PULSE SURVEY

The Transparency Imperative:

How Visibility into Technology Spending
Drives Business Value

Sponsored by
SPONSOR PERSPECTIVE

Every company is becoming a digital company and making technology

investments to drive better business outcomes. A digital-first strategy Sunny Gupta
requires both business and technology leaders to fundamentally change CEO
the operational model for technology. Business and technology teams work Apptio
together today, embracing agile development to move from project-based
to product-based delivery, and accelerating their journey to the cloud. This
all requires actionable insights into technology spending and measuring
the value for the organization. Leaders have to leverage data and scenario
planning to make better investment decisions. Modern enterprises require
a purpose-built system to manage modern IT—this includes real-time, data-
driven decisions, surfacing insights, conducting scenario planning, and
tracking value for innovation. As business leaders emerge into the post-
pandemic world, they have two big opportunities.

The first is to ensure they are building infrastructures to accelerate

adoption of new technologies and new ways of working. Competitive
advantages will be gained by those who can respond to changing priorities
with the right technology, financial management, and decision-making
systems and processes, including quantifying the economics of cloud
migration. In short, futureproofing for the next time a crisis hits allows
business leaders to respond immediately to replan and redirect technology
investments where necessary.

The second is to continue the pace of digital innovation—embracing the

product versus project mindset. The complexity of technology, when one
thinks about managing legacy resources, new agile developments, and the
journey to the cloud, is enormous. These transformations cannot be done
without measuring value, costs, and consumption to expose levers to the
business for collaborative decision making. Systems and processes must
be in place to ensure that these decisions are being made from a data-
driven perspective. Unfortunately, many leaders are discovering there is a
prominent data disconnect inside their organizations. This gap between the
importance of information about the business value of technology and its
accuracy poses a challenge to improving business agility and innovating
to compete.

We sought to understand how visibility into technology spending correlates

to business agility by sponsoring research by Harvard Business Review
Analytic Services. This report dives deeply into the “why” and “how”
business leaders can develop processes and metrics to measure value.
This analysis uncovers the central data point that ties everything together—
importance versus confidence.

The research supports the reality that business leaders know that
clean and strong data is imperative for them to be agile. However, they
simultaneously lack confidence in the data that they are currently using to
make those agile decisions. This report contains essential information that
will enable executives to support their teams as they work to close the gap
through collaboration and technology.
The Transparency Imperative:
How Visibility into Technology
Spending Drives Business Value

As retailers locked down in the spring of 2020 because HIGHLIGHTS

of the Covid-19 outbreak, Brinks braced for a hit.
Shuttered shops suspended services from the global
cash management company. But the management of 92% of survey respondents
consider information about the
Brinks, whose iconic armored vehicles transport cash business value of technology
from stores to banks, didn’t panic. to be highly important when
making budget decisions, but
only 62% are as confident in
The company dug into its costs, looking for cuts. However, Brinks didn’t just their information.
retrench. It also saw an opportunity to accelerate the rollout of a digital service
that would increase its margins as well as deliver more value to customers: a
deposit box and safe that enables Brinks’ customers to securely deposit their 82% stepped up their
cash and receive provisional credit for it without having to bring it to the bank investment in digital
initiatives as a result of the
first. When the box or safe at the customer’s location reaches full capacity, Covid-19 pandemic.
“we can go on demand without requiring customer interaction because it’s
locked and managed by us,” says Keith Barthelmeus, global vice president and
CFO for product and information technology with the company. “It improves
62% say investing in
our customer satisfaction at a time when there’s a low-touch mentality.” technologies to accelerate
Companies that invest in innovation during a crisis are more likely to delivery of new business
outperform the market when the crisis has passed.1 It’s no wonder, then, that applications and/or products
is a top technology spending
Brinks and others powered through the Covid-19 pandemic by accelerating
priority for the near future.
their digital transformation efforts. The value of these investments in the
moment—and for the future—became starkly apparent as firms were forced
to conduct business at a distance. A recent survey of 338 business leaders by
Harvard Business Review Analytic Services found that 82% have increased
their investments in digital initiatives as a result of the pandemic, with 62%
of that group adding money to their technology budgets to fund them.

