Guide

How IT Finance Leaders

and CIOs Can Analyze
Spend, Optimize Costs,
and Improve Agility

Introduction

70%
Disruption is a business reality. Significant changes in the last few years — even before the
COVID pandemic — have disrupted the normal operations of over 90% of enterprises.1

When change is constant, businesses must adapt. Executive leaders often shift priorities,
with emphasis on streamlining costs and optimizing resources. And this often places stress of successful
on IT departments to get more out of existing investments and to shift resources to new CIOs will have
initiatives. In fact, a recent survey revealed that 62% of CEOs see general price inflation as a dedicated
a persistent or long-term issue (Gartner).2 IT financial
Organizations that thrive in disruptive times are the ones that are the most efficient,
management
are clear on the value of different technology investments, and are agile enough to re- system by 2024.
plan, re-budget, and re-forecast quickly. But many organizations fall short because they
don’t have access to the information needed to make important technology investment
decisions:

. Finance leaders are still using spreadsheet-driven budgeting and forecasting

processes. This is especially true for IT departments, where corporate finance
systems are incapable of providing the granular detail needed for managers to make
data-driven decisions.
. Organizations are adopting cloud and SaaS tools in greater numbers, but are leaving
money on the table by either overprovisioning instances and accounts, or leaving
them on when they’re no longer being used.

Apptio is designed to help technology, business, and finance leaders gain comprehensive
visibility of their technology investments, regardless of technology stack, delivery, or
development model.

This guide will explain how leading organizations use Apptio to view budget allocations
and spending, find areas for optimization and cost reduction, and steer investments to
the most strategically imperative initiatives.

Apptio.com
 The spreadsheet-driven budgeting process
Creating a budget starts with gathering data. Finance leaders use prior-year expenditures and forecasts to create a
baseline budget. Budget owners then build from that baseline, estimating and projecting out current-year expenditures
to establish a budget for the next fiscal year.

For IT and software departments, budget expenses are typically allocated into five main categories: labor, contracts,
assets, projects, and miscellaneous expenses. When using spreadsheets for budgeting and planning, IT finance analysts
pull this information from disparate systems — HR, ERP, CPM, time tracking systems, and others — and normalize it,
creating complex sheets with embedded macros and pivot tables that present the data in a format which makes sense to
budget owners.

This approach has several drawbacks:

. The process is manual and time-consuming, prone to human error, and often takes months to complete.
. The data represents only one point in time; Cloud and SaaS consumption can change rapidly, from month to month or
even hour to hour.
. There is no relationship with expenses or business outcomes.
. Data is extracted from corporate finance systems that were not designed to capture this information with the level of
detail technology managers need to make informed decisions.

Additionally, macroeconomic conditions are changing — quickly. The budget that took weeks and months to process
can be rendered completely irrelevant just a few months later by changing prices, staffing shortages, and supply
chain disruptions.

