- What is TBO?
- Why is TBO important?
- How can I respond to business unit complaints about IT costs?
- How can I be better prepared for software compliance issues before receiving an audit letter from a vendor or BSA (Business Software Alliance)?
- We recently have grown through acquisitions and have multiple contracts with the same vendor. What is the first step to optimizing our vendor contracts portfolio?
What is TBO?
TBO (Technology Business Operations) is the name we use to refer to those functions in an IT Department that are not directly related to infrastructure engineering and operations or to application development and maintenance. Sometimes TBO is referred to as business cross-functional services and includes functions such as IT finance and technology sourcing. The Technology Business Advisory Overview section of this site provides more detail.
Why is TBO important?
IT management is evolving from a high-growth phase to a maturity phase. Most IT projects no longer have enormous ROIs, so more planning precision is required. The CIO’s focus is shifting to the overall business of IT. Further, third-party spend now dominates IT budgets; this development forces CIOs to have a depth of sourcing skills along with their technical understanding. Cost and consumption complexity require deep financial skills (with technical understanding). TBO provides a framework for better alignment with internal customer business goals and allows for an appropriate emphasis on these business skills.
How can I respond to business unit complaints about IT costs?
The best way to respond is to define and price your services so that IT costs can be aligned with business value. If business units actually purchase items from the IT department they have a greater appreciation for IT costs (or the price) and can begin to manage demand (the total charges) to feel more in control. If they don’t purchase the services today, you need to understand the costs as if you were selling services so that you can show your customers what they consume and how they can help control total costs. It may not stop the complaints, but it will give you an actionable way forward.
How can I be better prepared for software compliance issues before receiving an audit letter from a vendor or BSA (Business Software Alliance)?
The best-run companies typically have a software asset management (SAM) system that tracks software contracts and license entitlements, and have the controls and processes in place to accurately monitor usage. Often dedicated SAM resources are in place to monitor software license and usage activity — in many cases performing self-audits and testing the accuracy before an external audit occurs. In most cases software asset management activities are self-funding through cost savings of purchasing an optimal number of licenses and from the reduced risk of software license exposure.
We recently have grown through acquisitions and have multiple contracts with the same vendor. What is the first step to optimizing our vendor contracts portfolio?
Start with identifying the contracts and understanding your needs (short-term and long-term). Then determine what actions will bring the most value. If you have many contracts with the same vendor, there are usually opportunities to consolidate the relationship. The new contract will benefit from greater scale and include terms that are appropriate for the new, consolidated entity.
Since a third-party contract portfolio optimization can be a huge task, we usually start the vendors with the largest spend, most critical services, or where a transaction is imminent (e.g., need to buy something or the existing contract is about to expire). All of these actions require information, so the first step is always some type of discovery.