Overview:

In this article we will walk through the value of the reports, high level configuration steps, as well as non-standard configuration changes to the “Out of the Box” allocation flow to streamline alignment for existing customers.  Note – this article is intended for existing customers that already have a Cost Transparency model built out to applications.  It is recommended that new customer or new model setups follow the “Out of the Box” setup guidelines.

Reporting Value:

The Application Addressable reporting suite is an enhancement to Apptio’s traditional app TCO reports, which looks to segment costs into what is “Addressable” vs. what is “Non-Addressable”.  For example, if an application is decommissioned, you would expect to see savings from eliminating “Addressable” costs (i.e. software licenses, app dev/support labor, external labor/MSP’s, cloud consumption).  Alternatively, costs which are tagged to Non-Addressable (e.g.., remaining fixed asset deprecation from on prem infra, overhead from IT mgmt and security and compliance) would likely still remain.   Similarly, if an Application Budget Owner wanted to identify areas to reduce costs, they would have insights through what spend is labeled “Addressable”.  

These reports help to answer questions like… 

• “If we make changes to a specific application, can we expect to see hard savings? What costs are fixed?  What could be reduced from our application run rate?”
• “Do these types of costs have an impact or not, if I get rid of an application, what costs are fixed and do not go away vs what is actually actionable.”
• “If we make changes to our app portfolio or make changes to specific applications – can we expect to see hard savings in the near term or long term.  Maybe it’s not a financial impact, but maybe we can avoid costs by repurposing resources/assets.  What will really have an impact vs. what will not.”

Addressable Costs are then broken down into three categories (Direct, Delayed, Cost Avoidance) to drive further insights into potential savings:

• Addressable Costs

Costs that have an impact on the IT cost structure and availability of IT assets and resources.   Addressable costs are classified as Direct Savings, Delayed Savings and Cost Avoidance.

• Direct Savings

Potential cost savings that impact the current fiscal year (e.g., external contractors, public cloud services).

• Delayed Savings

Potential cost savings realized in future years (e.g., software licensing expiring in 18 months).

• Cost Avoidance

Potential resources freed up and may be repurposed (e.g., on-prem infrastructure, internal employees)

• Non-Addressable Costs

Costs that are not affected if an application is eliminated or reduced (e.g., depreciation and amortization, IT management, compliance).

These reports can be used as a part of a regular monthly or quarterly review with stakeholders to make decisions on apps that should be decommissioned or assessments around new app development.  This should be coordinated through a formal Application Rationalization Program, where accurate reporting is provided for stakeholders to make decisions and track savings and progress.


Configuration Guide Attached via Word Doc