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 Harvard Business Review Analytic Services
Companies that invest in innovation during a crisis are more likely to
outperform the market when the crisis has passed.
As the global economy emerges from the pandemic,
business leaders are applying what they learned during the
crisis to many areas of their operations. When it comes to
technology budgets, survey respondents’ current priorities
reflect their experience during more than a year spent
adapting to rapidly evolving business needs. Respondents
are seeking greater agility and flexibility from their technology
investments. However, the survey findings suggest that a
lack of information about the business value of technology
investments, and a shortage of timely data in general, present
a challenge to executing their plans.
Without visibility into their current spending on technology
and the return on these investments, business leaders are
hard-pressed to determine which are delivering the greatest
value and where money might be put to better use.
“Cost transparency leaders were actually better equipped
and better prepared to repurpose or reposition their solution
stack” to serve customers, remote workers, and external
partners alike, says Yonas Yohannes, principal with The
Hackett Group, a business advisory firm. Cost transparency
“forces you to understand how you’re actually spending your
dollars at the capability level,” enabling business leaders to
identify unproductive assets, and make tradeoffs that better
support their strategic objectives.
The New Need for Speed
“Continuous planning is the new normal,” says Trevor
Schulze, CIO of Belmont, Calif.-based RingCentral, which
provides telecommunications services to businesses. “You
can no longer anticipate how fast things can change.”
Sixty-seven percent of respondents agree the pandemic
changed their business priorities, while 80% agree that it
increased demand from their customers for digital products
and services. Accordingly, 65% of respondents selected
improving the customer experience from a list of 10 strategic
objectives that they expected would drive their organization’s
technology budget most in the next 12 to 18 months—the most
often cited response. Other top goals include opportunities to
automate business or manufacturing processes, tied at 51%
with reducing overall business operations costs/improving
productivity; the development or enhancement of new digital
business models (50%), and opportunities to expand their
customer base or enter new markets (49%).
Pulse Survey | The Transparency Imperative: How Visibility into Technology Spending Drives Business Value
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To support these initiatives, respondents say they are
working to improve their agility. Sixty-two percent of
respondents say deploying technologies to accelerate
delivery of new business applications and/or products is a top
technology spending priority, during the next 12 to 18 months.
FIGURE 1 This answer was the most often selected in a list of
technology spending priorities, followed by providing more
technology for the virtual/hybrid workforce (50%), migrating
technology infrastructure to the cloud (45%), consolidating
or decommissioning legacy systems and applications (35%),
FIGURE 1
Better, Faster, More Efficient
Technology spending priorities emphasize improving
business agility and IT efficiency
What are your organization’s top technology spending priorities during the
next 12-18 months? [SELECT ALL THAT APPLY]
62%
Deploying technologies and processes to support accelerated delivery of new
business applications and/or products (e.g., through agile, DevOps, continuous
integration/delivery)
50
Providing more technology for our virtual/hybrid workforce
45
Migrating technology infrastructure to the cloud
35
Consolidating/decommissioning of legacy systems and applications
25
Reevaluating and/or renegotiating our IT supplier agreements to improve costs
and flexibility
22
Providing tools for monitoring workforce and/or customer health and safety
7
Other
Source: Harvard Business Review Analytic Services survey, April 2021
 Harvard Business Review Analytic Services

As the global economy emerges

from the pandemic, business
leaders are applying what they
learned during the crisis to many
areas of their operations.

reevaluating and/or renegotiating IT supplier agreements to
improve costs and flexibility (25%), and providing tools for
monitoring workforce and/or customer health and safety
(22%). Meanwhile, many plan to increase their investment
in digital technologies, citing big data and analytics (58%),
cloud infrastructure/services and cybersecurity (both 46%),
artificial intelligence/machine learning (45%), and cloud
software applications (44%) most often as the areas they’ll
be increasing investment in to support digital initiatives.
Schulze and his C-suite colleagues are used to moving
fast, but in the past year, the pace has quickened. In April
2020, as office workers settled into their work-from-home
routines, RingCentral prepared to meet the burgeoning
demand for its telecommunications, including newly
available videoconferencing services. The company’s sales
and marketing teams needed expertise and new productivity
tools in order to promote and sell RingCentral services in
an entirely virtual environment. Lead generation “changed
overnight,” Schulze says. “We went from event-based to
digital marketing.”
Along with that shift came a reallocation of funds from
in-person events to digital campaigns. “We could show where
the IT spend was going very quickly,” says Schulze. With
visibility into every corner of his technology budget, he
was able to explain what was and wasn’t possible within the
existing allocation and collaborate with the marketing team
to find the money they needed.
The ability to make quick decisions “is really the core of why
technology leaders need to be good at financial management,”
he concludes, and why visibility into current spending, as
well as anticipated costs, is a key capability when business
needs change unexpectedly.
Ranojoy (RJ) Hazra, CFO of global technology with the
Atlanta-based credit reporting agency Equifax, makes a
similar case. “We have a monthly close and forecasting
process as part of our normal financial processes,” he says.
During the pandemic, he began to share detailed reports
about discretionary, cloud computing, and technology
development expenditures with senior leaders to inform
conversations about budget cuts. “I don’t see us taking
away that discretionary reporting and cloud cost reporting,
because it’s just good cost control,” he explains. “And it has
highlighted for all of our business managers the need to
understand technology deployment and how that impacts
their business cycle.”
A Data Disconnect
Many business leaders do not have such timely data with
which to make decisions. Sixty-two percent of survey
respondents agree that their cadence for reviewing their
technology budget has become more frequent in the past
year. FIGURE 2 Although most have been able to make changes
quickly when they have to—67% agree that they are able