The spreadsheet-driven planning process

Figure 1: Spreadsheet-driven planning process flow

2 How IT Finance Leaders and CIOs Can Analyze Spend, Optimize Costs, and Improve Agility Apptio.com
 Re-planning, and re-forecasting
Once the IT budget is set, what happens when markets
suddenly change? IT managers engage in a process
to re-plan projects and find ways to reduce costs.
The process often begins with a mandate from senior
executives. For example, if economic conditions
change: Senior leaders assess the impact and severity
to business operations, a decision is made to reduce
costs, and a directive is issued for IT to cut expenses.
After a target is set by corporate finance — such as,
reduce costs by 25% — IT finance then pulls data from
disparate systems to refresh the budget spreadsheets.
The data is normalized and aggregated manually and
sent to the VP of IT for scenario analysis. But that
analysis is challenging because the data represents only
one point in time, with no indication of the relationships
between expenses. In addition, there is no view of how
the plan aligns to the target data set.
Inputs and comments are made by managers and
sent back to IT finance. Templates are often broken
at this stage, with conflicting or confusing comments,
and spreadsheets are sent back and forth asking for
clarification. Answers are captured and integrated
manually. In large departments, where there could be
hundreds of budget owners, this process is slow and
tedious, with limited collaboration between managers.
Apptio is designed to overcome the challenges of spreadsheet-
driven budgeting, forecasting, and scenario planning. It does
this by ingesting data from disparate sources and intelligently
structuring that data, so that stakeholders across the business
can visualize spend and better analyze, optimize, and plan
technology investments.
3 How IT Finance Leaders and CIOs Can Analyze Spend, Optimize Costs, and Improve Agility
Once questions are answered, the VP of IT updates and
resubmits the budget forecast. IT finance aggregates
the changes and forwards to corporate finance.
Submissions are reviewed and questions sent back.
At this stage, there are several challenges: Since this
process is driven by spreadsheets, with no sure method
of version control, the back-and-forth must be repeated
until all three — corporate finance, IT finance, and the
VP of IT — agree the data is as accurate as they can
make it, and the plan is finalized.
Once a full planning cycle is completed, if another
significant event occurs, the process must be repeated.
For CIOs to respond to change, they need quick
access to relevant data to make informed decisions.
Spreadsheet-driven budgeting and scenario planning
is slow. The data lacks the detail and insight to
provide full visibility into the IT budget that is
needed for accelerated decision making. For these
reasons, many senior IT leaders are implementing
dedicated IT financial management systems. This is
such a widespread issue that Gartner predicts 70%
of successful CIOs will have a dedicated IT financial
management system in place by 2024.3
Apptio.com
 Data ingestion
Data is the basis for planning. When it comes to
determining IT costs, there can be many data
sources that contain the information needed
to make accurate cost calculations. The Apptio
platform ingests and unites data across disparate
sources and dimensions automatically into a
meaningful structure.
Cloud service providers like AWS, Azure, and
Google Cloud generate detailed billing reports that
account for every service used by the hour, or even
by the minute. This results in millions of rows of
relevant, yet impossible to decipher, information
that needs to be organized in a meaningful way.
Apptio Cloudability is designed to specifically
handle this data, ingesting, normalizing, and
structuring billing data across the major cloud
providers.
Figure 2: Apptio data ingestion through Datalink
4 How IT Finance Leaders and CIOs Can Analyze Spend, Optimize Costs, and Improve Agility
For other common IT tools, Apptio automates
the data ingestion process through Datalink.
First, IT managers configure data sources based
on their IT environment. Then, through software
connectors, Datalink uses Extract, Transform,
Load (ETL) operations to ingest data from those
sources. General connectors for SQL and Excel are
included with Datalink. Specially built connectors for
commonly used IT systems like ServiceNow, Oracle,
SAP, and Clarity are also provided. For uncommon
data sources, where a pre-built connector is not
available, Datalink provides the capability for IT
managers to create custom connectors. Once
Datalink is configured, the connectors pull in
data at user-defined intervals. The frequency
of the intervals — monthly, weekly, or daily — is
customizable by data source.
Apptio.com
 Structuring the Data
Once data is ingested, it must be organized and dynamic, flexible, and time-adjusted rules. This logic
structured in way that aligns expenses to how the can be based on the existing TBM taxonomy or custom
business operates — mapping costs to a team, a service, business logic rules.
or a set of applications.
Once built, the cost model then forms the basis for
Apptio provides a standardized taxonomy that aligns budgeting and forecasting.
with common IT functions and creates a consistent
This standard taxonomy and cost model eliminates the
cost model. It is based on a standard maintained by the
manual effort of data gathering and aggregation and
TBM Council, a nonprofit business entity dedicated
provides detailed information to IT budget owners,
to advancing the discipline of Technology Business
enabling them to make informed decisions.
Management — a way to connect business value to
technology investments.

In Apptio Cloudability, this is delivered through

Business Mappings — where organizations can map
complex business logic onto cloud spending with

The Apptio TBM Taxonomy

Business Units Business Architecture Customers & Partners

Revenue Non-Revenue Business Business

Product Lines Digital Platforms

Business View
Generating Generating Processes Capabilities

Solutions

Applications Products Services

Workplace Business Shared & Corporate

Delivery Platform Infrastructure

IT View
Towers

End User Application Delivery Security & Compliance IT Management

Finance View

Data Center Network Compute Storage Platform Output

Cost Pools

Internal External Outside Facilities Internal

Hardware Software Telecom Other
Labor Labor Services & Power Services

Figure 3: The TBM Taxonomy provides standard, benchmark-aligned IT categories

5 How IT Finance Leaders and CIOs Can Analyze Spend, Optimize Costs, and Improve Agility Apptio.com
 Cost Allocation Methods

As cost data flows up the layers of the taxonomy, cost calculations and allocations become more granular and complex.
For example, cost data maps in a straightforward way into the first two layers (cost pools and IT towers). But as the data
is further divided through the applications, products, and services layers — and the myriad sub-categories within — the
calculations become more complex, accurate, and meaningful. Several cost allocation methods can be used, depending
on the preferences, maturity, and needs of the organization. These range from assumption-based calculations, to
weighted attributes, to sophisticated consumption-driven metrics.

