Apptio Calculates the Cost of Information Technology
With the growth of software as a service (SaaS), many companies are making the transition to cloud computing to save money and increase efficiency. But is cloud computing really more economical and efficient in all cases? Until recently, there hasn’t been a reliable way to find out.
Apptio, located in Bellevue, Washington, provides hosted Internet technology solutions, among them its Technology Business Management package. Recently, Apptio introduced its new Cost Transparency Template. This template generates the formulas necessary for a company to calculate how much more—or less—it would cost to invest in cloud computing as opposed to other options, including traditional in house hardware and storage. Among Apptio clients are BNP Paribas, Starbucks, Hallmark, and Expedia. Jeff Day, Apptio director of marketing, says, We see that cloud computing is going to change the way IT leaders think about how they manage IT.”
St. Luke Health System of Kansas City has 1,200 doctors among 9,000 total employees in 11 hospitals. The chief information officer, Debe Gash, wanted to eliminate nonessential IT related costs. A spending analytics tool from Apptio allowed Gash and her team to save millions of dollars by highlighting unnecessary or redundant spending. For example, St. Luke had too many desktop software licenses, two full time employees dealt only with spam management, and they were spending a lot of money on electronic storage. Those expenses were reduced or eliminated, and funds are being redirected instead to finance such needed programs as electronic health records. We were surprised at the efficiencies we were able to derive from getting those insights,” Gash said.
In the future, IT managers will need to understand how the cloud works and whether it will actually be more cost effective than other in house or external systems. Day says, The greatest inhibitor of the cloud is a lack of understanding. IT leaders need better systems and tools to perform accurate analysis.”
Questions for Critical Thinking
1. Why have companies recently become so concerned with cost management?
2. Why might it be difficult for very large companies to keep accurate account of spending on such items as computer hardware and software licenses?