September 28, 2021

Optimizing IT OpEx spend to fund digital projects

Opinion piece attributed to Ben Allard, Vice President & General Manager, APAC at Apptio

In the new norm of disruption, businesses are being asked by their board to find opportunities to redirect resources to fund digital acceleration and enable their remote workforce. This is requiring technology leaders to focus their attention on operational expenses that represent the best opportunities to shift or reduce spending in the short to medium term. 

However most organisations when tasked with finding cost optimisation opportunities rely on ad-hoc studies that are manual, time consuming and often don’t deliver the expected outcomes. They lack a sustainable and digital approach to support continuous optimisation.     

These challenges were highlighted in a recent report from Harvard Business Review (HBR) stating that only 62% of organisations surveyed are highly confident in their information when making budget decisions and 82% stepped up their investment in digital initiatives in response to the Covid-19 pandemic. And 25% of business leaders when identifying opportunities to fund digital are reevaluating and/or renegotiating IT supplier agreements to improve costs and flexibility.

Surprisingly, it doesn’t take long to change the status quo. Across their portfolio of clients, Apptio has seen that in less than 90 days, and as few as 30 days, companies can derive significant funding improvements. When CFOs and CIOs focus their efforts and are armed with tangible, real-time insights, it helps accelerate the identification, execution and benefits realization of optimization efforts. 

Working with our clients, Apptio has solutions focused on four key areas where services are procured from vendors, primarily operational expenses and incurred on a pay-as-you-go basis. These are:

  1. Cloud is part of every IT organisation-whether planned or not. Staying on top of your cloud consumption, usage patterns and cost with FinOps best practices is critical to avoid excess consumption, bill-shock surprises, waste, and cloud resource inefficiency.
  2. SaaS offers clear advantages that enable organisations to collaborate and scale. Most, however, are  now struggling to maintain control over their SaaS  license footprint and utilisation- creating further waste,  contract compliance complexity and introducing financial risk.
  3. Mobile telco bills are hard to understand and analyse given the volume of call data, yet they bear a vast savings potential through the monitoring of excess data and roaming charges, and the possible re-allocation of orphaned or zero use devices. This is especially important right now given the lack of international business travel and requirement for international roaming plans.  
  4. A critical part of any “Return to Office” post-COVID plan, is the need for IT to review and optimise their pre-COVID desktop device fleet against work-from-home mobile devices.  This also has the potential to reduce costs by eliminating duplicate, zero use or end of life devices.

Recently, a sizable Asian financial institution adopted Technology Business Management (TBM), an industry framework(1) powered by Apptio’s software solutions. They identified and cancelled 1,200 unused or excess service numbers in the first 30 days. Additional benefits of the TBM implementation include:

  • 50% reduction in time to answer ad-hoc questions about costs
  • 2% annual public cloud costs savings
  • Insights reduced vendor invoice validation time from 14 to 6 days
  • Established platform for continuous cost optimisation

Companies with a data-driven, sustainable and tool-enabled approach are able to drive continuous cost optimization to help them ride times of uncertainty. 

Now that disruption is the new norm, businesses need to align their cost base with customers and revenue projections and to be able to efficiently manage their business on a  turn-of-the-tap basis. Critically though, the sooner you gain a grip of what your outgoing expenses in IT are, the more money you’ll save across the entire organization.

To help CIOs and CFOs in the region understand TBM, Apptio and KPMG hosted a webinar to share information about how TBM functions in IT organizations. KPMG APAC leaders joined a panel discussion to share common challenges faced by organizations when adopting TBM, including how to balance control and flexibility when it comes to the public cloud.