Presentation from State of Iowa's Cost Transparency Journey at ITFM Week 2014

May 1, 2014
Effective Cost Transparency from
Imperfect Data
Todd Tucker – TBM Council/Apptio
Kevin Teets – Apptio
Deb Krueger – State of Iowa

The Importance of Why

“Why” Questions in IT?
Why do we need so much
tier 1 storage?

Business Capabilities
Business Services
Technology
Services
Application Services
Platform Services
Infrastructure Services
Projects
Resources
FinanceViewITViewBusinessView
Cost Pools
General Ledger (Chart of Accounts)
Cost Model
Business
Capabilities
Business
Services
Technology
Services
Resources
Value Chain Model
Why? How? What? Our Value Chain…

IT Cost Transparency is not about
What does IT cost? It’s about…
WHY does IT cost what it does?
– and –
HOW can we use our money and other
resources to create MORE VALUE?

Transparency Every Business Needs For Fact-Based Decisions
© 2014 Apptio, All rights reserved6
“We knew more visibility would enable a change in culture and facilitate more
accountability. Every CIO should have the level of transparency that enables action.”
HAROLD BOUTIN, Senior Vice
President of IT Strategy and
Effectiveness, Equifax
A P P L I C A T I O N S
What does it cost to provide each product and service?
S E R V I C E S B U S I N E S S U N I T S
L A B O RV E N D O R S
S P E N D D A T A Q U A L I T Y
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011001
010110
P R O J E C T S
I T T O W E R S
What are the costs and KPIs of our key business disciplines?
Who is consuming how much of what?

What Questions Can You Answer with Transparency?
A P P L I C A T I O N S A N D S E R V I C E S B U S I N E S S U N I T S
 What is driving the costs of our top 10 apps?
 What are project vs. run costs for these apps?
 What are cost levers for reducing cost of this app?
APPLICATIONS
 Which cloud services are we spending most on?
 What is our cost per vendor for this service?
 How do our IaaS costs compare to Amazon’s?
SERVICES
 What is our investment level per BU?
 What does it cost to deliver these apps to this BU?
 Where do we spend the most per employee?
BUSINESS UNITS
 How much are we investing for innovation?
 How are we performing against project KPIs?
 Which projects are exceeding planned resources?
PROJECTS
 What is driving our run costs?
 What is our cost per GB of tier 1 storage vs. peers?
 Are we trending toward greater cost-efficiency?
IT TOWER
 What types of vendors are we spending most on?
 Are we leveraging preferred providers?
 How are we doing against spend targets?
VENDORS
 Which costs are within our control?
 Where are largest sources of plan variance?
 What is driving plan variance?
SPEND
 What is driving labor costs by role, location?
 How are we doing against our staffing plan?
 Where are we using our staff?
LABOR
 Where are our cost blind spots?
 Which data from what systems don’t line up?
 Which data is getting stale?
DATA QUALITY
F O U N D AT I O N
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FINANCEIT
EXECS
TOWER, APP &
SERVICE OWNERS
BUSINESS

Where and When Would Better Cost Transparency Have An
Impact For You?
 Questions from the business
 Initiative (M&A, ERP migration…)
 Business Case
 Infra choices by app teams
 Requests for capacity
 Quarterly Business Reviews
 Annual IT and Business Planning
 Project Portfolio Prioritization
 Exec / Leadership Meetings
 Capital Review Board
 Demand Planning
ANNUAL AND QUARTER
 Plan variance analysis
 Management reporting on
progress against targets
MONTHLY AD HOC

The Business Value of Transparency
Clorox Co. has promoted CIO Ralph Loura
to senior vice president and added him to
the company’s executive committee.
“We’re a 100-year-old company and
for the first time IT is represented on
the executive committee directly,” he
said.
One way Mr. Loura has been able to help
shift the thinking about IT at Clorox is by
using a model of financial transparency
and fiscal discipline known as
technology business management.
– Rachel King, Wall Street Journal
http://bit.ly/WSJClorox20140426
Ralph Loura
SVP and CIO
The Clorox Company

What Does This Have to Do with Data?

