Digital transformation: Why cloud solutions are more sustainable choices for investment

Digitization and the resulting technological innovations are one of the most important investment priorities for companies in Germany today. But despite ongoing digitization efforts, it is already becoming clear that not all investments are sustainable. Particularly tools and services acquired quickly during the pandemic now need to be reconsidered due to rising inflationary costs, prompting companies to enter a governance phase in which the cost, use, and value-added potential of innovations are reviewed. Cloud or SaaS solutions are increasingly coming into focus as part of a future-proof, transformative strategy and represent an important step in responding to rapidly changing conditions and adapting services in an agile manner.

Transparency in cloud investment and use

With the right use of Cloud Economics & FinOps principles cost savings are possible that can achieve and sustain up to 40 percent for multi-cloud applications . Despite the many advantages of cloud-based software, rising inflation costs and possible price increases on the part of providers such as SAP must also be considered with regard to sustainable cloud investments. For companies, transparency plays a particularly important role in connection with cost savings in order to identify the necessary entrepreneurial measures and drive business changes. In this context, the difficulties involved in analyzing material costs, investments and services in relation to one another should not be underestimated. This is because traditional cost allocation models, budget plans, and reporting often prove too rigid, fragmented, and flawed for agile transformation governance.

New opportunities with Technology Business Management

In order for companies to be able to overview and optimize their IT costs, many companies are already using IT financial management (ITFM) tools today. It can be used to quickly capture operational, project, and supplier cost data, as well as identify internally used technology services in terms of money spent, quality, and value to the business. According to Gartner 70 percent of CIOs are planning to use a dedicated ITFM system or tool to manage and analyze their IT spending by 2024 . While ITFM is very popular and has some obvious benefits, it does not identify the extent to which it drives business added value for a company.

This is achieved using the Technology Business Management (TBM) discipline. TBM can be used to create transparency for IT and shared services by generating a cross-departmental record and presentation of all IT expenditures and services. Based on a comprehensive taxonomy, as well as levels of action already specified by TBM, business added value can be determined in a comparable and consistent manner all the way through. Companies can start using TBM very quickly, because: Terminology and data models are already predefined based on the guidelines of the Technology Business Management Council.

TBM integration within the company

Despite the transparency that TBM offers in terms of the costs and benefits of all IT resources involved in the value-added process, some TBM-related data models fail, however, because of the complicated implementation process. Standardized unified models offer only limited added value to many companies because they are not adaptive enough to allow adjustments to the outdated and often only gradually changeable data and process realities. Therefore, companies will need to adopt an approach that builds on the current state of IT and implements an individualized view and reporting layer. Software solutions such as Serviceware's Digital Value Model (DVM) focus on individual adaptability and flexibility in their value proposition. The DVM uses a combination of the TBM and ITFM methods to meet all of a company's individual requirements and thus provide it with the best possible success.

Cost transparency through FinOps Cloud Management or TBM solutions is the foundation of operational and strategic decisions within a company. It helps executives understand optimization approaches and the value-added potential of technological investments such as cloud-based software, which takes companies a big step forward in their digital transformation and, most importantly, is sustainable.

Sam Wilson

Written by Sam Wilson

Sam Wilson is Head of International at Serviceware SE, a leading enterprise management software company. Serviceware provide solutions to digitalize and automate service processes, enabling companies to improve service quality and efficiently manage service costs. Sam has 10+ years of international experience in enterprise IT and IT financial management and has helped many global organizations realize value through their IT investments over the years.

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