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 Harvard Business Review Analytic Services

by the relationship of tech investments to the organization’s

Without visibility into their current
spending on technology and the
return on these investments,
business leaders are hard-pressed
to determine which are delivering
the greatest value and where
money might be put to better use.
to make timely decisions about technology spending in
response to business or market conditions—slightly more
than half (55%) also agree that the information they use for
these decisions isn’t as current as they would like it to be.
Critically, respondents’ confidence in their information
does not align with its importance. According to the survey,
business value, strategic importance, and the cost of
business applications and services are rated as the most
important categories of information that respondents use
when deciding how to spend their technology budgets.
However, they view business value and strategic importance
as more crucial.
Ninety-two percent rated the business value of technology
as important or very important to their decision making (a 4 or
5 on a 5-point scale, with 5 being “very important”), followed
business strategy (90%), the cost of business applications
and services (82%), IT department recommendations (74%),
opinions of executives (73%), mode of delivery (69%),
forecasts of future technology spending (66%), and current
technology spending (60%) scored in the same manner.
Most respondents expressed at least moderate confidence
in the quality of the different categories of information they
use. However, the survey identified notable gaps between
confidence in the information and its importance in all but
one category.
For example, the survey found a 30-percentage point
gap between respondents who rated the business value of
technology as important or very important (92%) and those
who are confident or very confident in their information about
this category (62%). FIGURE 3 For the second most important
category, the relationship of technology investments to the
organization’s business strategy, there is a 27-point gap:
63% say they are confident or very confident in the
information. Meanwhile, for the category rated third in
importance, 60% say they are confident or very confident
in their information about the cost of business applications
and services, a 22-point difference.
The one area where “importance” and “confidence” are
closely aligned is the information on their current technology
spending: 60% say it is important or very important and 61%
say they are confident or very confident in it. Respondents are
the least confident about their forecasts of future technology
spending, with 52% rating this category a 3 (moderately
confident) or less.
Meanwhile, many respondents report that crucial data
is hard to come by. Despite the importance they place on
information about business value for making decisions,

FIGURE 2

A Matter of Timeliness
Budget reviews have become more frequent, and data isn’t current enough

Rate the extent to which you agree with the following statements:

■ Strongly disagree ■ Somewhat disagree ■ Neither agree nor disagree ■ Somewhat agree ■ Strongly agree

4% 13% 22% 39% 23%

The cadence for reviewing our technology budget has become more frequent in the past year.
3 15 15 43 24
We are able to make timely decisions about our technology spending in response to changing business or market conditions.
6 19 20 34 21
The information my organization uses to make technology budget decisions isn’t as current as we’d like.

Source: Harvard Business Review Analytic Services survey, April 2021

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 Harvard Business Review Analytic Services

Despite the importance they place on information about

business value for making decisions, half of respondents say
they measure the business value generated by tech investments
only on an ad hoc basis (31%) or not at all (20%).

FIGURE 3 half of respondents say they measure the business value

generated by tech investments only on an ad hoc basis (31%)
The Confidence Gap
or not at all (20%). The remaining respondents measure this
Business leaders’ confidence in key financial information relationship either systematically throughout the year (31%),
doesn’t match its importance for decision making
or at predetermined project milestones (16%).
How important are the following categories of information when making The timeliness and availability of data may be a factor in
technology budget decisions? how much confidence respondents have in their measures
How confident are you in the quality of information your organization uses in of the business value generated by their organization’s tech
each of the following categories?
investments. Furthermore, the absence of reliable business
HIGHLY IMPORTANT: A 4 OR 5 ON A 5-POINT SCALE, 5 BEING “VERY IMPORTANT”
value information may impact organizations’ ability to
HIGHLY CONFIDENT: A 4 OR 5 ON A 5-POINT SCALE, 5 BEING “VERY CONFIDENT” execute their digital plans. Despite the desire to spend more
■ Highly important ■ Highly confident resources on digital initiatives, 57% of respondents agree that
other aspects of business get priority.
92%
“If you can’t demonstrate value and transparency into
62%
Business value of technology
how dollars are being spent, you’re never going to have
permission to be anything more than a keep-the-lights-on
90 organization,” says Christopher Key, director of the IT
63
executive advisory program with The Hackett Group.
Relationship of technology investments to the organization’s business strategy
Business leaders need a holistic view of their technology
82 portfolio in order to understand how their spending on
60
cloud computing, on sun-setting legacy systems to reduce
Cost of business applications and services
technology complexity, and on providing digital products
74 and services for customers and employees moves their
59
strategy forward.
IT department recommendations

