To grow sustainably, a scale-up needs to manage its tech spending effectively.
Technology Business Management (TBM) is an emerging practice that helps organizations align their technology investments with their business strategy and goals. And today you’ll learn everything you need to know about it.
In this post, we’ll share:
- What technology business management is
- Why TBM matters for growing businesses
- How to implement Technology Business Management with 6 best practices
Ready? Let’s get started!
What Is TBM?
Technology has become a crucial component of nearly every aspect of running a business. From customer engagement and supply chain management to financial operations and human resources. Nevertheless, many companies lack a clear understanding of how their tech stack actually works.
In fact, some leaders see IT as an unnecessarily costly department and think that they could deliver the same value for a fraction of their IT budget. What’s more, non-technical stakeholders may have trouble communicating with the IT professionals in their team. Especially if they use technical terms and inaccessible language. And these problems will only increase, as technology advances rapidly and more organizations show interest in implementing new technologies, such as artificial intelligence.
Here’s where Technology Business Management comes into play. TBM is a management framework designed to help organizations drive value and reduce costs. How? By aligning business and IT strategies.
TBM’s goals include:
- Defining the tools, processes, data, and staff required for technology management.
- Adopting standardized terminology that can be shared by tech, finance, and business leaders.
TBM aims to provide complete visibility into IT spending, allowing organizations to maximize their investments and resources.
Why Growing Companies Should Prioritize TBM
It’s not uncommon for leaders to think of TBM adoption as an unnecessary effort that’s unlikely to yield many benefits. However, it’s fair to say that, unlike other management frameworks, TBM can have a lasting impact, across departments.
Implementing a TBM strategy allows companies to:
- Get more value from their IT investments
- Gain financial accountability for technology investments
- Optimize their SaaS spending
- Determine the TCO (total cost of ownership) of their stack
- Have a clearer picture of their IT spending
- Detect and reduce wasteful IT spending
- Allocate their IT budget effectively
But, how can you start applying Technology Business Management at your company? In the next section, we’ll share everything you need to know.
How to Implement Technology Business Management: 6 TBM Best Practices
Good Technology Business Management isn’t as common as you might think. While every company has its own way of approaching TBM adoption, there are some patterns worth acknowledging.
Oftentimes, initial TBM efforts focus on:
- Traditional IT
- Public cloud spending
- Software development costs
These efforts are usually motivated by a short-term need to take back control of IT spending. But as they become more experienced, those responsible for TBM start to:
- Apply the framework to other areas, such as SaaS spending.
- Focus on long-term business goals, rather than short-term cost-saving.
Do you want to kick off your company’s TBM efforts?
Get started by applying these six TBM best practices:
- Approach technology investments with business value in mind
- Efficiently allocate costs based on usage
- Use a standardized taxonomy for technology use
- Implement TBM throughout the business operation’s lifecycle
- Don’t obsess over data accuracy on day one
- Don’t rely on spreadsheets
Let’s take a closer look at each one, shall we?
Approach Technology Investment with Business Value in Mind
All your company expenses should have a tangible benefit. And one of the key pillars of TBM is making sure that every dollar you spend on IT brings value to your business.
To do so, first, you should determine the practices and operating models that your company is adopting or aiming to adopt. For instance, if your company is adopting FinOps, unit economics are probably important to you. And this should inform your approach to TBM.
We advise you to make a list of all your resources, including technology, assets, and personnel involved. Then, map these resources to the actual goals you’re trying to achieve. The solutions you’re looking for may come in a variety of forms depending on your chosen operating model. And they can be anything from SaaS tools to the services of third-party vendors.
By connecting these solutions to your desired outcomes, you’ll have a clear understanding of the impact of your IT investment.
Efficiently Allocate Costs Based on Usage
Companies that succeed at TBM usually allocate costs based on how resources are used and how they relate to each other. And when presenting usage-based costs, it’s important to make sure that the expenses are justified in a way that will be easy to understand for those who will pay them.
