Lloyds Banking Group is looking to rationalise its IT spend across its stable of 4,500 applications by getting better asset visibility with the help of specialist vendor Apptio.
Apptio specialises in what it has coined as technology business management (TBM) software. The company, which successfully went public last year, is already helping some of the UK's biggest banks shut down costly applications and rationalise their IT spend.
Colin Rowland, SVP for EMEA at Apptio explained TBM to Computerworld UK as "supply chain management for IT".
Essentially, Apptio brings cost transparency to CIOs looking to understand their increasingly complex cost base, be that cloud infrastructure and services or internal labour and support. Once they get this visibility, IT leaders can start to spot pinch points and inefficiencies and reallocate funds.
"What used to happen is organisations got the cost of the app and spread that across the whole business based on their value or headcount, and that is an unfair allocation as people pay for things they aren't using. With Apptio you can start to do more consumption-based pricing," Rowland explained.
Lloyds turns to Apptio
This software is proving popular in the financial services sector, as those organisations tend to have lots of legacy technology and a huge IT cost base. Nationwide and RBS have already used Apptio to rationalise their IT spend, with Nationwide expecting to save £6-8 million in IT costs after its first year of implementation, and now Lloyds Banking Group is looking to do the same.
Keith Pearson, head of systems and programmes, IT CIO at Lloyds Banking Group was tasked with getting a view of all of the bank's IT assets 18 months ago. The aim is to allow the bank to "run the business of IT effectively", he explained during a speech made at a Gartner event in London last week.
So Pearson wanted to be able to take any IT asset, be that a business-critical software application, or a piece of hardware like an on-premise data centre, and be able to see: "Who owns it, what attributes it has, is it secure, is it resilient, how much does it cost, will we be fined? These are fundamental questions we couldn't answer about an asset."
By implementing Apptio the IT department at Lloyds could start to answer some of these questions. "Understanding an asset and its cost links to our ability to have effective cost analytics," Pearson added.
Pearson admits that Lloyds is in the early stages of its work with Apptio, but says that the organisation has already seen an increased ability to view "what is driving the cost of provisions and whether it is the optimised cost, so entitlement vs consumption".
For example, Lloyds uses the Falcon fraud detection platform sold by FICO. Pearson says that the company thought it knew what it was spending on Falcon, but after implementing Apptio, saw that it was spending five times more than the bank suspected.
Lloyds is currently using Apptio on a project-by-project basis to assess the cost of single applications like Falcon at this early stage, but the aim is to get "that flowing cost transparency and asset cost control" as they become more comfortable with the tool.
"I want to get to a level where we have platform economics," Pearson explained. "Which means if someone in business wants to know the cost of introducing a new mortgage customer, we can give a drill down of every IT component related to that new mortgage."
Aside from initial cost savings of closing down unnecessary applications across its estate of 4,500 apps, Apptio can also become an effective dashboard for IT leadership to monitor its assets.
The IT department at Lloyds has historically been "good at fixing things" according to Pearson, but that now "I think service management needs to become a cognitive and analytics-led capability where you can predict things breaking and fix them with no fire to put out."
Lloyds has also been working with IBM to see if it can apply this data to the cognitive Watson platform to start getting predictive insights related to its IT assets. Lloyds signed a £1.3 billion cloud deal with the vendor back in June.
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