Become a World-Class Service Provider to the Business

By Sunny Gupta  |  Posted 2010-08-20 Print this article Print

Step No. 1: Become a world-class service provider to the business

The first step in maximizing value and creating processes is to understand how IT technology maps to IT services. Such services can be broken down into user services (e-mail, desktops, telecom), business services (revenue-producing services such as trading application, CRM, etc.) and shared infrastructure services (data centers, compute capacity, storage, disaster recovery, etc.).

Second, IT should calculate the fully loaded cost of IT services including hardware, software, labor (project and maintenance), facilities and overhead. Companies should have a system to track costs over time, enabling teams across IT to understand how their domains contribute to the cost of IT services.

Third, IT should understand the individual unit costs for IT (that is, "What is my cost per gigabyte of Tier 1 storage? What is my cost per virtual machine? What is my monthly cost to support this application or that server?"). This single step is possibly the most powerful in eliminating waste. Most IT managers would like to eliminate costs and make better decisions but they have very little insight into the true costs of IT. For example, the CIO of a large, nonprofit healthcare system performed a deep cost analysis and found that, by moving a portion of the organization's non-mission-critical storage to Tier 2, the company could reduce storage costs by 66 percent.

Next, IT leaders should also overlay consumption or utilization of IT services with cost. IT organizations can only start to understand where there are opportunities to move towards lean IT by looking at cost and utilization metrics side by side. IT organizations should leverage automation to help them compare utilization and cost information.

By aligning around IT services, putting systems in place to measure cost of delivery, and enabling processes for tighter communication and transparency, IT moves from a cost center to a true service provider. While this is interwoven in everything we've discussed, it is fundamental to achieving lean IT. You can't understand the cost and value of a service unless you understand the TCO of that service. The better IT can understand the costs per service, the better it can eliminate waste, become leaner and provide higher value.

Sunny Gupta is co-founder, President and CEO of Apptio. Sunny's career in enterprise software spans more than 16 years, with roles in general management, strategic marketing, product management and business development. Most recently he was the Executive VP of Products at Opsware, and was responsible for all of the company's product businesses (up to its acquisition by HP for over $1.6 billion). Prior to Opsware, Sunny was the co-founder and CEO of iConclude, which pioneered the IT runbook automation market (and drove its acquisition by Opsware for $62 million in less than two years from inception). Before founding iConclude, Sunny ran the Java/.NET Performance Management Product Group for Mercury Interactive (acquired by HP for approximately $4 billion) and served as VP of Marketing and Business Development at Performant (acquired by Mercury Interactive). He also served as General Manager of Business Development at Rational Software (acquired by IBM for approximately $2 billion), while playing a role on the team that helped scale that company from $300 million to $850 million in revenue. Sunny also co-founded Vigor Technology before its acquisition by Rational, and held product management and consulting roles at Easel Corporation and IBM. Sunny earned a bachelor's degree in computer science from the University of South Carolina. He can be reached at

Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel