Apptio TBM Unified

Model (ATUM )
™ ™

The Standard Cost Model for IT

Executive Summary
For many years, visionary IT leaders have been adopting the principles of Technology Business Management (TBM)
in order to manage IT like a business. Apptio has facilitated this transformation by offering a purpose-built suite
of TBM applications. At first, there were no recognized best practices, but several years ago, Apptio partnered
with leading CIOs to launch the TBM Council. This partnership gave rise to a documented, consistent approach to
TBM processes. Now it’s time for the next step standardizing IT costing through the Apptio TBM Unified Model™
(ATUM™).

The concept of a unified model emerged in response to pain points raised by Apptio customers, members of the TBM
Council, partners, and analysts. These groups realized that it was difficult to gain alignment between IT, Finance, and
Business Unit leaders because there was no consistent approach to classifying and modeling IT costs.

Much like other organizations that developed standards and frameworks – think of the
guiding principles of GAAP for accounting – Apptio has developed ATUM to provide
adaptable best practices for standardized modeling of IT costs and allocations. Essentially, “ATUM [took] the noise out
ATUM defines a business information model to help the office of the CIO manage IT as a
business more effectively.
of conversations that might
have otherwise slowed us
This paper describes ATUM and its components, and provides insight into the need and
benefits that gave rise to ATUM.
down”
Lisa Stalter, IT Finance Director, Cox Enterprises
 Apptio TBM Unified Model

Table of Contents
Executive Summary...........................................................................................................................................................................................................................................0

The Need for Standardized IT Costing.......................................................................................................................................................................................................2

What is ATUM?...................................................................................................................................................................................................................................................4

Data...............................................................................................................................................................................................................................................................5

Taxonomy.....................................................................................................................................................................................................................................................7

Model............................................................................................................................................................................................................................................................9

Benefits of ATUM............................................................................................................................................................................................................................................11

Apptio’s ATUM-Powered Suite of TBM Applications........................................................................................................................................................................11

Actionable Information from ATUM-Enabled Applications...................................................................................................................................................12

Top Facts About Business Units..............................................................................................................................................................................................12

Top Facts About Applications & Services............................................................................................................................................................................12

Top Facts About Infrastructure & Operations...................................................................................................................................................................12

Top Facts About Overall IT Spend..........................................................................................................................................................................................12

Adopting ATUM.....................................................................................................................................................................................................................................13

The TBM Council’s Role................................................................................................................................................................................................................................13

Additional ATUM Resources.......................................................................................................................................................................................................................13

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 Apptio TBM Unified Model

The Need for a Standardized IT Costing

IT leaders increasingly rely on business principles to run their IT organizations and they need the ability to model
and analyze costs and related metrics in a granular and context-relevant manner. The first instinct is to work with
Finance to get reports on IT spend, but IT leaders quickly run in to problems. The data in the corporate accounting
or ERP system, while fine for finance purposes, lacks the granularity or alignment with IT lexicon necessary to make
better decisions about technology and conduct fact-based conversations with business partners.

Projects
BUs Teams

Accounts
Services Mfg Channels
Products Customers
R&D
Apps
General Ledger
Cost
Centers
IT
Towers

Profitability

Finance IT Business

Translating raw financial information from corporate ERP systems into appropriate IT context is key to the successful
adoption of TBM principles. However, this translation is anything but simple. When IT organizations attempt to build
this translation mechanism on their own, they encounter a host of challenges:

1. It’s hard to get agreement on IT terminology: Stakeholders range from accountants, to service managers,
to technologists, to software developers, and everyone has their own view driven by valid but disparate
motivations.
2. It’s hard to get the math right: Complex math is required to accumulate and apportion costs from finance-
centric views into IT-centric structures that everyone agrees on. Understanding, let alone agreeing to these
calculations, is beyond the patience of many.
3. It’s hard to get the right data: Few individuals in IT are even aware of all the potential data sources that
might contribute to accurate cost calculations; moreover data sources that were never meant to integrate
often have gaps and alignment issues that undermine their value when used together.
4. It’s hard to defend: Homegrown approaches seem like a good idea at first because organizations view
themselves as “special” or “unique,” but when your hard cost numbers generate controversy there’s no
external validation to reference in support of your methodology.
5. It’s hard to compare to your peers: If every organization calculates their IT costs differently, there’s no
reliable or accurate way to compare across peers, which means there’s no measuring stick for IT leaders to
strive for.