Plan CapEx/OpEx Run/Grow/Transform Fixed/Variable Location/Regions Month/Quarter/Year
Cost Centers Accounts
General Ledger Line Item Detail
B R E A K O U T S
Standard IT Cost Categories
Application 1 Application 2
Application 3 Application 4
Application & Integration Delivery Services
Hosting Services Professional Services
Client Computing
Communication & Collaboration
Connectivity End-user Support
Records Management Business-Driven Initiatives Infrastructure Initiatives
Process Initiatives Compliance Initiatives
Your Applications Technology Services End User Services Project Services
COST TRANSPARENCY: APPLICATIONS AND SERVICES
Design & Develop Buy, Build & Deliver Market & Sell Service Customer Shared Services
BUSINESS CAPABILITIES
Business Unit 1 Business Unit 2 Business Unit 3 Business Unit 4
COST TRANSPARENCY: BUSINESS UNITS
= Peer Benchmarks Available
Hardware Software Internal Labor External Labor Facilities/Overhead Outside Service
FOUNDATIONApptio TBM Unified Model™(ATUM™)
IT TOWERS & SUB-TOWERS
COST POOLS
Data
Center
Compute
IT
Operations
Voice
Network
Delivery
Services
Security &
Compliance
User
Services
Data
Network
Storage Application
IT
Management
COST TRANSPARENCY: FOUNDATION
Wintel Servers
Linux Servers
Unix Servers
Locations
Mainframe
Tier 1
Tier 2
Tier 3
Tier 4
Office LAN
DC LAN
WAN
Internet
MAN
Voice premise
Wide Area Voice
Call Center
Project Mgnt
Client Mgmt
PCs
Mobile Device
Service Desk
Field Service
App Dev
App Support
QA (Testing)
Middleware
Software Lic.
IT Mgmt & Admin
IT Finance
IT Vendor Mgmt
Ops Center
Service Mgmt
Security
Compliance
Disaster Recov.
Architecture

Data and Allocation Methods (Example)
Hardware Software Internal Labor External Labor Facilities/Overhead Outside Service
FOUNDATIONApptio TBM Unified Model™(ATUM™)
IT TOWERS & SUB-TOWERS
COST POOLS
Data
Center
Compute
IT
Operations
Voice
Network
Delivery
Services
Security &
Compliance
User
Services
Data
Network
Storage Application
IT
Management
FOUNDATION
= Peer Benchmarks Available
Wintel
Linux
Unix
Locations
Mainframe
Tier 1
Tier 2
Tier 3
Tier 4
Office LAN
DC LAN
WAN
Internet
MAN
Voice premise
Voice WAN
Call Center
Project Mgnt
Client Mgmt
Workstation
Mobile Device
Service Desk
Field Service
Development
Support
QA (Testing)
Middleware
Software Lic.
IT Mgmt & Admin
IT Finance
IT Vendor Arch.
Ops Center
Service Mgnt
Security
Compliance
Disaster Recov.
Sub-Tower Composition by Cost Pool
Used to configure mappings & allocations from your unique GL
 Linux Hardware: Dev, Test & Prod Servers, Internal Storage…
 Linux Software: Operating System, Virtualization…
 Linux Labor: Engineering, Tech Support
Unit Metrics
 Per physical server, per logical server, per CPU, per CPU Core
Sub-Tower to Application Allocation
Allocation Data
 Good: App & server team estimates (top 20 apps)
 Better: Server list with supported apps (e.g. top 20 apps)
 Best: Server performance by app ID
Allocation Methods
 Assumptive: Appx % of all LINUX used by each app; or
 Data: 1:1 relationship of server to app; or
 Data: 1-many relationship, weight by avg. CPU usage
Linux

Challenges of Creating Cost Transparency
TRIGGERS
 Month end close
 Forecasts
 Project financial
 QBRs
 Ad hoc questions
MANIPULATE
DATA
 Clean and manipulate
 Create joins and mapping
 Find data problems
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3
BUILD
REPORTS
 Create pivots
 Build graphs
5
MAINTAIN
COST MODEL
 Build vLookups
 Debug Formulas
4
VERSION
CONTROL!
ORG
CHANGE!
Update
Own Cost
Spreadsheets
DATA
SOURCE
CHANGE!
VALIDATE/CLARIFY6
 Timing and categorizations
 What cost went where?
 Why is that in MY costs?
FINANCE
High:
$3.8m
Low:
$180k
DATA
OWNERS
High:
$225k
Low:
$18k
DEPARTMENT
OWNERS
High:
$108k
Low:
$11k
IT
EXECUTIVES
High:
$130k
Low:
$11k
PROVIDE DATA
 Extract
 Validate
2
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 Explain
 Fill gaps
PUBLISH
REPORTS
 Trick Excel into making
waterfall charts
 Annotate and distribute
7
REQUEST
DATA
1  Prompt IT and
corporate for data
extracts
ANSWER QUESTIONS9
 Answer requires more
granularity or different slices
 Answer requires more dats
(may become a “study”)
ASK QUESTIONS8
 Why did costs. KPIs change?
 What does this include?
 I need to see this slices by…
 What it…?
?
The cost of staff
time spent on
manual IT cost
analysis shows wide
range of breadth,
scope across
Global 2000 IT orgs

