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When you’re meeting someone for the first time, do you choose the blue skies of Miami or the grey drizzle of autumnal London? I’ll give away the answer by saying that when Mallory Beaudreau and I exchanged small talk I was gently shaking the water from my raincoat. IBM’s Waterloo-based offices are a long way from the Technology Business Management Conference (TBMC) Mallory had just returned from.
Small talk out of the way, and with only the faint whiff of damp on my clothing, I explained why I wanted to meet in the first place. To know more about Apptio, an IBM division formed after its acquisition of the company for a cool $4.6 billion in August 2023. As Apptio’s Regional Vice President of Account Management, and having worked for the company in various forms for over six years, Mallory was undoubtedly in the know.
I started with the basics: how do you describe Apptio to someone when you meet for the first time? “It depends on who it is,” said Mallory. “To my mum, who spent 40 years at General Dynamics [an American aerospace and defence company] in accounting, I would explain you were supporting people all around the world. You had satellite technology. You had technology in the factories, building the tanks, you had all sorts of servers and databases with all of this data, right?
“Well, that all costs money and General Dynamics wants to make sure that every dollar… is maximising profit, maximising value, maximising innovation.”
The challenge is one of division: the people who use the tech and the team who invests in it.
“So if somebody at General Dynamics wants to know, what am I actually getting for this money, we need to marry those datasets. That’s what the Apptio products do. We’ve got several different products, but the fundamental question we’re answering is, let’s bring the cost of tech and the consumption of tech together so that you understand what you’re getting for your money and you can make better decisions about how to maximise value.”
At this point many CFOs will be shaking their heads, thinking it sounds awfully similar to their annual audits. And CIOs may be wondering if all this means is yet more information they need to navigate. Mallory, naturally, is having none of this.
“So you’ll have McKinsey come in and do a snapshot once a year, and you’re paying millions of dollars for the privilege. That’s good data, but it’s a snapshot in time,” she said.
There’s also the fact that people are often working in spreadsheets. “People can do brilliant things with spreadsheets, but it’s still a point in time and you’ve got version control [to worry about].
“I need 20 different teams to validate the budgets, and now I’ve got 20 different spreadsheets, and there’s still a point in time, and so every business is asking that question, what’s the value for money for my tech?
“What we’re doing is we’re making that programmatic. We’re bringing together all of these data sets automatically, mapping them automatically, and allowing you to actually get insight, rather than just look at the data.”
All this, I pointed out, sounds awfully similar to what AI is promising companies: that its models will consume their lake of data and make sense of it all. So what’s the extra that Apptio brings compared to what organisations can achieve with a well-tuned AI model?
“There are some orgs, maybe some people within orgs, who think that if you toss all of your data into a big data lake, and just ask AI to query it that you’ll get insight,” said Mallory. “I have yet to see that be true. I think there might be some edge cases, or maybe you could train an agent to do a specific task, but [even there] you are still going to need a human touch to adjust the model to your business, and then also you need humans to take those insights and action them.
“And it is far easier to do that in a platform where you can all look together. You can click. You can drill in, drill in, drill in. Look at it from a different angle, take those insights and move them into an actual business decision.”
She was also keen to point out that one of Apptio’s announcements at TBMC was how Apptio is using AI to enhance its own products. “Nobody has clean data,” she points out, but thanks to Apptio’s experience with “thousands of deployments and tens of thousands of data sets” it understands the patterns to look for.
“What we’ve launched is automated data mapping so that you can toss it all in. And now, intuitively, we can say, actually, we think it goes here. We think it goes there. Now you you tweak it, you customise it. All of a sudden the time to value is so much faster.”
Having dealt with the big picture so far, I wanted to know whether Mallory could point to a real-world example of how Apptio was helping a specific organisation. Which is a little tricky, as most orgs like to keep their cards close to their chest when it comes to tools that give them a competitive advantage – although we know that around 60% of Fortune 500 companies use Apptio.
Fortunately, Apptio’s work with the UK’s Nationwide Building Society is in the public domain. “They’ve got their on-prem side and their IT finance side, which needs a total cost of ownership,” said Mallory. “What does it actually cost to rent? In this application or to serve this business unit, so not just the hardware itself. What about the HVAC? What about the labour? Okay, do we mean our labour? No, we mean contractors as well. Just pile it on, here’s your total cost.”
But then there’s the question of cloud costs. “[Nationwide] have also adopted a finops methodology for cloud cost management,” Mallory explained. “The second you turn it on, you’re paying for it, whereas a mainframe, you’ve bought it, it depreciates over time.”
All of which means that to understand the TCO for an application – which may well run across a mix of on-prem and cloud – becomes harder to assess. Especially in real-time. And this is where Apptio comes in. “Now [a team within the finance department] is able to go up to the business and really say, here is what we’re doing with tech, whether it’s cloud or on-prem, and say here’s what we’re getting for that, right? That’s what you’re able to do when you bring the data sets together and you educate people.”
