Digital transformation has become a ubiquitous phrase in the technology industry, sprinkled liberally throughout conversations. It sounds pioneering and metamorphic, but often the reality fails to reflect the vision, and nowhere is this more apparent than in the way that technology costs are managed. The IT finance department has become more prominent within the business owing to the growth of tech, but the way that they are using spreadsheets to manage spend is a key instance of traditional models persisting when they should be reassessed.
The fact is that digital transformation, while embraced as an overarching theory by many businesses, is not actually being played out in the day-to-day running of individual departments. The wisdom of the concept is accepted: digital technology providing solutions to traditional problems. However, the translation of this into the business has been much slower to appear, and the use of tools like spreadsheets are a prominent example of this.
Gartner predicts that by 2022, businesses will spend $3.9 trillion on IT, which reflects the global uptick in technology usage. With such significant growth in technology costs, spreadsheets are too cumbersome, slow, and time-and-skill intensive to provide the constant and agile support necessary to support digital business transformation.
Agility is key in IT
In an era where agility is an imperative, not just a nice-to-have, IT finance departments that continue to use spreadsheets to organise and analyse their costs are likely to fall behind. This approach is particularly problematic in the arena of technology, which requires greater flexibility of management because digital transformation means it is constantly changing.
One way of adapting to this complicated new landscape is by implementing the practice of Technology Business Management (TBM), a discipline designed for the advancement of digital transformation. Using a TBM framework, IT finance departments can get a transparent view of costs to manoeuvre more quickly and reduce unnecessary spend, and identify areas of business growth, increased customer value, and competitive differentiation.
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Digital transformation requires agility to efficiently adopt and adapt the right cloud strategy to meet business needs, or pivot quickly to new tools or processes in order to drive innovative results. Yet spreadsheets simply aren’t a strong enough base upon which to build a TBM approach. They’re too clunky to empower businesses to be agile because of the sheer time that must be invested in order to glean any actionable insight from vast reams of data, which is manually managed and often prone to human error. This is particularly true where the various sources of data are all siloed from one another in separate documents and spreadsheets.
Get a clear picture of costs
To deliver value and support strategic technology investments, IT finance teams must see beyond individual data points to understand the context and analyse what it means for the business. This needs to be presented in an intuitive, intelligible format so teams can plan, analyse, and optimise their approach.
While cloud is often a critical part of embracing digital transformation, cloud spend can easily and quickly spin out of control. Utilising cloud requires thousands of lines of data to be tracked in by-the-minute billings, and when most organisations are using multiple cloud vendors, efficiently managing multi-cloud spend using spreadsheets is a near impossible task. Similarly, many businesses have hundreds of software licences and applications, among other digital services, creating ever more strands of costs for IT finance to manage. And while having the data on spend to provide a holistic view to the business can be helpful, it still doesn’t incorporate the fully burdened costs of running such applications – the labour, compute, network, security, and other resources necessary to keep them functioning properly.
Spreadsheets are a static, cumbersome tool that cannot hope to provide the level of actionable insight and oversight that the business needs.
The death of the disjointed office via technology
IT needs to articulate cost, value, and quality of technology investments
The need for an alternative is clear, and there are modern tools available that are more in line with the practices of TBM. These tools can enable the necessary shift for the IT finance department from cost centre to value creator. IT finance needs to be a partner to the rest of the business, but if they are stuck using time-intensive and legacy tools like spreadsheets to manage spend, they can’t hope to have time left over to look at the broader strategy for the business, nor assess how IT finance can best feed into fuelling digital transformation.
If the system of record for IT finance is lagging behind burgeoning technology innovation in other business units, how can IT hope to drive smart investment decisions for the business? To enable digital transformation, IT finance needs to embrace modern tools that empower them to go beyond being a simple cost centre.
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In today’s digitally-driven landscape, digital transformation needs to be more than a buzzword. The IT team should be at the forefront of the business, pushing forward innovation and demonstrating value in the products and services that they provide and manage. Legacy tech such as spreadsheets needs to be phased out for this to happen – and companies like Unilever have been able to do so using TBM, freeing up 20% more budget to be specifically spent on digital innovation.
Businesses need to ditch the spreadsheets and manage modern technologies with a framework that is purpose-built to help run the business of IT. A move away from spreadsheets and towards modern alternatives such as TBM will help IT finance optimise costs, accelerate delivery and clearly articulate the cost, value and quality of technology investments in pursuit of digital transformation.
Written by Henrik Nilsson, Regional VP, Apptio
