1. Technology Business Management
TECHNOLOGY BUSINESS MANAGEMENT
EXECUTIVE SUMMARY
This management summary condenses the second part
of chapter two of Technology Business Management:
How Innovative Technology Leaders Apply Business
Acumen to Drive Value, an eBook published by the
Technology Business Management (TBM) Council. It
discusses the foundational roles and responsibilities
required to optimize value creation and delivery under the
services-based technology business models defined by
TBM. These roles include service portfolio managers and
service owners who help make our business partners
successful and keep them satisfied with our services;
business relationship managers and business process
owners who define business value and manage demand;
and IT finance professionals who provide financial
analysis and advice to help optimize investments in our
service portfolios.
Optimize Your Team to Manage Supply and
Demand
Technology Business Management (TBM) is a practical,
applied approach for maximizing the value received from
every dollar invested in IT. At the core of TBM is the TBM
Framework, a decision-making methodology that helps
technology leaders and their business partners collaborate
on optimizing how IT dollars are spent.
The implementation of TBM often accompanies a
broader transformation of an IT organization. As
technology leaders, it is up to us to define a compelling
and unique value proposition, determine the right
technology business model, and establish an effective
model for managing a service portfolio. However,
although these objectives must be driven from the top
down; they depend on distinct roles and responsibilities
within an organization, which may not exist prior to
making the transition to a services-oriented technology
business model. In general, these roles fall into three
categories
• Supply-side roles such as service owners and
service portfolio managers, who focus on optimizing
the cost and quality of our services as a means of
running the business more cost-effectively—core
TBM disciplines discussed in the first management
summary in this series.
• Demand-side roles such as business relationship
managers and business process owners, who focus
on increasing the value of services to help grow and
change the business through increased innovation
and agility—also covered in the first management
summary in this series.
• IT finance professionals, who provide the financial
expertise and analysis needed for informed decision
making across both supply-side and demand-side roles.
Other IT roles are also evolving to be more services-
centric and value-aware, including those for technology
procurement, capacity management, and enterprise
architecture.
Managing Supply: Service Owners and Service Portfolio
Managers
Service owners are similar to product managers at a
software company. They are accountable for the success of
their services, as defined by established key performance
indicators (KPIs). Effective service owners:
• Understand their markets, including customers and
potential customers.
• Create a clear value proposition for each service.
• Monitor alternatives to existing services—both from a
competitive perspective and as potential replacements
for existing services.
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Optimize Your Team to Manage Supply and Demand
management summary

2. Technology Business Management
• Rationalize the resources (such as applications) that
are used to deliver services.
• Establish different service level packages (or tiers of
service) to more cost-effectively meet the distinct
needs of different business partners.
• Manage the costs, budgets, and financial performance
for services and service-level packages.
• Set prices or rates for communication to service
consumers (via chargeback or showback).
Service owners own the entire life cycle of the service.
Without this perspective, service owners will struggle
to apply appropriate portfolio management discipline,
especially with regard to making investments in new
services and service packages and recommending
that services be retired.
Service owners also are responsible for improving the
financial performance of their services, in effect moving
them “to the right” in the service portfolio investment
matrix (Figure 1). This includes right-sizing investments
in each service. (Note: The service portfolio investment
matrix is described in detail in the previous management
summary in this series, entitled Technology Business
Management: Build Your Foundation Based on Value.)
In general, service owners are not responsible for the
day-to-day operation and support of services. Instead,
they work with other supply-side roles to ensure that
services are performing according to expectations and
commitments.
Service portfolio managers work with service owners
and business relationship managers (discussed next)
to manage a service portfolio. Together, they set the
strategy for delivering on the IT organization’s unique
value proposition, which in turn should support the
company’s business strategy. Service portfolio managers
also define how service performance is measured
and communicated, which may include the use of the
following KPIs:
• Service level achievement. This is defined as
performance to service level agreements that
have been negotiated with business partners.
Components of such agreements can include
service availability, incident response times, bug
fixes and enhancements, measures of security and
compliance, and so on.
• Customer satisfaction. This is defined as the
percentage of users who are satisfied with the service.
This is often measured through periodic user surveys.
• Unit cost reduction. This is defined as the decrease
in per-unit costs for providing the same service (or
essentially the same service) over time. Unit costs
should decrease due to improved efficiencies,
economies of scale, and other factors. Major
enhancements may require a new baseline for unit
cost reduction.