To address these challenges, Apptio has developed the Apptio TBM Unified Model or ATUM.

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 Apptio TBM Unified Model

What is ATUM?
The Apptio TBM Unified Model, or ATUM, is a specification that defines the elements of a standard cost model for
technology. With standardized IT costs leaders can manage the business of IT more effectively.

Apptio developed ATUM based on our experience with 200+ customers and our role as Technical Advisor to the
TBM Council. Through this experience we became keenly aware of the challenges that result from organizations
“going it alone”. In response, Apptio created ATUM to embody the best practice patterns that we’ve identified among
our customers for translating corporate finance data into standardized IT financial structures.

What to Gather How to Organize How to Measure

DATA TAXONOMY MODEL

Source data elements, formats, and Standard management Standard costing rules to map and
relationships needed by Model categories for IT apportion GL costs to IT categories

Figure 1: ATUM describes what data to gather for IT cost analytics, how to organize that data into relevant IT categories, and how to measure and route costs
through those categories.

ATUM is a core capability of Apptio’s suite of TBM applications. Apptio recommends ATUM as the starting point for
most companies adopting TBM. Of course, there are times when an organization’s needs call for deviation from the
standard model. In such cases, ATUM provides the flexibility to extend and enhance the model (within constraints)
to accommodate changing trends in IT and unique customer needs.

“ATUM provided a familiar, industry-proven model that everyone could easily

get their hands around”
Lisa Stalter, IT Finance Director, Cox Enterprises

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 Apptio TBM Unified Model

Data
One of the most challenging aspects of adopting TBM disciplines is finding and integrating the right data to inform
business decisions. Between Finance and IT, there are dozens of systems that contain a wealth of detailed data, but
it’s hard to identify which subset to use as “raw material” for cost analytics. To complicate things further, there’s
potential for chaos when either the data or analytics undergo the inevitable change that often seems to be the only
constant in IT.

ATUM Taxonomy &

Your Data Packaged Reports
Cost Model

How does it connect up to What happens when your What happens when Apptio
Which data is needed?
model & reports? data changes? changes models & reports?

To address this, ATUM includes a collection of Master Data Sets that specify required and recommended data
sources that supply appropriate raw cost information and operational data needed for intelligent cost routing.
These include guidance on where to find the needed data, which columns are required/recommended/optional, and
how they should be formatted.

Cost Source Application Labor

Master Data Sets

5. Where to put it

4. How to format

3. Required,
recommended,
or optional

2. Which columns

1. What source

GL/Fixed Asset/ PPM HR Service

Assets CMDB Desk

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 Apptio TBM Unified Model

The other ATUM components and Apptio-supplied reports are “wired to” these Master Data Sets so that as soon as
the correct raw data is gathered and mapped into them, cost calculations and reports automatically “light up” with
resulting cost analytics.

Pre-wired Master ATUM Taxonomy &

Your Data Packaged Reports
Data Sets Cost Model

Additionally, these Master Data Sets provide an abstraction layer that reduces the impact of changes in the structure
of your data on the rest of ATUM and Apptio’s out-of-the-box reports. Best of all, they enable Apptio to regularly
deliver enhancements to the ATUM Model and our out-of-the-box reports while minimizing changes needed in
customers’ source data to adopt those enhancements.

Figure 2: Apptio Data Advisor provides specific guidance for obtaining appropriate source data columns for each Master Data Set, including common source
systems and applications.