Assumption-based Attribute-based Consumption-based

Costs routed based on assumptions Costs weighted by an attribute of an item Cost allocated by measured consumption

Labor costs allocated using a 25% / 75% Data center cost allocations weighted by # of Data center costs allocated based
spread across Wintel and Unix Compute CPUs or kWh power rating on measured power consumed during month

Data center costs estimated with a Desktop cost allocations weighted by desktop Server costs allocated to applications based on
“rate card” value (e.g. $50/kW-mo) make/model total compute hours per month

Application support labor costs allocated to Application support labor cost allocations Application support labor costs allocated to
applications based on “peanut butter spread” weighted by size or complexity of an application applications based on support tickets

Business application cost allocations
Business application costs allocated across LOBs
weighted across LOBs based on # of assigned
based on % revenue
login accounts
Business application cost allocated across LOBs
based on # of business transactions
per month

Figure 4: Cost allocation methods and examples

Budget automation and workflow

Once the cost model is established, new budget plans can be created in Apptio. The budget process owner — in most
cases, a member of IT finance — creates a plan and sets targets. Budget owners, of which there could be many, input
data to carry out and support their projects and submit their plans for approval. Up to five levels of approvals can be
configured. Once all approvals have been received, the budget process owner finalizes the plan.

Apptio’s data ingestion process and integrated workflow simplify each step in the process.

Create a plan
At the beginning of the planning cycle, Apptio enables the budget process owner to create a new budget plan in the
application. The business process owner defines the plan type (budget or forecast), start year, length, baseline (from an
existing budget plan or prior forecast), and name.
The plan is populated with data, organized based on reporting structure and department hierarchy as defined by the
organization. This eliminates the manual effort of data aggregation. Once the plan is created, the business process
owner has a comprehensive view of the budget, and can adjust the baseline (if desired) and set plan targets for each
department.