• Service budget management. This is defined as
whether the total costs for delivering the service
remain within the quarterly and annual budgets for
the service. This requires a services-oriented budget,
which is often different than the budget managed in
the general ledger.
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Optimize Your Team to Manage Supply and Demand
Figure 1. Service owners are responsible for improving the financial performance of their
services.

3. Technology Business Management
• Service level “profit-and-loss”. This is defined as
the difference between the cost of providing a service
and the amount recovered from the business, or
via comparison to third-party benchmarks such as
external service providers or industry peers.
• Investment portfolio alignment. This is defined as
the ratio of spending in services according to overall
investment goals, as determined through business-
aligned classifications. This requires classifications of
services, projects, and other investments according to
global business capabilities, business strategies, and/
or other established targets.
Managing Demand: Business Relationship Managers and
Business Process Owners
After services have been defined and their ownership
established, the business relationship manager is
responsible for linking the supply of those services with
business demand. While service owners and service
portfolio managers are accountable for the success of what
we deliver, business relationship managers help make our
business partners successful and keep them satisfied with
our services by:
• Liaising with business partners to understand their needs
and business plans.
• Working with service owners, enterprise architects,
business process owners, and others to define and
propose solutions to new business problems.
• Communicating the business value and the cost of
services in the service catalog.
• Assessing and negotiating business demand for our
services.
• Identifying and addressing service-related issues
by working with service owners, service managers,
enterprise architects, and others.
Business relationship managers are similar to the account
managers of a services vendor. They listen to their customers
(our business partners), understand their business plans and
pains, and propose solutions. They also own the service
catalog and identify the need for new services in the pipeline.
In this regard, they also influence supply.
Business relationship managers are authorities on
demand patterns and trends. They serve a critical
demand-management role by prioritizing what is most
important for our business partners, communicating the
cost of service choices, and helping close or defer low-
value requests. Of course, they must remain mindful of
technical and other supply-side constraints as they work
to ensure customer success.
Business process owners also play a key role in managing
demand. They may reside in a shared services organization,
where they are responsible for the design, implementation,
continuous improvement, and promised benefits of their
processes across the company. Because such processes
are usually high-value and differentiated, business process
owners should be paired one-to-one with service owners for
the services that support their business processes. In such
situations, service owners may not interact with business
relationship managers, instead working directly with business
process owners to provide the necessary linkage between
the supply of services and the demand for those services by
the business.
Together, business relationship managers and business
process owners are responsible for defining value and
managing demand. At first, it may seem counterintuitive to
make these roles responsible for defining value. However,
value is a function of business need, and these roles are
the essential bridge between our services and the business
processes that they support. In this way, business process
owners and business relationship managers are responsible
for the business value and the demand dimensions of the
service portfolio investment matrix—with the goal of moving
investments to a position in the matrix that denotes the
delivery of greater business value (Figure 2).
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Optimize Your Team to Manage Supply and Demand

4. Technology Business Management
The following KPIs are applicable to business relationship
managers and business process owners:
• Service level achievement. This is defined as
performance to service level agreements for all services
provided to a business partner.
• Business partner satisfaction. This is defined as the
percentage of services for which the business partner’s
end users are reporting satisfaction.
• Business planning. This is defined as the percentage
of services provided to a business partner for which a
documented business plan and demand estimate exists.
• Service budget management. This is defined as
whether the total costs for delivering the service remain
within the quarterly and annual budgets for the service.
This requires a services-oriented budget, which is often
different than the budget managed in the general ledger.
• Business partner-level “profit-and-loss”. This is
defined as the difference between the cost of providing
services to the business partner and the amount
recovered from that business partner. (This can be
applied to both charging back for service delivery and
performing showback.)
• Project performance. This is defined as performance-
to-plan for projects that are performed for the business
partner. This should include projects that are delivered
under agreements with the business partner, such as
those included in professional services offerings.
• Economic value added (EVA). This is defined as total
profitability from the operations of a business unit from
the perspective of the shareholder. (This KPI can be
employed only if EVA measurements are supported by
corporate finance.)
IT Finance: Facilitating Business Decisions
Traditionally, finance professionals within an IT organization have
created and managed the IT budget within parameters set forth
by corporate finance. They may also own IT asset management
and procurement functions, including approval of purchases
and tracking of assets. For many IT organizations, such
responsibilities have been served by a controller-level function.