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 Apptio TBM Unified Model

Master Data Sets

Application Units Benchmark Industry Physical Server

Applications Benchmark Unit Cost Server Units by Class

Business Unit Allocation Cost Source to IT Resource Servers

Cloud Service Provider IT Resource Towers Tickets

Cost Source Labor Storage Devices

Data Centers Projects Storage

Fixed Asset Hypervisor Storage Units by Tier

Benchmark Composition Physical Server Vendors

Table 1 ATUM specifies over two dozen Master Data Sets and hundreds of columns.

Taxonomy
In most organizations, there are as many viewpoints about how to describe and categorize IT functions as there are
staff. This usually results in a mixture of prolonged debates on the merits of various categorization schemes, incorrect
or inconsistent categorizations due to lack of clear category definitions, multiple simultaneous categorization
schemes in different parts of the organization, and poor alignment with external categorization schemes such as
industry benchmarks.

Business Units

BUSINESS VIEW
Business Unit 1 Business Unit 3 Business Unit 2 Business Unit 4 Business Unit 5
Describe the consumers of the technology
supported by IT spend

Applications & Services Individual Apps by

Business Capability End User Services Technology Services
Describe the products or output delivered by
IT and consumed by business units
Line of Business Client Computing Application & Integration
Management & Support Connectivity IT Professional Services
Communication & Collaboration Hosting

IT VIEW
IT Towers & Sub-Towers Data Center Storage Compute Network Communication Output
Describe the technology functions supported by IT
spend in terms and groupings relevant to the owners Security
and consumers of those functions End User Application Delivery IT Management
& Compliance FINANCE VIEW

Cost Pools & Sub-Pools Internal External Outside Facilities

Hardware Software Telecom Other
Describe the type of asset or service purchased using Labor Labor Services & Power
terms and groupings relevant to both IT and Finance.

Actual & Planned Costs

To address this, the ATUM Taxonomy defines a hierarchy of IT categories into which IT costs should be organized.
The Taxonomy is structured in four distinct layers with each actual or planned cost mapped and routed through all
four layers, starting from the bottom. This categorization provides common terminology between Finance and IT
departments and aligns with Apptio IT Benchmarking to enable easy and frequent peer comparisons.

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 Apptio TBM Unified Model

Business Units
Business Unit 1 Business Unit 2 Business Unit 3 Business Unit 4 Business Unit 5

Applications & Services

Individual Applications
by Business Capability End User Services Technology Services

Management & Communication Applications IT Professional

Line of Business Support Client Computing Connectivity & Collaboration & Integration Services Hosting

Strategy & Plan Finance Basic Workspace Network Access Conferencing Application Design & Dev. Program & Project Mgmt. Application Hosting
Design & Build Human Resources Technical Workspace Remote Access Collaborative Workspace Application Support Business Process Mgmt. Web hosting as a Service
Market & Sell Legal Shared Workspace Messaging Quality Assurance Enterprise Architecture Platform as a Service
Take Orders Facilities Traveling Workspace Email Service Desk Database as a Service
Deliver Product Communications Copy/Print/Fax/Scan Phone & Voicemail Deskside Support Compute as a Service
Service Customer Storage as a Service
Connectivity as a Service

TBM Council Endorsed IT Towers & Sub-Towers BENCHMARK DATA AVAILABLE FROM APPTIO

Data Communi- Security & IT

Center Compute Storage Network cation Output End User Application Delivery Compliance Management

Enterprise Windows Database Tier 1 LAN Circuits Central Print Workspace App Dev Ops Center Security IT Mgmt. &
Data Center Post Strategic
Linux Middleware Tier 2 WAN Usage Mobile Devices App Support Project Mgmt. Compliance
Processing Planning
Other & Ops
Unix Mainframe Tier 3 Voice Service Desk Client Mgmt. Disaster
Facilities Enterprise
Database LoB Software Recovery
Mainframe Tier 4 Other Network Field Support Cloud Ops Architecture
Mainframe Cloud Apps Cloud DR
Converged Cloud Storage Cloud Network Cloud Desktop IT Finance
Middleware
Infrastructure Cloud Archive IT Vendor Mgmt.
Cloud
Cloud Windows
Platform
Cloud Linux

