A new way to track government spending on technology

Seattle and its suburbs comprise a world-renowned tech hub that plays home to iconic companies that have reached household name status such as Microsoft, Amazon, RealNetworks, Nintendo and Cray to name a few.

Sunny Gupta just believed Seattle needed one more.

And so he set out seven years ago with the express (and audacious) goal to create a tech company that would be so successful that virtually everybody in business would hear about it.

After all, Gupta has done this before, having built and sold two companies to Hewlett Packard, and one to IBM (speaking of iconic companies).

First move: Listen. Gupta visited with chief information officers (CIOs) at companies and in government positions. Listening to what they complained about; what they needed but did not have.

{mosads}”We wanted to make sure we had a really big idea,” he tells a visitor.

Today, his company, Apptio, is providing CIOs a new tool to make them true C-level executives (not merely “the techie” in the room). And while the company may not yet be a household name, Gupta seems to be on his way.

Launched with money from venture superstars Andreessen Horowitz (led by Netscape founder Marc Andreessen), Greylock Partners (early stage money for Facebook and LinkedIn) and Madrona Venture Group (early Amazon funders), Apptio last year was the biggest non-biotech recipient of new capital in Washington state.

Why all the money? Because, as Gupta points out, even as the world spends $3.6 trillion dollars on information technology (IT), the CIOs did not have a comprehensive business management tool for all that investment.

“The IT department touches every part of the business, but it isn’t managed like a business,” Gupta says, warming to his favorite topic. “It was truly a case where the cobbler’s children had no shoes.”

Gupta points out that CIOs must track their hardware, plus the bring-your-own-devices of employees. Then there is storage, cloud usage, a burgeoning number of apps, energy usage, cybersecurity, telecommunications and reporting that to the CEO and CFO.

“CIOs we talked to literally could not tell you what the fully loaded cost was of their company’s total technology spend. They had no visibility, and no transparency by which to manage.”

The field is now referred to as Technology Business Management (TBM). Gupta promises that Apptio can deliver metrics and data that enable users to see 20 to 30 percent jumps in the efficiency of their technology budgets.

And big-name customers are signing up: Boeing, Hilton, Cisco, Microsoft, Starbucks, Safeway, Facebook, eBay and U.S. Steel to name a few.

“We have literally written the book on TBM,” Gupta says with evident pride. “We formed a council of CIOs from across industries and established it as a nonprofit and not only wrote a book for other CIOs, but also laid out the first-ever operating standard for CIOs.

“Now CIOs can not only run the technology better, they can help run the entire business better. Government executives can get the transparency needed how they are spending, where, and how they can be better stewards.”

That’s a message that is being warmly received in Washington, where the roughly $80 billion annual IT spend routinely earns negative press for the failed technology rollouts and spend mismanagement. Indeed, after the midterm elections, it seems safe to say that one thing both parties can agree on is doing more with less.

According to Gutpa, Apptio can help federal information technology leaders with the Office of Management and Budget (OMB) mandates such as PortfolioStat. Apptio’s cloud-based applications can help them determine effectiveness of current information technology management practices and address opportunities to improve management of IT resources.

Apptio’s approach is to provide analytics and fact-based insights about the cost, quality and value of technology spend to remove the emotional component from the decision-making process surrounding spending, so that spend management is no longer up for debate.

The company’s standard methodology also allows for cost measurement commonality across all agencies. This will enable disparate agencies to understand and communicate their costs in a standard way, rather than relying on individual preferences.

Apptio claims its Cost Transparency application can track a grant or appropriated money to ensure it is being spent as planned. The company also helps information technology finance professionals understand the color of money by tracking appropriators on Capitol Hill. All of this is done within the context of each agency’s larger budget to provide deeper clarity and understanding throughout the agency.

In October, when 800 information technology leaders devoted to Apptio’s TBM approach gathered in Miami to compare notes, there was for the first time a significant contingent of federal CIOs.

“Getting the most out of the billions that government spends is a bipartisan issue,” Gupta observes. “Taxpayers, Congress and the administration all want to see us spend money wisely.”

Well, there’s another audacious goal.

This piece has been updated from a previous version.

Bond is a former undersecretary of Commerce for technology and a former CEO of the trade association TechAmerica. Today he is president and CEO of Bond & Associates, a technology and healthcare lobbying firm with offices in Washington and Silicon Valley.