To enable more meaningful decision making, an IT organization
needs a CFO of IT—a true financial advisor for business decision
making. This role must use many of the same techniques that
corporate CFOs employ, such as activity-based modeling,
business intelligence, portfolio analysis, cost restructuring,
and opportunity cost management, all of which are essential
to analyzing business value and thus to TBM. For many IT
organizations, this will require upgrading tools and skillsets.
This does not mean that every IT organization must have
such expertise. Instead, many IT organizations will rely on
corporate finance for this function. Regardless of specific
organizational structure and roles, corporate finance and IT
must align, work from the same source data, and employ
consistent approaches to financial decision making.
Other Roles Are Evolving
We have focused our discussion so far on the roles that are
deemed essential for managing supply and demand, which
often do not exist in organizations that have not made the
shift to a services-based model. However, other supply-side
roles are evolving to become more services-centric and TBM-
ready. These roles include:
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Optimize Your Team to Manage Supply and Demand
Figure 2. Business process owners and business relationship managers are responsible for
maximizing the business value of services.

5. Technology Business Management
• Technologyprocurement. Intheshifttodeliveringservices,
a category management approach for third-party sourcing
is often more effective because it changes the focus from
vendors to the needs of internal service providers. The
goal of category management is to maximize the value of a
product or service category by managing total costs, risk,
operational performance, and so on—not just the purchase
cost and quality of a technology.
• Capacity management. After services are defined and their
bills-of-materials are known, capacity management can be
employed to accurately translate business plans to capacity
requirements. As the costs associated with capacity-related
decisions become more clear, service owners can work with
capacity planners to more cost-effectively balance capacity-
related risks with capacity-related costs.
• Enterprise architecture. Enterprise architects also are
becoming much more cost-aware now that service owners
are holding them accountable for the costs associated
with their architectural standards. As tradeoffs between
the benefits of proposed architectural standards and the
costs of adherence to those standards become more clear,
enterprise architects can understand not only the impact
on the enterprise, but also the impact to individual services.
Combined with improved demand planning, this will help
IT organizations to better measure the business value of
proposed architectural changes.
Next Steps
So far, in this series of management summaries, we’ve
discussedouruniquevaluepropositions,technologybusiness
models,servicesandserviceportfolios,andfoundationalroles
and responsibilities, all of which are essential to TBM. These
foundational elements enable us to practice the disciplines
of the TBM Framework: understanding and benchmarking
true costs and performance, changing behavior through
transparency, and planning with greater confidence. The
roles and responsibilities we’ve described also directly relate
to the decision-making capabilities of the TBM Framework in
terms of optimizing both run-the-business and change-the-
business investments.
If you run a service provider or value partner organization,
or if you’re working toward becoming one, evaluate the
alignment and clarity of your roles and responsibilities. Do your
service owners understand their role in optimizing financial
performance? Have your service portfolio managers created
an effective model for making investment decisions? Have you
paired your service owners with business process owners to
collaborate on optimizing their business processes?
As Technical Advisor to the TBM Council, Apptio is committed
to the continued development and adoption of TBM. Apptio
has deployed its TBM software at more than 120 enterprises,
including industry leaders such as Bank of America, Boeing,
JPMorgan Chase, Microsoft, St. Luke’s Health System, and
Swiss Re. If you’re interested in learning more about TBM or
Apptio’s approach, Apptio can:
• Introduce you to the TBM Council and/or connect you
with TBM Council members.
• Provide access to the TBM Index™, an interactive
assessment for comparing your business practices to
those recommended by the TBM Council.
• Review your TBM Index baseline to help you create an
accelerated TBM roadmap.
• Show you how Apptio has helped innovative companies
in your industry automate TBM to manage the cost,
quality, and value of their IT services.
To learn more, contact Apptio by visiting
www.apptio.com/company/contact or sending an
email to info@apptio.com.
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Apptio is the leading independent provider of on-demand Technology
Business Management (TBM) solutions for managing the business of
IT. Apptio enables IT leaders to manage the cost, quality, and value of
IT Services by providing deep visibility into the total cost of IT services,
communicating the value of IT to the business, and strategically aligning
the planning, budgeting, and forecasting processes. Apptio’s TBM solutions
play a critical role in helping companies accelerate IT investment decisions,
cloud initiatives, strategic sourcing improvements, and other key business
initiatives. Global enterprise customers rely on Apptio® products and
services to reduce costs and align IT with business priorities. For more
information, visit the Apptio website or the Apptio blog at www.apptio.com.
Optimize Your Team to Manage Supply and Demand