Worldwide IT spending is forecast to reach $5.74 trillion in 2025, a 9.3% increase from 2024, driven by strong investments in digital transformation, artificial intelligence, software, and IT services. In today’s service economy, where technology expenditures are directly linked to enhancing business outcomes, aligning IT investments with strategic goals is more crucial than ever. The release of Technology Business Management (TBM) Taxonomy 5.0 marks a significant milestone, offering a refreshed standard for cost modeling and strategic alignment that addresses the evolving needs of modern enterprises.
Serviceware’s Digital Value Model (DVM) enables organizations to effectively operationalize TBM 5.0, bridging the gap between taxonomy and practical implementation to deliver measurable business value.
Let’s look at best practices in detail:
1. Use Resource Towers und Cost Pools for Benchmarking and IT Reporting Standardization
New Taxonomy Benefits: The update to TBM Taxonomy 5.0 makes IT benchmarking and reporting more accessible and transparent, especially at the Tower and Cost Pool levels.
Getting started: For most companies, mapping general ledger cost elements to cost pools and cost centers to Resource Towers is a straight forward exercise and hence an excellent way to get started with TBM. Serviceware’s DVM platform employs AI models to further facilitate a first mapping draft.
Generate value fast with Benchmarking: Leverage the updated standard taxonomy to foster benchmarks along Cost Pools and Resource Towers with complementary value and performance metrics, e.g., Application cost per User/Application, End User Cost per Device, Compute Cost per GB RAM. Our DVM platform provides you a battery of benchmark values that can be used to create fast insights to your IT performance and cost positioning.
From Standard Reporting to Value-Based Decisions: Serviceware’s DVM supports benchmarking and reporting on Resource Tower and Cost Pool level with additional IT steering and value KPI (e.g., project business cases, operational performance like cost/ticket and consumption behavior data like gold SLA consumption per business unit) and flexible data structures tailored to each organization to support the steering framework your organizational needs.
2. Anchor cost flows in general ledger (IT and Business) and solution layers
New Taxonomy benefits: TBM 5.0 clearly outlines how costs should flow across cost pools, resource towers, and technology solutions. Real-world operational flows can be intricate, but the update enables flexible adaptation.
Getting started - tagging and allocation: Where possible, establish tagging at the cost voucher level. Collect untagged items along ERP cost elements/categories and account assignment objects (WBS, Cost Centers, IO) and define allocation rules directly to your TBM solution layer. DVM’s process templates—enhanced with AI—streamline mapping and allocation, even with evolving data sets.
Ensure backward traceability to ERP: Employ Resource Towers and Cost Pools for reporting only (see point 1). Avoid incorporating them directly into your cost flows as it will reduce backward traceability of your TBM data to your ERP data and hence trust in your TBM solution. Serviceware’s Digital Value Model helps organizations connect ERP allows breaking down solution and project TCO as well as IT budgets from business partners to the IT general ledger from your ERP system.
Adopt TBM 5.0’s notion of end-to-end transparency: The solutions layer draws value from DVM’s end-to-end mapping, aligning IT services with business outcomes and advancing chargeback/showback transparency. Avoid consumption-based chargeback for services, solutions and products that have a very high share fixed cost.
3. Start simple and build up complexity only if there is a business case for it
Start simple – Focus on Run & Maintain first: The scope that should be subject to continuous optimization discussions are your running services and solutions. Starting your TBM journey with those, will enable focused value discussions of your technology portfolio early-on. Adding projects and investments will drive complexity as it necessitates answers to questions on how to deal with cash versus cost view, integrated manpower capacity management and achieve an effective benefit tracking. Answering these questions will typically require a higher TBM maturity.
Start Simple - Cost Pools and Resource Towers: In a first sprint of your TBM journey, only consider aggregate levels of Cost Pools and Resource Towers. Add sub pools and towers later as you need them.
Start Simple – Solutions vertical: Do not overcomplicate your IT value chain. Start out with 2-3 solution layers to enable a reliable TCO reporting for your business facing solutions. If you find in a second step that more layers are needed for an effective unit cost steering and demand management internally as well as with your business partners, you can add additional layers later.
Start Simple - Solutions horizontal: Start with fewer or more aggregated solution and service cuts. The TBM 5.0 Taxonomy offers many options to do that. Maybe you want to pilot your TBM journey with one solution cluster such as Workplace in greater detail (down to offering level) or you want to start with a comprehensive solution catalogue across all clusters but cut your solutions only down to the “solution category” level to get started.
Advanced considerations – Integrate TBM and FinOps: The new TBM Taxonomy 5.0 offers many integration points with FinOps. Still, this is an advanced topic that merits a separate blog. We recommend to tackle this question in a second step. If your TBM aspirations are strongly driven by creating transparency and cost control for your cloud costs, this may very well be your first step on your TBM journey – if so, you should focus on cloud costs only.
4. From the beginning, make sure people, processes and governance bring TBM to life
Pairing TBM Taxonomy 5.0’s refresh with operational platforms like Serviceware’s Digital Value Model magnifies impact:
Role-Specific Guidance: DVM matches taxonomy elements with key personas, encouraging broad and role-based adoption of TBM. Bringing on all relevant stakeholders to collaborate in your TBM ecosystem is key for a successful TBM journey.
Process Integration: TBM data is created and updated as part of different processes. With ready-made workflow templates for budgeting, forecasting, scenario modeling, and reporting, the new TBM taxonomy becomes reliably actionable. With our new AI process engine, the configuration of the respective workflows gets as easy as prompting ChatGPT.
Governance: TBM reporting capabilities within our DVM platform can be tailored to roles and/or governance bodies to support standing agendas. Key aim is bringing together business, IT and finance views. Our DVM platform is designed to bring on all relevant stakeholders to breath TBM from the start and learn to grow with our platform. Customization and Business Intelligence derived from combining TBM data with sources beyond the TBM ecosystem can be easily realized with our PowerBI connector.
5. Develop a clear roadmap for your TBM journey and strategic value alignment
The refresh of TBM Taxonomy 5.0 sets a robust foundation and standard for IT financial management. Serviceware’s Digital Value Model equips organizations to confidently operationalize the taxonomy, achieve comprehensive cost transparency, and deliver strategic business value in your unique organizational environment. Engage with Serviceware and expert consultants to:
- Assess your starting point (architecture, data, process, organization, strategy)
- Envision the future with TBM (TBM vision and strategy integration, TBM business case, TBM target picture for cost model, process, governance)
- Derive and shape your TBM journey and maximize your business outcomes.
If you want to further explore TBM and Serviceware’s Digital Value Model, reach out to Serviceware or Strategic Service Consulting for expert guidance and practical support on your IT financial transformation journey.
