Taking IT Cost Tracking and FinOps to the next level

A CIO I interviewed recently told me candidly: “It’s always a bit nerve wracking when you go into a meeting with a set of top-level numbers that look very sound, but inside you’re dreading being asked to drill into the detail”.

It’s a sentiment we often hear from people in IT or engineering management roles. The number of moving parts and activity streams you need to account for to form an accurate view of costs is pretty daunting nowadays. Allocating those costs to different departments, systems and business initiatives is then another huge headache given the amount of infrastructure, resource and service sharing that has become normal over recent years.

Even when you appoint some unfortunate team member to spend hours or days of their life pulling the numbers together, reconciling inconsistencies and coming up with plausible allocation assumptions, the end result can still be inaccurate and incomplete, not to mention out of date. 

Against this background, I have personally become a little frustrated with all of the focus on ‘FinOps’ lately. Sure, many are experiencing runaway cloud services costs, which seem to be the pivot for a lot of FinOps conversations, but the cost of operating, modernising and extending data centre infrastructure and tooling hasn’t gone away. The same is true of core business and departmental applications running on premises. 

Overarching all of this, our survey work consistently highlights two other important considerations – the future is clearly ‘hybrid’, and value generally matters as much as costs to business stakeholders. Surely, then, it makes sense to take a more holistic view of IT financial management, including both business alignment and value, as well as costs.

If you haven’t guessed it yet, this is a hobbyhorse of mine, which is why I enjoyed a recent briefing that my colleague Tony Lock and I had with the guys at Apptio, who see the world in a very similar way.

If you’re not familiar with Apptio, it has provided what we might crudely call ‘IT spend management’ solutions for many years, and is well established with upwards of 1,800 customers. At the highest level, Apptio continuously sucks in information from the many sources of cost-related data, brings it all together, then allows you to model and analyse the numbers and allocate things out to cost centres and any other entities or activities you need to track costs against. This is my description, not Apptio’s, and I’m really not doing justice to the solution, but it’ll give you the basic idea.

And I make no apologies for starting at this level as in a survey of CIOs conducted by Freeform Dynamics at the end 2022, knowledge of this kind of solution was clearly very patchy, with relatively little actual adoption. The majority were still pulling data from business administration systems, traditional IT service management solutions and platform-specific cost/resource usage reports, then crunching the numbers in spreadsheets and/or generic analytics tools. Plus as an interesting side note, survey respondents reported more challenges with tracking and accounting in relation to shared infrastructure compared to public cloud services. 

Back to Apptio, the point of our latest conversation was to catch up with the way the solution set has been developing. Building on the company’s long-standing capabilities around cost transparency, planning, forecasting, and benchmarking, the scope has been expanded into new areas like product costing/profitability and cloud FinOps. 

I was particularly interested in the addition of Targetprocess to the Apptio family, an enterprise agile planning and portfolio management solution bought by Apptio in 2021. This helps organisations align agile delivery with strategic objectives. It’s obviously not the only solution in this space (think Planview, Broadcom Rally, etc), but having something like this as an integral part of a broader IT financial management suite is nice, especially when it sits alongside FinOps in the form of Cloudability – an earlier addition from 2019. 

Speaking of acquisitions, Apptio was itself acquired by IBM mid-2023, and the team says this has helped to accelerate both solution development and market reach. As part of this, work is underway to make the whole suite more accessible to smaller businesses. It’s probably not something for very small organisations, but lots of mid-size companies suffer from many of the same problems as large enterprises. Apptio is using techniques such as AI-based cost-modelling and assumptive cost allocation to provide new customers with out-of-the-box visibility and immediate insights that can be refined from there, i.e. short time to value and room to grow.   

While I’m not in a position to overtly recommend Apptio – we don’t do in-depth reviews – what I can say is that the company’s evolution is indicative of the way things are developing in this space in general. It’s therefore worth checking out either directly or via the work it does as part of the TBM Council, a non-profit organisation dedicated to advancing the discipline of Technology Business Management (TBM) through education, standards, and collaboration. Apptio founded the TBM Council  in 2012 and is a technical advisor to the member community.

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Dale is a co-founder of Freeform Dynamics, and today runs the company. As part of this, he oversees the organisation’s industry coverage and research agenda, which tracks technology trends and developments, along with IT-related buying behaviour among mainstream enterprises, SMBs and public sector organisations.