TBM Council Endorsed Cost Pools & Sub-Pools BENCHMARK DATA AVAILABLE FROM APPTIO

Internal Labor External Labor Hardware Software Outside Services Facilities & Power Telecom Other

Internal Labor External Labor Depreciation Depreciation Consulting Depreciation Telecom Other
Lease Lease Managed Service Provider Lease
Expense Expense Cloud Service Provider Expense
Maintenance & Maintenance & Maintenance & Support
Support Support

Actual & Planned Costs

For each Cost Sub-Pool and IT Sub-Tower, the Taxonomy describes the types of costs to be included.

Examples:
• The Hardware Expense cost sub-pool comprises non-capitalized purchases (e.g. spare parts, consumables or equipment
below capitalization threshold).
• The Windows Compute IT sub-tower is comprised of costs associated with physical and virtual servers running a
version of Microsoft’s® Windows Server operating system; includes hardware, software, labor, and support services.

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 Apptio TBM Unified Model

Model
In the Apptio platform, each cost entry extracted from cost sources such as the General Ledger (GL) is mapped into
both the Cost Pool and IT Tower layers, frequently via straightforward mapping rules. More sophisticated allocation
methods are then used to route and apportion these costs through the Applications and Services and Business Unit
layers.

CUSTOMER
SALES MARKETING SERVICE

Routed by: BU Consumption

3 Weighted by: Number of Logins
Data sources:
• CMDB or Service Catalog
MANUFACTURING • Log Monitoring Tool
SAP AUTOMATION SIEBEL

Routed by: Storage to App Relationship

2 Weighted by: Reserved storage size
Data sources:
COMPUTE STORAGE NETWORK • CMDB
• Asset DB
• Storage Manager

Routed by: Account Code, Cost Center,

INTERNAL EXTERNAL
LABOR LABOR SOFTWARE 1 & Organization Structure
Data sources:
• Chart of Accounts
• List of Cost Centers
• Active Directory

GL JOURNAL
ENTRY: WAGES

Figure 3: In this simplified example, operational data is used to intelligently route and apportion wages for an employee working on storage technologies.

The range of possible allocation methods is large, and selecting the right methods can be daunting. Similar to
categorization, it may be difficult to gain agreement on the appropriate way to apportion and route costs to IT
functions, applications, services, and consuming business units. Everyone has an opinion on how the math should be
done, and because it often affects achievement of performance objectives, debates quickly become emotional when
not grounded in fact or best practice.

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 Apptio TBM Unified Model

To address this, ATUM prescribes a range of key drivers and interdependencies that define the cost composition and
weighted allocation of these costs through elements of the Taxonomy.

Assumption-Based Attribute-Based Consumption-Based

Costs routed based on assumptions Costs weighted by an attribute of an item Cost allocated by measured consumption

Labor costs allocated using a 25% / 75% Data Center cost allocations weighted Data Center costs allocated based on
spread across Wintel and Unix Compute by # of CPUs or kWhr power rating measured power consumed during
month
Data Center costs estimated with a Desktop cost allocations weighted by
“rate card” value (e.g. $50/kW-Mo) desktop make/model Server costs allocated to applications
based on total compute hours per
Application support labor costs Application support labor cost
month
allocated to applications based on allocations weighted by size or
“peanut butter spread” complexity of an application Application support labor costs
allocated to applications based on
Business Application costs allocated Business Application cost allocations
support tickets
across LOBs based on % revenue weighted across LOBs based on # of
assigned login accounts Business Application cost allocated
across LOBs based on # of business
transactions per month

Figure 4: ATUM specifies a range of available cost routing strategies to fit your TBM maturity, unique business needs, and available data.

By providing multiple best practice strategies, ATUM affords the flexibility to select the mix of routing strategies
that best match each organization’s TBM maturity, unique business needs, and available data. And since the costing
methods in the Model are aligned with Apptio-supplied benchmark data, it’s easy to use Apptio IT Benchmarks to
perform apples-to-apples peer comparisons.