73
54
Opinions of executives
A View to Value
Fortunately, many business leaders appear to understand
69 they need a more comprehensive view of their investments
61
in order to connect their technology spending with
Mode of delivery (e.g., cloud versus on-premises systems)
business outcomes and choose initiatives that deliver
66 the greatest value. Asked about the challenges they face
48 when making technology spending decisions, the two
Forecasts of future technology spending
most common were related to the data they use to make
60 decisions. Forty-five percent cited the lack of systematic
61 measurement of business value. FIGURE 4 The next most often
Current technology spending
selected challenge was that IT, finance, and line-of-business
Source: Harvard Business Review Analytic Services survey, April 2021 leaders don’t have access to the same views of technology
spending (33%). Other challenges include spending for
digital initiatives siloed in the IT department (31%); difficulty
making accurate forecasts about technology spending
(30%); spending for digital initiatives siloed in specific
business units or functions (30%); limited flexibility due to

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 Harvard Business Review Analytic Services

Business leaders need a holistic view of their technology portfolio

in order to understand how their spending on cloud computing,
on sun-setting legacy systems to reduce technology complexity,
and on providing digital products and services for customers and
employees moves their strategy forward.

too many fixed costs (27%); and reviewing the technology FIGURE 4

budget too infrequently to understand the impact of spending

Challenges to Better Budgeting
decisions (23%). Only 5% say they face no challenges when
it comes to making decisions about how much to spend on To improve decision making, many executives need better
technology. information, and to share that information.
To address the gaps and improve their ability to make Which of the following challenges does your organization face when making
decisions, 59% of respondents say they are working on decisions about how much to spend on technology? [SELECT ALL THAT APPLY]
developing new metrics and data-based processes to measure
business outcomes—the most often cited answer of the list 45%
and a critical step, given the importance of trusted business We do not systematically measure the business value generated by our
value information. Other changes respondents say they need technology investments
to make include maintaining an inventory of the skills and
33
capabilities their workforce has or needs to execute their
IT, finance, functional, and line-of-business leaders do not have access to
digital strategy (48%); aligning and integrating the data used the same views of technology spending
by IT, finance, and business units or functions to track and
forecast technology spending (46%); and improving their 31
technology budget processes to support greater business Our spending for digital initiatives is concentrated within the technology
agility (46%). department, and business units or functions do not have their own budget
for digital initiatives
Mike Brady, CIO with financial services company USAA,
is connecting costs with business value by incorporating a 30
new metric: the speed at which the company can deliver We have difficulty making accurate forecasts about our technology spending
value to its customers—U.S. military personnel, veterans,
and their families. Investments in technology and person- 30
hours to migrate infrastructure to the cloud, for example, are Our spending for digital initiatives is siloed in specific business units
not made in a vacuum. The new metric helps Brady connect or functions
spending on infrastructure with speed to market for new
27
products and features. “We’re modernizing the way we serve
We have limited flexibility due to too many fixed costs
our members. So for auto claims, our goal is that 75% of our
members can do it touchless—they can take a picture with 23
their mobile phone at the scene of the accident,” he explains. We do not review the technology budget frequently enough to understand
“That’s what drives the back-end changes.” the impact of our technology spending decisions
At Equifax, Hazra is developing metrics that describe
technology spending in terms of unit costs. The effort involves 5
mapping expenditures on technology to the products they None
support and their profits. “Historically, we haven’t really
2
looked at our unit cost for technology deployment, it’s just
Other
been technology cost as a whole. Now we’re incorporating a
volume component to say, okay, costs may be going up, but Source: Harvard Business Review Analytic Services survey, April 2021
commensurate to volume, our unit cost is decreasing,” he
says. “You can take those individual unit costs associated

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 Harvard Business Review Analytic Services

Investments in technology
and person hours to migrate
infrastructure to the cloud,
for example, are not
made in a vacuum.

