Briefing: Apptio – How Much is the IT Costing Me? (The SaaS Edition)

Earlier this week I had a briefing with Apptio‘s Eric Berg, late of Microsoft (you might remember him from the IT Forum videos around System Center we did last Fall in Barcelona).

Tracking Costs for IT

Apptio’s thing, if you will, is doing IT cost tracking as a SaaS. In a nut-shell, their stuff mines usage and cost related data in organizations, provides some modeling and mapping, and then tells tries to tell you how much your IT is costing you.

Clearly, your skeptical mind should be kicking in as even this “lower level” of BSM is a tough nut to crack. I of course raised this point in the form of a question. The answer was somewhat novel and comforting, interestingly driven largely by the incremental (read: cheap at first) pricing that a SaaS offering makes possible.

Getting that Rabbit Outta the Hat

First off, Eric said, the problem is typically not with figuring out the raw data. People usually have it collected already in spreadsheets or even more formal systems. Mining that data isn’t a big deal, and getting it up into the Apptio system isn’t too big of a deal. Indeed, the frequency that this data is used isn’t realtime, which reduces a lot of the big-bang expectations for “how much is IT costing me right now!” scenarios.

Layered on-top of that info is modeling, reporting, and what I’d generalize as “business intelligence.” And for me, this where we get to an interesting, new type of business model that SaaS enables.

Using SaaS for Incremental Success, Avoiding Big Price Let-downs

Typically, tackling some problem like “keep track of how much my IT is costing me” would be an expensive problem to solve. Getting the servers, software, and other base-line things is expensive enough that you want maximal bang for your buck: “I just spent $50,000 on this, you’re damn right it better tell me realtime IT cost!”

Instead, offering BI for IT (if you will) as a SaaS could allow people to incrementally bite-off more realistic chunks on a payment plan that doesn’t make them expect the moon. That is, maybe the reporting you’re getting isn’t “real-time,” but maybe it’s so cheap to start with that you’re fine with these “slow start” results.

The point here isn’t that “you’re getting what you pay for” in the negative sense. Rather, it’s that your expectations are matching the reality of affordable spending and what technology can do at such prices.

I’ve actually noticed this “less for less” approach applied to several scenarios with BI. See RedMonk client eVapt as another example. That is, on-premise business intelligence seems to be expensive by nature, just to get in-the-door. Where-as doing BI as a SaaS potentially lowers that in-the-door cost such that vendors can mark-down the price to match smaller sets of functionality. This is one of those dangerous points a vendor will rarely make: who wants to say, “sure, we do less at the beginning, and you can scale up your complexity…but, you pay less!”

Back to Apptio

Now, how does this abstract theory apply to Apptio? Well, they didn’t have their pricing figured out when I talked with Eric this week, but they he was into the incremental features for less idea for sure. The more important point is that with a smaller in-the-door price (we hope) customers can feel comfortable setting realistic goals for doing this low-level BSM task of linking money to IT resources.

Sure, the result may not be the utopic vision of undulating dashboards that vibrate dollar signs at every database transaction and failure. On the other hand, it’s gotta be better than The Big Spreadsheet.

A smaller point worth noting that’s easy to overlook: once you build up a big enough set of data, you can theoretically start to play around with “what if?” scenarios – here, obviously, only in the area of cost, not performance, and “does it work” areas. Like, what if we replace the Sun boxes with Dell ones?

The To Do List

As with all SaaS IT Management offerings, there’s the huge potential to layer Collaborative IT Management on-top of all those stacks of cross-firewall data. You could compare yourself to other users of Apptio of your size in similar industries and situations to see how your spend is going. The pay-more feature there would be drilling down to answer the question why? (Hooking up into asset management and other things that might be corporate privacy no-no’s, but, hey, who don’t like savings?)

Also missing is tracking the other-side of the coin: how much money is this IT stuff making for me? Apptio only tracks cost, the frowns, as it where, no smilie charts so far. In addition to adding that mega-feature, you can also imagine future features like integrating with help-desks and workflows inside IT to track costs for, say, closing various types of tickets (e.g., “it costs us $50 to change a password”).

Being a SaaS, you’d expect to see integration with other SaaSes. For example, as SalesForce moves into more general ERP and accounting areas (read: not just CRM), pulling in the cost of IT would be snazzy.

Throw in some energy tracking (pulling raw energy usage data as IBM Tivoli seems to be getting to doing) and cloud computing integration (“running this work load in EC2 costs us $XXX vs. $XXX on-premise”) and you’ve got some fun, and probably useful buzz-features going.

Update: (Eric was kind enough to send some corrections to the above)

A couple of comments – just on the factual side if you could reflect:

1. We do have our pricing figured out – just haven’t release it publicly – more than happy to talk through that with you on the phone.
2. You had a point lower down where you say “Apptio only tracks cost” – which is inaccurate – we actually have a hosting company (Motricity) who is looking at both cost of IT infrastructure and the revenue that they generate off of that by customer – so we definitely do cost and revenue – as well as other metrics like utilization, and operational metrics (server/admin, etc..)

Thanks!

Disclaimer: IBM is a client, as is eVapt and Microsoft.