Another company that has benefited from Apptio is IBM, which claims that Apptio’s Technology Business Management tools helped secure $3.5 billion in productivity gains. “We’re an organisation known for being stable, being secure… but we still found all sorts of inefficiencies, duplicate vendors,” said Mallory. “It’s like finding you have five video-streaming services at home, but you only actually use two of them, right? That’s what we were able to do as an organisation by adopting these tools and looking at the trends and patterns.”
At this point I wanted to nail down exactly how the process works. I’m CFO of an organisation, I engage Apptio. What happens next and how granular does the assessment go – right down to credit card receipts in expense submissions?
“We start with the cost pools,” said Mallory. “It ties into your general ledger, or if it’s cloud it ties right into your billing file, which is this massive CSV that is every single potential charge, every single server you turned on and off for two minutes. So that granularity of data, if you’ve got it, we can see it – so it is partly what you put in is what you get out.”
The “fun part”, Mallory explains, is when you marry this information with business functions. Functions such as IT support. “Most businesses are just going to charge you based on your head count,” said Mallory.
“You have 100 heads so we’re going to give you that proportion of the total charge of this IT support system. I could do it based on the number of tickets you’ve submitted, but do I want to do that? Or does it create a perverse incentive, because now I’m disincentivizing tickets, right? Until you have that data, you can’t make that business decision.”
Having talked about efficiency, it was time to move onto that most beloved feature of all Fortune 500 companies: making more money. And that not only means working out where to invest, but where to pull your investment because the costs outweigh the potential benefits. Can Apptio help?
“if you’re able to bring in the margins or your revenue, your P&L, all of a sudden you say, hold on a second, this team is costing way more as a proportion of the revenue they generate – why?” said Mallory.
“Now, here’s where AI is actually interesting, because everybody has this slush fund for AI – I’m sorry for calling it a slush fund, but it is – and if you tried to attach that to revenue the vast majority of organisations have got nothing to show for it yet. They’ve got ideas. They’re tweaking the model.”
But you can’t keep tweaking forever. “GPUs are wildly expensive, so [that team’s] cost compared to their revenue is going to look terrible compared to, say, your mobile banking app, where everybody’s logging in and doing transactions. Now it’s a business decision. We’re investing in AI: do we care that there’s no revenue, or are we going to fuel more people and more research into this, because we see the potential later on?
“Anytime someone gives you a number, you need to ask for a different number. That’s what we make easy to do.”
To end, I was curious about what kind of companies are using Apptio. It’s perhaps telling that after our meeting, IBM sent me links to case studies on two banks: one on how NatWest is using Apptio to build sustainability into its TBM reporting, another on how Raiffeisen Bank is optimising its cloud operating costs.
During our chat, Mallory also mentioned a New York-based financial services company is using Apptio to make sure “they know what they’re spending in tech, doing proper cost allocation and chargeback, but also, what are the people doing? Not just how much do they cost, because that’s in your labour data, but what are they doing with their time, and how does that tie back into this bank’s particular initiatives.”
Then there’s the manufacturing sector, which always grasps technology early in its attempt to be “lean and agile”, in Mallory’s words.
“Multiple German car manufacturers are looking at the cost of their technology, including the [cost of the] engineers. They want to be able to track what each team is working on and tie that back to, say, the 2029 model of this particular vehicle, because if they missed that deadline… well, they can’t. They just can’t miss that deadline. And that’s another example where competition is fierce, it’s deadline-based, and yes, you have an investment pool, but you don’t have unlimited funds and you don’t have unlimited people.
“Being able to track exactly what people are doing, and that ties back to the launch of our newest electric truck in 2030 or whatever it is – we’re that glue that helps them connect the work they’re doing today to the five-year plan that they have to deliver on.”
Of course, all this is how companies are using Apptio today. Mallory, fresh from the Technology Business Management Conference in Miami, pointed out that “almost every breakout had AI in the title”. She was also taken by how much the topic of “strategic portfolio management” came up.
“I don’t know if strategic portfolio management is necessarily a known term,” she added. “What that means is organisations are spending on tech, but they have these strategic outcomes. And there’s a gap between the people doing the work at the bottom, developing the products, and the people at the top who are required to report back to shareholders. To say, this is how we are delivering on our strategic vision. So strategic portfolio management is the glue between the two.”
Fundamentally, Mallory says, it’s about tying what people are doing day to day with what the business is trying to achieve. “Most of the time we’re talking about spreadsheets. It’s very manual. You can say I’ve got 20 people over on this team and I’ve outsourced 100 in this centre of excellence over here. Okay, but what are they actually doing? I’m not talking about timesheets – that’s gone away – it’s more about what process, project, product, application are they working on now?
“Help me connect that back to something really big at the top. Increase market share in this region by X percent. How do you do that? Well, you do that by delivering this product or feature or investing in this team, et cetera, et cetera, you need to be able to connect that back. That’s strategic portfolio management.”
