit costs are simply your total costs on a per unit basis for your services, technologies, people, and other inputs or outputs. Unit costs reveal a lot about your cost effectiveness.
Spare or idle capacity is a significant source of inefficiencies.
Project spending often accounts for 20% or more of IT budget. Measure and manage project spending in terms of both resources and costs.
Chapter 6: shaping business demand
Use transparency to shape business demand. Business partners see consumer technology cheaper, as a tax that weighs on their profit margin, than what they are getting from you!Business transparency can be performed at several levels; portfolio level for executive steering; business unit level for business leader choices; and individual level for creating more informed consumers.
Chargeback is a proven m charisma for creating accountability for IT consumption.
Define, setting and communicating unit of consumption for IT towers, applications, and services with business partners.
Shaping demand requires the creation of levers to manage consumption, costs, and value. 1st lever, variable cost ratio, reflects the degree to which total costs respond to volume changes. Try to cut down fixed cost by renegotiating contracts, consolidating infrastructure, automating processes etc. 2nd lever is discretionary costs which are your cost and services and projects that can be stopped at the discretion of the business.
Chapter 7: planning and hovering for value
IT planning in many organizations fails to provide business value; it is a slow process too often disconnected from business plans and goals. The traditional planning approach sends IT leaders into a tailspin of defensive budgeting',forcing them to creatively allocate the dollars they do have, so they can support the inevitable changes and variances.
Employ a hybrid approach to budgeting- combination of baseline budgeting and zero based budgeting to provide greater fidelity to your discipline plan.
The new, more iterative and interactive approach does not replace the existing corporate financial planning process. Instead, it augments that process by injecting IT into business planning process throughout the year.
Chapter 8: optimizing your business
The goal of TBM is to provide transparent information on cost and capability so that you and your business partners can make good decisions on how IT investments can drive value in your company.
Evaluate your resource consumption to ensure a solid alignment to business priorities. Manage your services and applications, technology and platforms, vendors and suppliers, and Sara centers as portfolios, allowing both for trade offs and tough decisions.
Use a combo of cost metrics and performance metrics to assess cost for performance.
Chapter 9: transforming your business
TBM has become a core part of many technology organizations are becoming service providers to their business partners and an enabler of that broader business transformation.
Project spending often accounts for 20% or more of IT budget, including a large portion of your overall labor spending. The more alarming finding is that one in six projects actually had cost overruns of 200 % and schedule overruns of 70%. These massive failures are referred as black swans. Projects are delivered differently than in the past, often using agile development methodologies. These approaches promises to improve the success rate of technology project by improving business collaboration, allowing for more course corrections, and delivering software sooner with a precise emphasis on continuous improvement. In contrast to waterfall approaches which begin with a well defined project plan and budget, agile employs a spiral-intro-accuracy methodology for delivery with more flexible view of project funding and milestones, getting more accurate as the project progresses. Agile team don't prepare a soup-to-nuts project plan but continuously review the project spending.
Many IT leaders are shifting from project management to service management. CIOs tend to establish a stable team for each of their services and match investment levels to the business values of their services. In managing service spending levels in this way, you create a more business-Agi led portfolio.
Variablizing costs for your business partners helps you transform the way you deliver IT services and the way your business partner consume them. Transform more fixed cost to variable cost helps to improve the agility of your business.
Many IT leaders have learned that shadow IT is nothing to be feared. Business partners not only have the right to buy the third party products and services they need, but they are often best situated to do exactly that. I.e. Many CMOS are more adept at choosing marketing automation tools than their IT departments are.
Chapter 10: continuously improving value
TBM is a journey not a destination. Define very clear business goals. These should map well with the value conversations of TBM framework: cost of performance, business aligned portfolio, investment in innovation and enterprise agility, which will give you the KPI to measure goals.
Establish proper governance of your TBM program. Shared ownership of TBM that is based on partnership between IT, corporate finance, and your line of business partners.
TBM office can be built into other functions, such as PMO especially when it owns service portfolio management duties. The program director should have a proven record of driving something strategic and building strong relationships with both IT and non-IT business leaders.
Chapter 11: expanding the business partnership
By linking technology and business outcomes, TBM helps technology centric business make major business decisions, such as taking on new business opportunities.
Chapter 12: the best time to start
Waiting for the right time to start TBM is a mistake. Now is the right time to start because your business needs a cost effective technology partner that is well aligned to both its needs and strategy.
October 8, 2020
The book fell short in not addressing the unpredictability in being able to accurately estimate software development costs or how you focus on value delivery instead of just delivering a bunch of stuff.
May 1, 2023
Work reading
January 14, 2025
Some good ideas here, but not a particularly engaging read.
April 28, 2018
Proposes a future in which a company's IT department can provide a catalog of services to the business, each with a known cost and level of service. This allows IT to move from an expense center that is seen as a "tax" on the business to become a value partner that the business trusts and understands (or even a business driver in some businesses).
Displaying 1 - 5 of 5 reviews