Monday, May 31, 2010

Apptio launches demand-based forecasting for IT budget and spend management

Apptio is betting big on the market for demand-based budget forecasting. A new feature in its technology business management solutions software suite aims to help business managers plan and budget more accurately by inputting departmental forecasts into its software.

The Bellevue, Wash., company is calling it a “closed-loop” approach to financial planning, cost management, and transparency. The promised result: tighter alignment with business priorities, improved cost efficiency, and transparent reporting on the cost and value of IT services.

Michel Feaster, vice president of products at Apptio, is convinced the company’s closed-loop financial planning process will “close the gap between IT and the business” by letting companies update budgets and forecasts based on real business priorities.

“Demand-based forecasting gives IT the data it needs to respond more effectively, and plan accordingly with minimal variance so they aren’t over- or under-committing resources,” Feaster said.

Budgeting and planning = painful and inaccurate

Indeed, Apptio’s latest feature intends to remedy a notoriously painful and inaccurate IT budgeting and planning process. It was General Electric CEO Jack Welch who once said, “The budgeting process at most companies has to be the most ineffective practice in management. It sucks the energy, time, fun, and big dreams out of an organization. It hides opportunity and stunts growth.”

The budgeting process . . . hides opportunity and stunts growth.

Apptio’s demand-based forecasting works on the premise that past performance is not an indicator of future trends. Many variables can change and those changes can make a ripple effect across the organization’s IT services needs. In essence, Apptio’s demand-based forecasting is applying best practices from the supply chain management world to IT budgeting and planning.

Companies like Starbucks, Cisco, and Volkswagen are reporting savings with Apptio solutions to determine how changes in key business drivers affect IT services. In fact, Starbucks has seen $1.4 million in savings in nine months while Volkswagen reports a 50 percent reduction in annual budgeting costs through Apptio’s automation. Apptio believes the new demand-based forecasting will drive even stronger returns.
BriefingsDirect contributor Jennifer LeClaire provided editorial assistance and research on this post. She can be reached at and
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