6 How IT Finance Leaders and CIOs Can Analyze Spend, Optimize Costs, and Improve Agility Apptio.com
 Edit plan and submit
After the budget plan is opened, Apptio notifies
each budget owner. This signals the budget owner
that a plan is awaiting their input and begins the
budget automation process. Inside Apptio, budget
owners can see all the elements of the budget — the
hardware costs, software costs, labor costs, projects,
contracts, and miscellaneous expenses — that
represent their group or sub-group. From there, each
budget owner enters data for the planning timeframe
and submits the plan for approval.
Review and approve
Submission of a plan by a budget owner initiates
the review and approval step. Each approver in the
workflow then reviews the plan, and either approves
it, or returns it to the submitter with requests for
changes.
The process is repeated, each approver being notified
when the previous approver in the workflow accepts
the plan, until the final approver has signed off.
Finalize plan
Upon final approval, the budget plan is returned to
the budget process owner. The plan is marked final
and budget owners are notified. Then, a new baseline
is established, and budget owners can measure their
progress against plan and spend versus budget as the
planning period progresses.
Forecasting
Forecasting in Apptio follows the same process flow
as budgeting: A forecast is created. Budget owners
input data and submit the forecast for approval.
Approvers review and either accept the forecast
or return it with requests for changes. Finally, the
forecast is approved and finalized.
By automating the budgeting and forecasting
process, Apptio eliminates the need to email
spreadsheets to budget owners, reduces manual
intervention, minimizes the risk of human error, and
accelerates the review and approval process.
7 How IT Finance Leaders and CIOs Can Analyze Spend, Optimize Costs, and Improve Agility
IT scenario planning
Most CIOs agree that today’s competitive marketplace
requires continuous planning and forecasting,
especially in times of major change. In fact, three out
of four CIOs (76%) surveyed during the COVID-19
pandemic said the ability to rapidly adjust plans (re-
plan) during the crisis was critical to their business, with
69% believing it will continue to be critical after the
pandemic.4
In whatever form — economic, physical, or social —
further disruption is almost certain to occur in 2022
and beyond. Change is best met with critical thinking,
wise planning, and swift action. These qualities require
agility and data. When it comes to IT budgeting and
scenario planning, however, manually reconciling
spreadsheets and disparate systems detracts from an
organization’s agility, adaptability, and overall fitness to
respond to uncertainty.
76%
of CIOs said the ability to rapidly adjust
plans during the pandemic was critical to
their business.
Apptio enhances IT scenario
planning through its platform
capabilities that surface insights
and optimization opportunities,
enable on-demand reporting,
and drive variance analysis at
the IT-specific level.
Apptio.com
 Dashboard insights and variance analysis
In Apptio, data drives the planning process. Throughout
the budget period (typically, the fiscal year), Apptio’s
automated data ingestion and cost model allows the
budget plan to be updated with actuals pulled from
corporate financial systems and other data sources.
Lag time in refreshing data, a common issue with
spreadsheet-driven processes, is nearly eliminated. This
enables budget owners to find opportunities to reduce
costs and to optimize resources much faster.
To simplify analysis, Apptio provides visualizations
and dashboard views through Self-Service Reporting.
Budget owners can toggle between multiple views and
quickly see performance against plan, both from a high-
level business-initiative perspective (see Figure 6), and
a line-item perspective (see Figure 7).
In addition, Self-Service Reporting enables budget
owners to author and share custom reports with
specific views that use data from actuals and the
current plan. Enabling any user to create custom
reports using real-time data prevents reliance on
admins (or other roles) to create a custom report in
Excel using potentially stale data. As a result, any
user can aggregate data and personalize reports to
answer nagging questions faster and uncover savings
opportunities.
Figure 5: View custom reports and visualizations side-by-side to answer questions faster
8 How IT Finance Leaders and CIOs Can Analyze Spend, Optimize Costs, and Improve Agility
Besides reporting, Apptio provides drill-down
capability for analysis. This allows budget owners to
unpack budget elements, diagnose specific variances,
and make adjustments that prevent budget overruns,
without waiting for the next forecasting cycle or
relying on guesswork.
Modeling and reallocation
When re-planning is required, budget owners
must look at their entire budget portfolio, reorder
priorities, add new projects, remove projects, and
reassign resources. Apptio allows budget owners to
create a new plan — based on their current plan —
and then model changes. They can add and remove
resources and projects, adjust spending allocations
across their project portfolio, and more.
Through plan modeling, budget owners can see
the results of changes at both macro and micro
levels. They can refactor changes, comparing
different scenarios and assessing the advantages
and disadvantages of each, until they have achieved
their objectives. This allows budget owners to align
their spending with business priorities and to reduce
expenses wherever possible.
Figure 6: A line-item perspective
Apptio.com
 Running Efficiently Everywhere
In the face of challenging economic times, 46% of CFOs and finance leaders surveyed by Gartner reported they planned
to scale up enterprise digital initiatives in the next two years. 5 (“They view digital technology as not only a smart long-
term bet but also a critical part of their strategies to address ongoing macroeconomic volatility.”) With this desire to
continue to invest in innovation, technology leaders must ensure that they are running efficiently — especially in the
cloud.

Many organizations are running highly efficient data centers with well-developed capacity planning practices that have
been developed over the past two decades. Today, these same organizations have also adopted cloud and SaaS tools to
accelerate innovation, and focus has shifted from maintaining data centers to building new capabilities. The challenge
is that the flexibility of Cloud and SaaS also makes it easy for many organizations to lose oversight into that spend. Idle
resources and unused licenses are often the first symptom, but oversized resources and not using committed spend
discounts can also impact the overall IT budget significantly — especially in large organizations that spend millions of
dollars annually on these important technologies. A good IT budget plan is more effective when these cloud resources
are being used efficiently.

Apptio Cloudability is a Cloud Financial Management (FinOps) solution that provides single-pane-of-glass cost visibility
across the major public clouds and interactive features that enable teams to own and optimize their cloud spend.
Cloudability ingests, normalizes, and structures billing data across cloud providers so that you can actively manage
spend and consumption to continuously improve the unit economics of running cloud. Cloudability enables technology,
finance, and business teams to optimize cloud costs and maximize the value of their public cloud strategy.

