Coles Group Reveals Total Cost of Ownership for Enterprise Applications
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Coles Group Improves Cost Management for Enterprise Applications with In-Depth TCO Analysis
Quick Overview
- Coles Group is concentrating on assessing the total cost of ownership (TCO) for its enterprise applications.
- The retailer utilizes Apptio’s Cloudability for managing cloud expenses, with intentions to broaden its application to other cost dimensions.
- Coles is integrating costs related to personnel, support, infrastructure, and licensing into its TCO assessments.
- These findings are aiding Coles in optimizing application management and evaluating the consolidation or retirement of underutilized applications.
- IBM’s acquisition of Apptio in 2023 has further strengthened the tool’s functionality for enterprise cost management.
Reasons Coles Group is Emphasizing TCO for Enterprise Applications
Coles Group, among Australia’s leading retailers, is making substantial progress in refining its cost management approach by acquiring a deeper insight into the total cost of ownership (TCO) for its enterprise applications. This effort aims to ensure that all cost factors—such as personnel, support services, infrastructure, and licensing—are included, thus rendering a clearer financial overview for each application.
Beyond Cloud Cost Management
Since 2021, Coles has employed Apptio’s Cloudability tool for overseeing its Azure cloud expenses. Nevertheless, the company is now extending its focus beyond merely cloud costs to grasp the complete TCO of its applications. This approach involves incorporating additional costs like shared infrastructure, outsourced support, and personnel expenses.
Daniel Nicholson, Coles’ Head of Architecture, noted that while the organization had detailed analyses of its cloud expenditure, linking those expenses directly to specific applications was challenging. To remedy this, Coles is utilizing the full range of Apptio tools to improve its cost attribution abilities.
IBM’s Acquisition of Apptio
In mid-2023, IBM revealed its acquisition of Apptio, emphasizing the increasing significance of cost management solutions for businesses. Apptio’s suite of tools offers organizations visibility into their IT investments, facilitating the connection of expenses to business results. For Coles, this acquisition might lead to greater advancements in leveraging Apptio for managing its enterprise applications.
Examining the TCO Components
Previously, Coles could only approximate the TCO for its applications, mainly based on contracts and broad cost allocations. Now, the retailer has begun to incorporate more detailed costs, including:
- Personnel Costs: Coles can now assess the standard support costs related to application management, considering the number of personnel involved.
- Shared Platform Costs: Certain applications rely on shared database platforms or cloud services, allowing Coles to attribute these costs more effectively.
- Outsourced Support: Expenses from external partners like Accenture and IBM are now included in the TCO calculation.
These comprehensive insights enable Coles to maintain a 12-month trailing TCO for each application, with this data stored in its enterprise architecture system, which operates on LeanIX, a platform designed to manage the complexity of an organization’s IT framework.
Effects on Business Decisions
Through a deeper understanding of the TCO associated with each application, Coles can engage in more informed discussions with its business units. For instance, if a specific application is not being fully utilized but incurs substantial costs, the company can initiate discussions about consolidating applications or even decommissioning those that have outlived their utility.
This capability is increasingly crucial in today’s competitive retail landscape, where cost efficiency is paramount to sustaining profitability. With a clearer understanding of its IT expenditures, Coles can make smarter choices regarding resource allocation and optimizing its application portfolio.
Improved IT and Finance Alignment
A primary motivator for Coles’ emphasis on TCO is the need for enhanced alignment between IT and finance departments. As per Nicholson, the company’s Chief Financial Officer (CFO) and IT Finance teams are eager to comprehend the actual costs linked to application operations. This clarity has been made possible through the detailed breakdowns offered by Apptio and LeanIX.
With these insights, Coles can more effectively illustrate how technology costs directly bolster internal capabilities and business outcomes. This alignment fosters more strategic dialogues between IT and the wider business.
Conclusion
Coles Group is advancing its enterprise cost management approaches by acquiring a more nuanced understanding of the total cost of ownership (TCO) for its applications. By utilizing Apptio and LeanIX, the retailer can now factor in personnel, support, infrastructure, and licensing expenses in its TCO analyses. This facilitates the optimization of its application portfolio, ensuring resources are allocated efficiently. With IBM’s acquisition of Apptio in 2023, Coles is set to further capitalize on cutting-edge tools to oversee and manage its IT costs.
Q&A
Q: What is TCO, and why is it significant for Coles Group?
A:
TCO stands for Total Cost of Ownership. It encompasses the entire cost associated with owning and operating an application, including not only licensing but also personnel, support, shared platforms, and infrastructure. For Coles, comprehending TCO is vital for making educated choices regarding resource distribution and possible application consolidations or retirements.
Q: How does Apptio assist Coles with TCO management?
A:
Apptio is a cost management platform that allows companies to track their IT expenditures. Coles utilizes Apptio’s Cloudability to oversee cloud usage costs and is now broadening its application of Apptio to assess the total cost of ownership for other segments of its IT framework, such as shared services and personnel expenses.
Q: How does IBM’s acquisition of Apptio influence Coles’ cost management strategy?
A:
The acquisition of Apptio by IBM in 2023 could enhance the platform’s functionality, equipping Coles with more powerful tools for managing and optimizing its IT expenditures. This acquisition may pave the way for further innovations in how Coles monitors and governs the TCO of its enterprise applications.
Q: How does understanding TCO benefit the business and IT teams at Coles?
A:
By comprehending the comprehensive costs of running each application, Coles can achieve better synergy between its IT and finance teams. This facilitates more strategic discussions about resource distribution, application consolidation, and cost-saving measures, ultimately assisting the company in optimizing its IT investments.
Q: What role does LeanIX play in Coles’ TCO management?
A:
LeanIX is an enterprise architecture management tool that aids Coles in tracking and overseeing its IT landscape. By utilizing LeanIX, the retailer can store and manage the 12-month trailing TCO for each application, providing decision-makers with a clear overview of how IT investments are supporting business functions.