with a product to say your delivery of a unit of product costs
you x,” where in the past, business leaders may not have
accounted for them fully, or at all.
Alignment on Business Strategy
Comes First
Achieving greater transparency into costs and business value
requires commitment from business leaders to use technology
to benefit the enterprise overall, rather than compete with
each department and each other in silos. “If you think about
how traditional prioritization and spending decisions are
made, a broad base of people are saying, ‘Hey, we really need
to do this, and I really need technology to do this,’” observes
Key of The Hackett Group.
“At the end, it comes back to who has the loudest voice, and
who hasn’t been made happy in a long time,” he says. Line-
of-business and functional leaders who are well-informed
about high-level business priorities will be better able to
focus on how they contribute to achieving those goals, rather
than defending their technology wish list. “You don’t have
enough money to do everything that everyone wants to do,”
Key asserts.
“There has to be broad senior leadership buy-in on the
technology strategy from the get-go,” agrees Hazra. “If that
does not happen, then as you go through these systemic
events, I think investment in technology will always come
into question, no matter how much data you put behind it,
because, to a certain degree, it is discretionary.”
Business leaders who already collaborate across units
and functions on technology decisions have a head start.
Sixty-three percent of respondents say IT and business units
together are responsible for measuring the business value of
technology investments, providing a strong foundation to
not only improve the way they measure business value but
also to address other budgeting challenges.
Strong relationships, effective communication, and
confidence in the budgeting process are all vital to enabling
timely technology spending decisions. A crisis like the
pandemic may bring people together, suggests RingCentral’s
Schulze, but “I had a great relationship with all my business
partners” to start.
At USAA, Brady had established a monthly budget and
forecasting process several years earlier when the company
adopted agile software development methodologies. When
his team had to work faster to respond to the pandemic, the
budget process accelerated with them to a weekly cadence
for “the first couple of months.” The executive team and
board scheduled meetings on the fly any time high-level
decisions were needed. “Then we had our plans, we had
our direction, and we were back into our normal cadence,”
Brady recalls.

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 Harvard Business Review Analytic Services

“If you can’t demonstrate value and transparency into how dollars are
being spent, you’re never going to have permission to be anything
more than a keep-the-lights-on organization,” says Christopher Key,
director of the IT executive advisory program with The Hackett Group.

From Cost Transparency Barthelmeus says, with every investment considered by

to Business Value
As executives gain more insight into what their technology
costs, they trust the numbers more, observes Brinks’
Barthelmeus. He is leading an effort that started before the
pandemic to deliver monthly, instead of annual, technology
spending updates to business leaders worldwide, enabling
him to adjust their budgets throughout the year according
to the resources they use and the technology requirements
of their larger business strategy.
Now executives are beginning to spend less time debating
whether the costs allocated to them are accurate, and focusing
more on what they are getting for their money. “Value was
getting defined by the cost of what was being consumed,”
business leaders to be of equal benefit. “Our next step is to
really look at the cost of performance, and what performance
is expected” in terms of business value.
Generating value is what moves every business forward.
As The Hackett Group’s Yohannes puts it, “Cost transparency
is a means to an end.” When business leaders are able to
identify their most productive investments in the moment,
they will be better positioned to make decisions about how
to allocate funds as new business needs arise. Whether they
are making their infrastructure more efficient, launching a
new digital product, or establishing a new business model,
they will have the means to uncover more value today and
in the future.

Endnote

Jordan Bar Am, Laura Furstenthal, Felicitas Jorge, et al., “Innovation in a Crisis: Why It Is More Critical Than Ever,” McKinsey & Co., June 17, 2020.
1

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/innovation-in-a-crisis-why-it-is-more-critical-than-ever.

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M E T H O D O LO GY A N D PA R T I C I PA N T P R O F I L E

A total of 338 respondents drawn from the HBR audience of readers (magazine/newsletter readers,
customers, HBR.org users) completed the survey.

Size of Organization Seniority Key Industry Sectors Job Function Regions

19% 50% 14% 30% 36%

10,000 or more Executive Manufacturing General/executive North America
employees management/ management
board members
13% 25%
25% Technology 11% Europe
1,000 – 9,999 31% IT
employees Senior
management 9% 21%
Financial 9% Asia/Pacific/
8% services Strategic Oceana
500 – 999 10% planning
employees Middle
management 9% All other functions 12%
Business/ less than 8% each Latin America
22% professional
100 – 499 10% services
employees Other grades 6%
All other sectors Middle East/
less than 8% each Africa
27%
Fewer than 100
employees

Figures may not add up to 100% due to rounding.

ABOUT US

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unit within Harvard Business Review Group, conducting research and comparative
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