Which Comes First: Transparency or Good Data?
“There's no better way to
focus and prioritize your
cleaning up data like
assigning costs to it. If you
know that your ‘unknown’ is
costing you a lot of money
each month, you‘ll choose do
something about it.”
– Lance Warner
TBM Architect
First American Financial
Award for Business Transformation: First American Financial
TBM Conference 2013

May 1, 2014
Cost Transparency at
State of Iowa

Mission: Provide Iowans unified, comprehensive, value-driven
administrative services
 Responsible for infrastructure IT services to Executive branch agencies
 Goal of reducing the cost of government by 15%
 Consolidation of executive branch IT infrastructure functions is in focus
 Federal law requires all services sold to agencies be at a net zero recovery
 State agencies could approve/disapprove of certain rates charged by DAS-ITE
 Department of Management oversees rate setting, determines if rate changes are
allowable
 IT has proven more difficult for users of financial information to understand
Why Cost Transparency at State of Iowa

May 1, 2014
Working with Imperfect Data

Introduction
1. TBM ADVISORS –
MISSION STATEMENT
2. WHY AM I TALKING
ABOUT DATA QUALITY?
3. WHAT YOU WILL
GET OUT OF TODAY’S
PRESENTATION?

Challenges
Don’t want to start TBM
because of poor data quality
Do not have confidence
in the level of data quality
to defend the allocations
within the Apptio model
START NOW!
“A journey of a thousand miles begins
with a single step.”
– Lao-tsu, The Way of Lao-tsu – Chinese philosopher (604 BC – 531 BC)
EMBRACE FAILURE!
“Ever tried? Ever failed? No matter, try again,
fail again, fail better.”
– Samuel Beckett – Irish author, dramatist, novelist in France (1906 – 1989)

Apptio Data Quality Dimensions – Defined
MAINTAINABILITY
A measure of the degree to which data can be accessed
and used, and the degree to which data can be updated,
maintained, and managed.
UNIQUENESS
A measure of the number of distinct or unique values
within a field.
COMPLETENESS
A measure of the count and percentage of the fields that contain
a value. Example: A server Operating System has a value in
90 out of 100 records, Data Quality Completeness = 90%.
VALIDITY
A measure of the values within the data set compared to a set
of allowed valid values. Example: Test all values in OS to
a master set of valid values to ensure there are no outliers.
FREQUENCY
DISTRIBUTION
The distribution of unique values within a field by count and
percentage. For those values with a low frequency, consider
dropping them and changing to another comparable value.
APPTIO
ON DEMAND

Data Quality Ecosystem
Data Governance
Ownership (TBMO)
Data Advisor
Data Sources
Data Stewards
Change Management
Automation & ADM
Monitoring /
Measurement
Data Quality

Data Governance Organizational Model
OFFICE OF THE CIO
Executive
Sponsorship
Business
Strategy
Ownership
Strategic
LeadsData
StrategyPolicies
&Standards
Tactical
Technical&
Business
Process
OwnershipData
&System
Architecture
Data
Management
Stewardship
controlanddata
management
Data Governance Program
TBM Steering Committee
TBM Office
CROSS FUNCTIONAL WORKGROUP
DATA STEWARDS
OwnershipPolicy

Data Advisor
Data Advisor defines the
data that you need to
build out each
component within
Apptio, effectively acting
as the Master Data set
for each source.

Data Quality Integration into Change Management
Change
Management
• Maintainability
• Uniqueness
• Completeness
• Validity
• Frequency Distribution

Apptio Adaptive Data Management
DISPARATE RAW DATA
• Data checks
• Parse, filter
• De-dupe
• Create
• Change
• Join
• Auto-discover source
data relationships
• Map source to
model objects
• Visualize relationships
VALIDATE
AND CLEANSE
RELATEENRICH
RULES-BASED TRANSFORMATION
DATA INFERENCE
MODELS
& ANALYSES
EXTRACT
Connectors
(Cloud or
On-Prem)
CORRELATED MAPPED DATA
• Continuously adapts
to changing data and
analytics needs
• Data chain of custody
preserved and
documented
• Less time on data prep,
more time on analysis
and decisions
DATA QUALITY DIMENSIONS

Data Mapper
Data Advisor Master
Data fields that
support our Out of
the Box content
Customer data that
is mapped to Master
Data which enables
the fastest
configuration
possible