Business Units Route Costs from Apps to BUs

Assumptive: map apps to BUs and Business Capabilities (when 1:1 relationships)
Assumptive: estimated % of an app used per BU (when apps shared across BUs)
Managed: list of app users correlated to BUs via Active Directory
Consumptive: weighted by app logins
Applications Services

Route Costs from Linux to Apps

Assumptive: estimated % of all Linux servers used by each app
IT Towers & Sub-Towers
Compute, Storage, App Dev..
Managed: list of servers by app drives direct mapping
Managed/Consumptive: when multiple apps supported by one expensive server, weight
by avg. CPU or memory usage using server performance by app ID

Cost Pools
Hardware, Software, External Labor...
Route Costs from GL Actuals to Linux Tower
Linux Hardware: Dev, test and production servers, internal storage…
Linux Software: Operating System, Virtualization…
Your GL Cost Center & Accounts Linux Labor: Engineering, tech support

Figure 5: Organizations can select appropriate cost routing strategies for their business and adjust them over time as their TBM adoption matures.

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 Apptio TBM Unified Model

Benefits of ATUM
The Apptio TBM Unified Model offers numerous benefits for Apptio customers:

• Enterprise IT Business Model: Equips IT leaders to rapidly define their IT business model for aligning with the
business on cost/consumption tradeoffs and IT value.
• Defensible: Increases confidence because the model is based on the experiences of 200+ IT organizations and
endorsed by the TBM Council.
• Accelerated Benchmarking: Calculates IT costs in a manner that aligns with leading benchmarking
methodologies to enable easy comparison with industry and internal peers.
• Ecosystem Leverage: Facilitates collaboration and learnings across TBM Council members, Apptio user groups,
customers and the broader practitioner community, all aligned around a common approach.
• Fast Time to Value: Supports rapid realization of TBM benefits with pre-packaged product configuration and
documented delivery methodology. (See next section)
• Ongoing Improvements: Simplifies the adoption of new capabilities and enhancements delivered by Apptio
based on standardized ATUM interfaces.

Apptio’s ATUM-Powered Suite of TBM Applications

Of course, a standard such as ATUM is of little value without a practical means for implementation. That’s where
Apptio’s suite of TBM applications comes in. By embedding ATUM into our applications, Apptio accelerates adoption
of best practice TBM principles. Plus, with Apptio Cost Transparency aligned to Apptio IT Benchmarking via ATUM,
comparisons of IT costs vs. peer organizations become easy and routine.

SaaS APPLICATIONS

Cost Transparency IT Benchmarking Business Insights Bill of IT IT Planning

SaaS PLATFORM

Self-Service Analytics
Apptio TBM Unified Model™
(ATUM™)
Model & Calculation Engine

Adaptive Data Management

SOURCE DATA

Financial Operational Billing

Figure 6: Apptio’s Suite of TBM applications leverage ATUM to automate TBM.

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 Apptio TBM Unified Model

Actionable Information from ATUM-Enabled Applications

With Apptio’s TBM applications built around ATUM, organizations can get IT, Finance, and Business Units on the same page using actionable
business information that facilitates better, faster decision-making.

Top Facts About Business Units

Total IT Cost Per Employee

• Resource, Application, and Service Costs per Business Unit (BU)
• IT Cost Impact of BU Consumption Behaviors $

• IT Cost per Employee for Each BU (pictured)

J F M A
Engineering Sales HR

Top Facts About Applications & Services

Total Application Spend
• Total Cost to Buy, Build, and Run an Application (pictured)
• Asset, Resource, and Cloud Costs per Application or Service $

• Application and Project Spend by Business Purpose

J F M A
App Run App Dev

Top Facts About Infrastructure & Operations

IT Tower by Cost Pool
• IT Tower Costs Broken Down by Cost Pool (pictured) Compute
Application
• Unit Costs with Peer Benchmarks
Data Center
• Costs by Vendor and Labor Type End User
Network