To begin, you should first familiarize yourself with how the services are structured. Each solution may consist of a combination of various technologies and human resources. For instance, if your team’s relying on a self-hosted application to run certain key processes, the cost of this solution may include:
- Server management services
As a TBM leader aiming to align stakeholders around this solution, your goal should be to granularly break down its costs and compare them to its impact. And of course, that should be achieved using language and concepts that everyone involved can understand.
Use Standardized Taxonomy for Technology Costs
Given tech’s complexity and diversity, every business has its own terminology for referring to the elements within its scope. As a result, it can become very challenging to implement allocation best practices, or even to make efficiency comparisons across vendors and niches.
That’s why the TBM Council (a non-profit business entity) standardized a TBM Taxonomy in 2014 to help name and organize cost structures. With the TBM Taxonomy, financial, technology, and business-facing views are all translated into terminology that makes sense to each audience.
As a TBM expert, you can use this taxonomy to communicate effectively with non-technical stakeholders. However, don’t assume that your colleagues understand these terms from the get-go. Instead, prelude your TBM efforts by advocating for the adoption of this common terminology.
Implement TBM Throughout Your Business Operations Lifecycle
It’s important to note that TBM isn’t a yearly activity or a static framework. It’s a discipline that should be incorporated across your business operation’s lifecycle.
Here’s a quick overview of how to get it done:
- At the strategic planning and ideation stage, TBM can have a key role in helping review previous performance and visualize how technology can aid in reaching new goals.
- When it comes to demand and capacity management, TBM can help analyze both technology and labor needs.
- Throughout the financial planning cycle, TBM helps to assess and strategize around IT spending.
- When deploying products or services, TBM can help optimize resource allocation.
- When it comes to value management and financial assessments, TBM leaders can use KPIs to evaluate IT investment impact, analyze the viability of further IT investment, and even renegotiate contracts according to business needs.
TBM can ensure that IT decisions are driven by data and strategic goals, at every stage of your operational lifecycle. TBM specialists don’t blindly advocate for more IT spending, nor do they deny the business impact of technology. Instead, they focus on efficiency.
Don’t Obsess Over Data Accuracy on Day One
Maybe you’re wondering if you can still use your data for TBM, even if it’s incomplete. Of course, you can use incomplete data for TBM. Truth be told, TBM programs hardly ever start with great data on day one. Typically, companies start off with “good enough data” and achieve accuracy over time.
What’s more, attempting to correct bad data in advance can be a confusing and chaotic effort, as there’s no context to guide you. And this can make it hard to actually acknowledge what needs to be fixed right away.
Don’t Rely on Spreadsheets
Are financial spreadsheets enough to implement TBM? Many IT professionals manage their departments successfully, with just a spreadsheet. However, spreadsheets aren’t enough. As your technology spending and data sets grow larger, you’ll need to make more complex decisions. And for that, you’ll need more context.
Spreadsheets that provide tons of context for each data point are usually very hard to read. Additionally, if you need to centralize different types of information, from different platforms, your spreadsheet will end up being too rigid, or too disorganized. And in any case, your capacity to turn data into accurate insights will suffer.
Instead of using a spreadsheet, adopt an IT spending management solution.
Make TBM Effortless with Cledara
By adopting TBM, companies can:
- Get transparency regarding their technology spending
- Optimize their IT budget
- Make informed decisions about new technology investments
However, TBM isn’t a one-off effort. Taking control of your IT spending and making sure it’s having an impact will help you make some powerful short-term changes. But staying in control of your IT spending will have a huge impact.
Cledara is a software management tool that helps you optimize your IaaS and SaaS spending.
With Cledara, you will:
- Have a centralized view of all your software spending
- Easily spot unnecessary software subscriptions and cancel them with one click
- Get insights on each tool’s usage
What’s more, Cledara will also help you to:
- Avoid shadow IT
- Make sure everyone has access to the tools they need
- Simplify your SaaS compliance processes
Take control of your software spending, book a Cledara demo today.