Technology Business Management (TBM) and IT Financial Management (ITFM) play a significant role in the operation of today’s enterprise businesses. With cost optimization recently listed among Forrester’s top CIO priorities, we at Serviceware anticipate TBM and ITFM to ascend the list over the coming years as more success stories emerge.
So, why is TBM rising up the ranks of importance for IT leaders and why is it so crucial for organizations now? Let’s find out.
TBM is a Strategic Imperative
TBM isn’t just a nice-to-have, it’s a strategic imperative. In a rapidly evolving digital climate, TBM enables organizations to unlock the full potential of their technology investments, drive innovation, and position themselves for success. Remember, technology isn’t just about bits and bytes; it’s about creating value, enhancing customer experiences, and shaping the future of business.
Digital Transformation - That Dreaded Phrase
Perhaps one of the most used IT terms ever, digital transformation will be ever-present, and it revolves around the digitalization and modernization of business operations. Innovation lies at the heart of digital transformation and is critical to remaining competitive, operating efficiently, and fostering growth. And it’s not just IT leaders who recognize the importance of this movement; 71% of CFOs believe that their company’s success depends on effective digital transformation - so it really is a top priority for the entire business.
Luckily, Technology Business Management supports this thirst for innovation. TBM empowers organizations to prioritize investments in transformative technologies, such as artificial intelligence, cloud computing, and data analytics, that drive innovation and result in impactful outcomes. By building a culture of innovation and experimentation, TBM accelerates the pace of technological change and positions organizations for long-term success.
Why is TBM So Important Right Now?
Today's dynamic business environment, powered by rapid technological advancements and increasing complexity, has made the need for TBM ever more pressing. Besides enabling digital transformation, there are several other reasons why organizations should prioritize a TBM implementation now:
1. Cost Optimization in Uncertain Times
In the wake of global economic uncertainties and competitive pressures, organizations must endeavor to optimize costs without compromising innovation or service quality. TBM offers insights into cost drivers, enabling businesses to identify inefficiencies, rationalize spending, and reallocate resources strategically. By optimizing IT expenditure, organizations can enhance their financial resilience and competitiveness.
2. Enhance Decision-Making and Agility
If you’re not already making data-driven decisions, then it’s an absolute must for 2024 if you want to operate efficiently. TBM equips organizations with actionable insights derived from accurate and real-time information. By aligning your IT investments with business priorities, leaders can make informed decisions that drive agility, innovation, and competitive advantage. TBM has been evolving beyond traditional “Core IT” services and will continue to do so, adapting to the changing technology landscape. TBM can facilitate scenario planning, risk assessment, and resource allocation, enabling organizations to adapt swiftly to changing market dynamics. According to the 2022 State of TBM report, 69% of technology departments now include agile development costs within their TBM business models and we suspect this will only increase.
3. Maximize Return on Investment (ROI)
Investments in technology represent significant capital outlays for organizations, so bridging the gap between these investments with tangible business outcomes is essential. However, realizing the full potential of these investments requires diligent management and optimization. TBM enables organizations to track the ROI of their technology investments, measuring outcomes against predefined metrics and benchmarks that matter to the business. By identifying high-value opportunities and reallocating resources accordingly, businesses can maximize ROI and drive sustainable growth. It’s noted that more than half (52%) of organizations are using products or value streams as the funding mechanism for software development emphasizing this shift and the need to align technology spending with tangible business value.
4. Align IT with Business Objectives
Historically, IT departments have been perceived as cost centers rather than strategic enablers of business objectives. The rest of the business thought IT departments only used to handle corporate emails, software upgrades, and manage the servers. Thanks to some monumental technological advances such as cloud technology, big data, and the emergence of AI, the perception and role of IT has evolved into a critical part of day-to-day business operations. TBM fosters alignment between IT and business stakeholders, ensuring that technology investments are directly linked to organizational goals and priorities. By fostering collaboration and transparency, TBM facilitates a shared understanding of how technology contributes to value creation and competitive advantage.
5. Mitigate Risk and Ensure Compliance
In an environment marked by increasing cybersecurity threats and regulatory scrutiny, effective risk management and compliance are paramount. AI alone poses many questions about its adoption, governance, and education for employees. A Coalfire report found that nearly 70% of service organizations need to demonstrate compliance or conformity to at least six frameworks spanning information security and data privacy - which is no easy feat, even for experienced IT teams. TBM helps organizations manage and track compliance across multiple frameworks quickly. Business leaders can also assess the risk exposure associated with their technology investments and implement proactive measures to mitigate threats. By ensuring compliance with regulatory requirements and industry standards, TBM enhances organizational resilience and safeguards against potential disruptions.
Implementing TBM: Key Considerations
While the benefits of TBM are clear, successful implementation requires careful planning, collaboration, and commitment. Here are some key considerations for organizations embarking on their TBM journey:
- Executive sponsorship: TBM requires strong executive sponsorship and leadership commitment to drive organizational change and overcome resistance to adoption.
- Cross-functional collaboration and transparency: TBM involves collaboration across departments, including finance, IT, and business units, to ensure alignment of objectives and priorities.
- Data quality and governance: Simply put - rubbish in, rubbish out. Reliable data is essential for accurate TBM analysis. Organizations must establish robust data governance practices to ensure data integrity and consistency.
- Continuous improvement: TBM is not a one-time initiative but an ongoing process of optimization and refinement. Organizations should embrace a culture of continuous improvement and adaptability.
At its core, TBM is a framework that enables organizations to understand and manage the cost, quality, and value of their technology investments. It provides a comprehensive view of IT expenses and performance metrics, aligning them with business objectives to facilitate informed decision-making. TBM empowers stakeholders across departments to collaborate, optimize resource allocation, and drive strategic initiatives effectively.
No matter where you are on your TBM journey, we can help you achieve the most value. Get in touch with Serviceware or check out our dedicated TBM Library for more helpful articles, guides, and webinars.
