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November 13, 2012

Apptio Unveils Next-Generation IT Service Costing for Enterprises

By Erin Harrison, Executive Editor, Cloud Computing

Apptio, a provider of on-demand Technology Business Management (TBM) solutions, has rolled out the next version of its IT Service Costing application, offering new capabilities aimed to accelerate the adoption of IT cost transparency initiatives.

As more CIOs look for insight into IT spending, Apptio has focused on its TBM service to provide even greater transparency into IT service costs. Given today’s complex IT environment, it’s become difficult to see a full picture of how those costs, quality and value of the technology affect businesses, Dave Wilt, director of product marketing, Apptio, explained in an interview with TMCnet.

New capabilities of Apptio’s Service Costing include self-service analytics, services library and allocation strategy reports designed to help customers focus on a few common data sets to launch TBM in their company and drive transparency into IT service costs.

Today, over 90 percent of organizations start their TBM initiatives with service costing, according to Apptio, however, IT executives often struggle to understand what data from their various financial and systems management systems to use and how to begin the process.

According to Wilt, businesses can start TBM with as much or as little data as they have and begin at a high level and eventually be able to understand average versus individual unit costs for applications, servers, networks, storage and desktop services.

“Every single potential customer that we talk to all thinks that they don’t have good enough data to do this. It’s because IT was never built by design to be run one way. One of the big developments from our first 100 customers, was the ability to really synthesize and distill that core data they need to get started,” Wilt said. “They don’t need as much data as they thought and it finds the holes in the data so you can fix them. And it works around the holes.”

Over time, organizations can build upon their service costing foundation to optimize infrastructure utilization, benchmark cost and performance metrics, and understand how costs will change based on a “what-if” analysis.

In addition, Wilt said cloud computing has accelerated the need for greater cost transparency of IT services.

“There is a change in expectation in the business they see from Amazon, or Microsoft or Rackspace (News - Alert). There is a clear description of services and know exactly what they are getting,” he said. “There’s been a psychological change in shift. CIOs are saying, ‘I am done with vague answers. I want clear answers from an analytical aspect.’”

IT research firm Gartner (News - Alert) validated this finding, noting that IT financial and operational performance is under tight scrutiny as most business executives do not understand IT operating expenses and, as a result, cap IT spending levels arbitrarily, according to Michael Smith (News - Alert), VP distinguished analyst at Gartner.

“To avoid arbitrarily capped spending levels, CIOs must explicitly define, validate and communicate the value of IT business services that impact business outcomes,” Smith said.

Based on these insights and best practices, Apptio has unveiled several new capabilities designed to help companies establish service-costing transparency through three phases:

1) Starting a TBM Initiative: Apptio’s IT Service Costing application enables customers to overcome these challenges using a services library and defined source data sets.

2) Establish Trust and Buy-In from the Business: Socialize service costing insights with key business and IT stakeholders to build trust and buy-in.

3) Operationalize the Implementation: Turn insights into decisions, and decisions into action, via role-based dashboards and self-service analytics.

These capabilities have helped customers such as Con-way and Novae Group PLC accelerate TBM initiatives and deliver value for their organizations.

“As a leader in the transportation and logistics industry, Con-way’s focus is on running efficiently and providing the highest value service possible to our customers. Our IT organization is no different; we need to run lean and efficient, focusing on practical innovation that delivers rapid value,” said Christopher Levitt, CFO of IT at Con-Way. “With Apptio’s Service Costing Application, we were able to get our TBM initiative started quickly and provide quality data to support accurate cost-saving decisions. We use the application as well for ongoing operational reviews and analytics to ensure we are continually improving and delivering value as a team.”

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Brooke Neuman
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