Apptio Bill of IT

The Apptio Bill of IT solution enables an IT chargeback or showback process by delivering a summarized report to the business on the cost, quality and value of the IT Services each business unit consumes.  The Bill of IT, like a cell phone bill, details the services being consumed and the cost of those services in a language the business understands.  The Bill of IT also provides IT finance powerful “What If” capabilities to model the impact of potential allocation, chargeback or service level changes on Business Unit bills prior to implementation.

Closely Managing IT Demand to Reduce Costs and Ensure Business Alignment

Today, business leaders typically have limited or no visibility into their cost and consumption of IT services. As IT makes the transition to a true service provider, it has become necessary to provide the business units with insight into the cost, quality and value of the IT services they are consuming on a regular basis. Cost and value transparency is a key step in the service provider transition. It lays the foundation for a different relationship where both are equal partners with mutual accountability.

The Bill of IT – Articulating IT in a Language the Business Understands

Think of the Bill of IT like a monthly invoice from a cable TV provider. The consumer orders a number of different services (Cable TV, on-demand movies, select movie channels, broadband internet and possible home VoIP service) and each service comes with a line item cost.  The consumer then can use this Bill to decide whether they still value the services, would they like to buy more (upgrade to Platinum movie package or add a DVR) or shop around to other providers to make sure they are getting the best deal. In this way, the consumer chooses to get the services that he or she values most, and the provider constantly aligns their services with what consumers want most.

The trick is to cost the service based on the value metric the service is providing to the business. As an example, for a financial trading application this could be ‘cost per transaction’; for loan processing this could be ‘cost per loan processed’; for online services it is often ‘cost per service transaction’ or ‘cost per customer’; desktop or client services are often ‘cost per employee.’  Most business leaders don’t know how to judge the cost per MIPS, network port or gigabyte.  By reporting on the cost of the service in business terms, the BU manager can make value assessments and resource assignments more aligned to the objectives of the business.

Maturing the Chargeback Process Over Time with Apptio’s Bill of IT

Simple Bill of IT (PxQ)

Apptio’s Bill of IT solution enables organizations who only have unit cost data to begin their chargeback process by rolling out an invoice to the business using a simple price (unit cost) x quantity (volume) Bill of IT.  In today’s complex and constantly changing world of distributed shared services, SaaS, Cloud and virtualization have made the simple Bill of IT less ideal for most organizations. 

Quality of Service in the Bill of IT

Like most consumers, business units want to know what they are being charged for and what they are getting in return. Cost is an important element, but so too are service levels. Apptio’s Bill of IT solution enables organizations to incorporate uptime metrics, support response times, service incident and other metrics so that they can be reported side-by-side with service costs. The Quality of Service Bill of IT can also be used to drive service level pricing policies.

IT Service Costing in the Bill of IT

Activity based costing enables IT to assign costs by identifying activities and precisely assigning the cost of each activity to the corresponding IT services. Activity based costing gives IT the ability to determine the fully loaded cost of IT services – client services, infrastructure services and applications or shared services. Including true services costs in the Bill of IT dramatically increases the actionability of the Bill of IT by revealing the levers that can be pulled to drive down costs or modify user behavior.

Benchmarking in the Bill of IT

Benchmarking of IT services and the creation of internal benchmarks provides another element of actionability to the Bill of IT. If device to FTE levels in the business unit are above the internal benchmark, the business executive can investigate and/or change policy to bring this in line. Any internal or external benchmark data can be included to round out the performance management aspects of the Bill.

Budgeting and Forecasting in the Bill of IT

The budget and forecast can also be incorporated into a Bill of IT. This allows the business unit to weigh in and be accountable for the budget and forecast process before it’s locked and can rather be updated on a rolling basis. This process spreads accountability and fosters partnership with the business in managing the IT spend.

Manage Demand and Change Behavior with a Bill of IT

By establishing a clear understanding of the costs and quality of service of the products and services that IT offers to the business combined with IT efficiency benchmarks and budget and forecast information, IT can begin to have a very different dialogue with the business. Capability, cost and quality can be regularly evaluated and traded off as a joint exercise between IT and the business. Thus, total transparency can lay the groundwork for true demand management.