Apptio enhances IT scenario planning through

its platform capabilities that surface insights and
optimization opportunities, enable on-demand
reporting, and drive variance analysis at the IT-
specific level.

9 How IT Finance Leaders and CIOs Can Analyze Spend, Optimize Costs, and Improve Agility Apptio.com
 CHRISTUS Health – A case study in
transformative IT planning
CHRISTUS Health is an international, faith-based,
not-for-profit health system with a mission to take
better care of people. As one of the largest Catholic
health care systems in the U.S., comprised of more
than 60 hospitals and long-term care facilities, 175
clinics and outpatient centers, and dozens of other
health ventures, the organization is focused on
driving advancements and innovations to improve
patient care.
The problem
We are no longer being asked ‘do I have
this budgeted?’ or ‘is this in there?’
Instead, budget managers are asking
for clarification about the value they’re
getting from services, the effect demand
has on specific areas of the budget, and
the impact of adjustments we can make
throughout the year. Apptio has helped
us get back to financial analysis, which is
where we longed to be.
”
Stephanie Rendon,
Director of Finance

The IT finance team struggled with a tedious manual

process of pulling data from payroll, contract, and
asset management repositories, creating multiple
password-protected spreadsheets, and meeting face-
to-face with CHRISTUS Health’s 35 diverse budget
owners, group cost center owners, and leadership
team. Reviews and revisions were handled via email,
where last-minute notes and requests were difficult to
track and sometimes missed. From start to finish, the
planning process typically required 5-6 months.

To help the organization better align budgets with

project and operational demands, improve business
unit engagement in planning, and address SaaS-
related shadow IT, the IT finance team needed to
streamline the planning process.

The solution

Leveraging a 12-week window between budget

cycles, the team was able to rapidly configure Apptio
and train managers in the new system, eliminating
the inherent inefficiencies involved in manual data
collection and improving visibility into IT spend.
Today, the information management team at
CHRISTUS Health is using Apptio to build stronger
relationships with business units, support smarter
spend strategies, and foster increased accountability
among budget owners.

10 How IT Finance Leaders and CIOs Can Analyze Spend, Optimize Costs, and Improve Agility Apptio.com
Get Started
Apptio’s products empower business leaders to drive optimal financial performance
across their organizations. More than 60 percent of Fortune 100 enterprises trust
Apptio to manage spend across the entire IT portfolio and beyond, so that they can
focus on delivering innovation. Apptio automatically ingests and intelligently structures
vast amounts of enterprise and technology specific spend and operational data and
enables users across disciplines to report, analyze, plan, and govern their investments
collaboratively, efficiently and with confidence.

For more information, please visit Apptio.com/get-started

References
1
“Gartner Survey of More Than 1,000 CIOs Shows That ‘Fit’ Enterprises Will Win When Business Conditions Turn.” Gartner press
release. October 22, 2019. Accessed June 15, 2020. https://www.gartner.com/en/newsroom/press-releases/2019-10-22-gartner-
survey-of-more-than-1000-cios-show-that-fit-enterprises-will-win-when-business-conditions-turn
2
“Gartner Survey Reveals Significant Shifts in CEO Thinking on Sustainability, Workforce Issues and Inflation in 2022” Gartner press
release. May 18, 2022. https://www.gartner.com/en/newsroom/press-releases/2022-05-18-gartner-survey-reveals-significant-
shifts-in-ceo-thinking-on-sustainability-workforce-issues-and-inflation-in-2022.
3
”Gartner: Build a Focused ITFM Cost Model and Use a Simple Allocation Approach to Deliver Rapid Value.” 7 February 2020, Robert
Naegle, Chris Ganly
4
Apptio CIO survey 2020.
5
“Gartner Says 78% of CFOs Will Increase or Maintain Enterprise Digital Investments Through 2023 Even if Inflation Persists”
Gartner press release. May 25, 2022. https://www.gartner.com/en/newsroom/press-releases/2022-05-19-gartner-says-78-
percent-of-cfos-will-increase-or-maintain-enterprise-digital-investments-through-2023-even-if-inflation-persists

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