$
Te So O In Ha Fa Ex
lec ftw ut te rd cil te
om sid rn wa iti rn
ar eS al es al
e er La re & La
vic bo Po b
es r we or
r

Top Facts About Overall IT Spend

Forecast vs. Plan by Cost Pool
• Forecast vs. Plan by Cost Pool (pictured) Forecast Plan
$129.96M $128.21M
• Run-the-Business vs. Innovation Spend 2%
• Fixed vs. Variable Costs and Ratio
(3%)
(4%)

Internal Outside Facilities/

Labor Services Power

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 Apptio TBM Unified Model

Adopting ATUM
Although ATUM is an optional component, Apptio recommends it as the starting point for most customers. Among
Apptio’s customers, over half have adopted a version of Apptio’s standard model, including many who started with a
fully custom approach and later recognized the value of adopting the standard to achieve the benefits described earlier.

Because every business is unique, ATUM and Apptio’s packaged applications afford
organizations the flexibility to adapt to their needs while retaining the benefits of packaged
“Without ATUM, we would have
software. Many potential adjustments fall under the category of “configuration” wherein core
struggled to get traction…and functionality and standard compliance is maintained, upgrades are straightforward, it’s easy
agree on definitions and terms of to adopt new features from Apptio, and alignment with benchmark data is retained. These
configuration changes are supported and may enable new use cases or expanded scope (such
services”
as the addition of a new IT tower to support industry-specific technology like medical devices),
Lisa Stalter, IT Finance Director, Cox Enterprises without making substantial changes to the standard offering.

Additionally, customers have the option of applying larger deviations from standard ATUM or Apptio’s packaged
applications. These “customizations” may modify ATUM components or packaged Apptio applications to accommodate
specialized business practices or individual company preferences. While permissible, these customizations may
complicate access to new features and versions, or degrade alignment with benchmark data.

Apptio Customer Success works with each customer to understand their unique needs and guide them to the best
approach for realizing their desired outcome.

The TBM Council’s Role

The TBM Council is a nonprofit organization that creates and promotes best practices for managing the
business of IT. As the Council’s technical advisor, Apptio provides intellectual property (IP) in pursuit
of the Council’s mission. Apptio vetted the ATUM Taxonomy through a series of peer reviews with over
50 principal members of the TBM Council in order to collect additional input to complement our own
experience with customer implementations.

In mid-2014, the TBM Council formed and convened vertical industry workgroups – energy, financial services
(banking-focused), insurance, health services, and media/entertainment – gathering CIOs and other TBM executives
from over 120 distinct organizations, along with industry leaders from KPMG and ISG.

The industry workgroups recognized that one of their primary goals is to “develop industry-specific extensions to the
Apptio-defined TBM Taxonomy (business model for IT).” These extensions will help answer tough questions facing
the workgroup members. For example, banking executives often wonder if they’re spending too much or too little
on legacy platforms or how their costs will change when loan origination volumes fluctuate. By creating industry-
specific elements of the Taxonomy, the workgroups can begin to answer those questions.

Additional ATUM Resources

Every IT organization can benefit from standardizing their approach to IT cost analytics, and Apptio is ready to
help. Visit Apptio.com/ATUM to learn more about the Apptio TBM Unified Model, including:
• Watch a seven minute video and share this summary with your colleagues so they can quickly come up to
speed on ATUM.
• Order a free ATUM poster to hang in your workspace so you can easily reference the ATUM Taxonomy and
explain ATUM components to colleagues.
• Get started on your TBM Journey today! Contact the TBM experts at Apptio.com/get-started and we’ll show
you how standardized IT costing and our SaaS TBM applications can help you manage IT like a business.

Apptio is the leading provider of cloud-based Technology Business Management (TBM) software that helps CIOs manage the business of IT.
For more information, visit the Apptio website or the Apptio blog at www.apptio.com.

©2014 Apptio, Inc. All rights reserved. v.2 13 http://www.apptio.com