Technology Business Management (TBM) Overview - NIST

1 2017 FINANCIAL Management CONFERENCE. Technology Business Management (TBM) Overview Kevin Coyne Director of Technology and Services Bureau of Industry and Security Department of Commerce Agenda What is TBM? Who is TBM for? How we got here . TBM adoption TBM Stakeholder Support and Process Integration What are example TBM processes? Tools of TBM. TBM Data Requirements TBM and OMB eCPIC reporting requirements 2017 Financial Management Conference What is TBM? TBM defines a Business model and decision-making framework TBM Benefits which enables IT to run as a Business . Optimize: Continuously improve the unit cost of technologies and TBM provides IT organizations services while keeping cost and with the solutions strategies, quality in proper balance methodologies, and tools Rationalize: Better focus of time to manage the cost, quality, and and resources on the services, value of their IT services.

2 Applications, technologies and vendors that drive the most value TBM was instituted by CIOs, Innovate: Mission/ Business and IT. CTOs, CFOs, and other partnership that ensures maximum Technology leaders. Founded on value from Technology investments transparency of costs, Transform: Provide consumption, and performance, mission/ Business partners with TBM gives Technology leaders agility to pivot more quickly to and their Business partners the exploit innovation and capitalize on facts they need to collaborate on new opportunities Business -aligned decisions. 2017 Financial Management Conference How we got here . February Federal IT. Acquisition Reform October Act (FITARA) TBM Council September Proposed Federal CIO Tony Scott begins March December Conference - (1). socializing TBM discipline with GSA begins formulating Federal Federal CIO TBM January select government executives a government-wide TBM.

3 Information Panel, (2) ITCC Federal-wide acquisition vehicle May Technology breakout and ITCC meeting Acquisition Reform planning session Digital Act (FITARA) May-June Accountability enacted November and March Federal TBM. OMB releases policy Federal-wide requiring IT spend Transparency Act Executive Steering ITCC meeting data to be reported (DATA) enacted Committee launched by IT Tower and Cost by the CIO Council Pools July October 2013. 2014. 2015. 2016. 2017. October ITCC's 21 TBM. CIO Advisory TBM Council September Council validates adoption Conference Proposed: scope of ITCC recommendations OMB shares OMB begins published, TBM Adoption receiving IT. presented to OMB roadmap spend data by December May IT Tower and GSA's Category November TBM Council's 1st Cost Pool Management policy ITCC meeting and Winter 2015-16.

4 ITCC Interviews and US. Fall TBM Certification released CIO planning session GSA is first course for US. Federal Community Federal agency to Federal leaders Engagement: CIO, DCIO, CFO, June CAOs, COOs, CPIC Directors, fully adopt the ITCC = US Federal IT Cost, Opportunity, ITCC chartered by Budget Directors, IT Portfolio TBM Taxonomy Strategy, and Transparency Commission the TBM Council Managers, OMB leaders 2017 Financial Management Conference TBM Taxonomy Adopted by over 300 organizations 2017 Financial Management Conference Who is TBM for? TBM addresses the needs of several stakeholder personas Business DevOps Service Owners Relationship (Application Owner) (Infrastructure Platforms) CIO & IT Leaders IT Finance Managers Manage Application Make Fact-Based Show Efficiency and Align Resources to Establish Governance Portfolio for Value Decisions to Shift Justify IT Spend Business Priorities & Accountability O&M to DME.

5 Understand application Drive awareness of the Right size infrastructure Communicate the value cost, quality, and value Understand the cost of tech services . capacity to usage of IT Align IT spend to Rationalize application operating cost of IT Provide defensible cost Rationalize and optimize mission need Influence portfolio Right size services and resources allocations Mange the platforms mission demand application infrastructure IT financial plan Total cost on applications? Infra cost by category? IT spend on O&M/run vs Application, infrastructure, Where do we spend? DME versus O&M spend? Unit cost compared to DME/change? and labor breakdown/ What's fixed vs variable? Impact if applications is peers, benchmarking? Project spend on ID levers to control spend? ID short-term cost decommissioned?