Data Foundations
Data Strategy
Data Governance
Source Systems
Data Quality Dimensions
Adaptive Data
Management
Data Quality
Index
Transparency
Owner
ship
Apps
GL
Completeness
Servers
Maintainabilty
Labor
Validity
Frequency Distribution
= DQ Ave % * Impact $$

Data Quality Workflow

Data Quality Dimensions – Dashboard
Drill into
any KPI for
additional
detail

Data Quality Dimensions – Maintainability
Answer 3
questions
to evaluate
score

Data Quality Dimensions – Uniqueness
Total number of
duplicate records

Data Quality Dimensions – Completeness
# blanks
per column

Data Quality Dimensions – Completeness
Slice into
each column
to discover the
rows causing
the errors
Export out for
remediation
Row count
is the same
as # blanks
above

Data Quality Dimensions – Validity
First –
configure
Settings
Invalid cells
are based
on values set
in Settings

Data Quality Dimensions – Validity Settings
Instructions
Values that
are new and
have not been
assigned

Data Quality Dimensions – Validity Settings
Assign “Valid”
or “Invalid”
as appropriate.
These values
serve as the
“Master” lookup
values
Change values
and click
Save before
moving on

Data Quality Dimensions – Validity
# Invalid
values per
column
Compare
against
expected
values

Data Quality Dimensions – Frequency Distribution
Instructions
and overview
of calculation

Review
Threshold
Row number
Set
Threshold
Value

Adjust slicer
settings and
insert Threshold
Rows KPI to
review items
for inspection

Data Quality Maturity

May 1, 2014
Data Quality Journey at
The State of Iowa

 Data comes from many different and varied systems
 HRIS, general ledger system, MS Project, eDAS, etc.
 Buy in is important!
 Culture change comes from executive decision that transparency is important
 Transparency cuts both ways:
 view into financial data, which can be powerful and useful for asking for rate
increases
 shines a flashlight onto data quality (or lack thereof…)
 Many stakeholders can have strong opinions about the data
 Don’t wait to begin transparency efforts due to data quality
Data Quality Is a Sensitive Subject

 Explained that financial data isn't 'perfect' and gets better with
everyone's help
 Managers have responsibility to review financial information
 Managers ask for help where numbers disagree with their 'gut' feelings
 Sometimes the financial data shows:
 something that might have been forgotten or…
 the financial data and/or allocations need to be adjusted
 Iterative process – no financial report is considered above question
Roadmap to Improve of Data Quality

 Semi-annual inventory of servers, ports, racks
 Ease the burden of reporting in ledger to having the costing tool (Apptio) provide
the costing analysis
 Allow billing to have additional 5 days each month to perform
 trend analysis
 review additions/deletions to prior month's file
 Build good relationships with technicians, so coding changes can be made
 Restrict access to 'master' data files
 Bring in software to build a CMDB (implementing ServiceNow)
 Monthly reconciliations to billing files and ledger to assure pass-through costs
are recovered
Outcomes to Date

May 1, 2014
Building Trust in Our Data

Steps to Improve Trust in the Data
 Beta test new models or major
changes
 Be transparent about data quality
 Account for every dollar
 Ensure report consumers
understand:
 how the costs were allocated
 how to interpret the reports
 what changes they can make
 Provide drill downs in your
reporting

May 1, 2014
Where To Learn More

Apptio Resource Center
Top 5 Reasons for Avoiding IT Cost Transparency
(May 6 Webcast)
http://bit.ly/apptiomaywebinar
Key Considerations in Data Model Whitepaper
http://bit.ly/apptiokcdmwp
Case Studies:
AutoTrader Group (http://bit.ly/apptioatg2014)
CME Group (http://bit.ly/apptiocmeg2014)
Freddie Mac (http://bit.ly/apptiofreddie2014)
Product Info:
Cost Transparency Foundation (http://bit.ly/apptioctfds)
Source Data Guide (http://bit.ly/apptiosdrg201404)

TBM Council
 TBM Conference in Miami
 Workgroups
 CXO peer groups for vertical
industries: FSI, Insurance,
Health, CME, Energy, High-
Tech
 CFO of IT, Planning &
Strategy, and Enterprise
Architecture
 TBM Book
 TBM Index
 LinkedIn Forum
(http://bit.ly/TBMGenMembers)www.TBMCouncil.org

TBM Conf 2014 Miami – fountain blue
2014
Miami
TBMconference.org
October 28-30

52
Thank You!
Todd Tucker
TTucker@TBMcouncil.org
Kevin Teets
KTeets@Apptio.com
Info@Apptio.com
Apptio.com

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