6 What drives O&M cost? initiatives? Align demand with reduction opportunities Application spending Applications using non- Cost reduction progress? consumption? What drives variances? levers? standard infrastructure? Spend by mission or BU Application or service Under-over spend Release failure rate? EOL at-risk infrastructure? capability? investment / Business Unit recovery? and consumption / Adjust service rates? Business Unit? IT Governance Support data-driven, fact-based, defensible decision-making 2017 Financial Management Conference TBM Stakeholder Support and Process Integration TBM Stakeholder Support Process Integration CIO Infrastructure & Operations Understand unit cost Cost scaling (capacity and growth, Identify duplicative spend demand) identification IT Service IT Financial Asset Total Department IT spend Cost element identification Portfolio Management Management Forward/strategic planning Buy vs.

7 Build vs. outsource decision- Management Benchmark spend vs. making internal/external Cost performance IT Project & IT Vendor &. Spend by mission/ Business function Updated cost/operating models Portfolio Infrastructure Contract Current state vs. future for transition Defensible pricing (1st on vs. last off) Management Management Management plan Business case/ROI analysis CFO. Shared resources/personnel across IT budget justification modes IT investment justification Mission/ Business Outcomes Alignment with federal-wide Strategic Alignment through service and project portfolio Management Application Owner priorities/initiatives Value Delivery through portfolio, financial, and asset tracking Application Total Cost of Ownership Predictable recurring and non- (TCO), TCO by cost center/mission Performance Measurement through metrics and reporting recurring costs area Validity of obligations vs expenditures Resource Management through labor, software, and hardware tracking Service and capability Management , Accuracy of cost projections Risk and Compliance Management through policies, procedures, and EA alignment Baseline costs vs.

8 Variable for contracts tracking Application strategic alignment budgeting/planning in out years Application portfolio prioritization Demand Management , cost of service(s) 2017 Financial Management Conference What are example TBM processes? TBM processes are not new they are processes DOC does, wants to do, or wants to do better, faster, and more effectively and efficiently Communicate Automate Mandated Govern Through Measure and Prove Set Service Rates Cost & Value Reporting Metrics Periodic Reviews FITARA Compliance Mission Show-back Understand TCO Track and Compare Review Apps & Align spend plan or Charge-back & Cost Drivers cloud Spend Services to Demand Plan Project Recommend Levers Track Variance Data-based Review Agency Financials for Choice to Plan Decisioning Consumption Based on Resources Optimization Improve Data Track KPIs &.

9 Recover Cost Review Vendors Review Projects Quality Project Actuals Review Project Review IT Build O&M Benchmark Review Labor Costs Infrastructure Spend Plan Performance Build DME / Align Resource plan Forecast Service TCO Measure Customer Adjust Forecast Investment Plan to Financial plan based on Biz Demand Satisfaction 2017 Financial Management Conference Tools of TBM TBM Framework Operations and Maintenance (O&M) Development, Modernization, & Enhancement Value conversations depend on Run the Business (DME) Change the Business facts about: Costs and spending Performance and Risk Portfolio Investments (Ratios). Return on Investments (ROI) Business - Investment Cost Structure Cost for Enterprise Aligned in Data Quality Performance Agility Portfolio Innovation These can be instrumented and measured with TBM Value Conversations Key Performance Indicators, should be employed by CIOs Goals can be set and communicated using KPIs TBM provides metrics that support each of the value conversations ( Unit Cost Actuals vs Targets = Cost for Performance).

10 2017 Financial Management Conference Tools of TBM TBM Model Business View Business Units or Business Capabilities The TBM taxonomy: defines the 3 perspectives End User Services, Business Application Services (languages) of finance, IT, and Business Delivery Services, Platform Services, does NOT translate between the Infrastructure Services, Emerging three perspectives IT View Projects The TBM model: translates between the three perspectives IT Towers allocates (apportions) costs from Finance View lower layers to the upper layers Cost Pools Is usually a software tool General Ledger 2017 Financial Management Conference Tools of TBM TBM Taxonomy Mission/ Business Domains Business View Trade Policy Trade Policy National Weather Census 2020. Development Enforcement Service Describes the capabilities (and consumers) of the Technology supported by IT spend and resources IT Applications & Services Client End User Services Communication & Design &.