Glossary Topics K-O Flashcards
What is a Key?
One of four supported column types that can be assigned to the columns of a data set. A key establishes a relationship to all other tables in the project that have the same key.
What is a KPI?
KPI
Key Performance Indicator. A statistic about an important area of the business. Examples: spend per employee, cost year-to-date, labor headcount.
What is a Label?
Label
In Apptio Studio, one of four supported column types that can be assigned to the columns of a data set. Labels are not included in the Inference Map.
What is a LUN?
LUN
The “Logical Unit Number” This is an ID of a place on the frame that can be used for Storage. Usually present in data, and represents an assignment layer between physical devices and logical volumes.
Describe the Operating Profit & Margin: Metric?
Operating Profit and Margin:
Is total revenue less operating expenditures. Operating profit and margin depend on quantifying the value of your IT services in financial terms, which few IT organizations do today. Consider establishing prices based on market rates and costing the IT services whose value is most heavily scrutinized by business leaders, such as desktops, storage and business applications. Then produce and communicate operating profit and margin to business leaders and other stakeholders in order to demonstrate the importance of quantifying the value of your services. This can justify the expansion of pricing to other IT services.
Describe the NPV of IT Investment Portfolio: Metric?
Net Present Value (NPV) of the IT Investment Portfolio:
Net present value (NPV) is a method of determining the return on investment from a projected stream of cash flows. It reflects the value, in today’s dollars, of expected cash receipts less expected cash paid out for a project or investment or service. In discounting the cash flow, most organizations use their average cost of capital or another discount rate that reflects their cost of money.
Generally this is set by the finance department. Economic Value Added (EVA): provides an effective measure of profitability from the operations of a business unit from the perspective of the shareholder. It does so by essentially reducing the net operating profit (after taxes) by the average cost of capital for the business unit. EVA promises to provide an accurate measure of profit contribution for a period of activity. EVA is not a measure to be undertaken by IT alone, as it relies on assumptions about the amount of capital invested in IT that is not traditionally available to IT decision makers.
What is a Materialised View?
Materialised View
A database object that contains the results of a query. For example, it may be a local copy of data located remotely, or may be a subset of the rows and/or columns of a table or join result, or may be a summary based on aggregations of the data in a table. Materialized views, which store data based on remote tables, are also known as snapshots. A snapshot can be redefined as a materialized view.
What is Mercurial?
Mercurial
A cross-platform, distributed revision control tool and source control management (SCM) system. Free software distributed under GNU General Public License version 2.
What is Metering?
Metering
The practice of measuring usage for the purpose of charging an associated usage fee.
What is a Metric (within Apptio Applications)?
Metric (Apptio Applications)
A calculation that provides a measurement for a model. Typical metrics include: cost, budget, and utilization. Apptio supports the following types of metrics: costing, label, numeric, pricing, and quantity.
There are two classes of metrics:
* Modelled. A modelled metric is a model.
Calculated. A calculated metric is a new column in a unit table. Calculated metrics apply for the entire project
What types of Metrics are there within Apptio?
There are three types of metrics:
Efficiency
Service Delivery
Business Transformation
Metrics | Business Transformation Metrics.
The focus is on the allocation of resources to achieving the transformation goals, and their associated return to the business.
IT Spend Ratio: IT portfolio management stratify IT investment portfolio according to four categories of investment: infrastructure, transactional, informational, and strategic (For an excellent discussion of IT portfolio management along these four dimensions, refer to: Weill, Peter, and Sinan Aral. “Generating Premium Returns on Your IT Investments.” MIT Sloan Management Review 47.2 (2006): 39-48. Print.). These categories are aligned to the type of benefit conferred by the investment.
Their portfolios are cast along the following three strata: run-the-business (RTB), grow-the-business (GTB), and transform-the-business (TTB). Over the past several years, CIOs have seen their budgets tighten and have had less to allocate to GTB and TTB. Their combined ratios (GTB + TTB) fell from about 38% of total IT budgets in 005 to 33% in 2008, but have made modest improvements since then (i.e., to 35% in 2010).
Net Present Value (NPV) of the IT Investment Portfolio: Net present value (NPV) is a method of determining the return on investment from a projected stream of cash flows. It reflects the value, in today’s dollars, of expected cash receipts less expected cash paid out for a project or investment or service. In discounting the cash flow, most organizations use their average cost of capital or another discount rate that reflects their cost of money.
Generally this is set by the finance department. Economic Value Added (EVA): provides an effective measure of profitability from the operations of a business unit from the perspective of the shareholder. It does so by essentially reducing the net operating profit (after taxes) by the average cost of capital for the business unit. EVA promises to provide an accurate measure of profit contribution for a period of activity. EVA is not a measure to be undertaken by IT alone, as it relies on assumptions about the amount of capital invested in IT that is not traditionally available to IT decision makers.
Metrics | Efficiency Metrics.
Fixed-to-Variable: Monitor your fixed-to-variable cost ratio and ensure it is in line with the needs of your business. Keep in mind that with this ratio, lower is not always better. For some organizations, especially those with economies of scale, a higher proportion of fixed costs may be advantageous. Businesses that experience more significant organizational changes, especially reductions in staff, generally benefit from a higher proportion of variable costs.
Direct vs. Indirect Cost Ratio: When determining direct vs. indirect, you must answer one question first: to what degree are your costs (primarily) allocated? The relative proportion of your indirect costs to your direct costs indicates the degree to which your business employs shared resources.
In organizations that have not completed the transformation to a service delivery model, the objects of allocation are generally business units or cost centers. For example, IT organizations in this model may allocate the cost of a server to the business unit (cost center) to which it is dedicated. In organizations that are aligned to service delivery, the objects of allocation are generally their services. Resources that are dedicated to a business unit or a service would be described as a direct cost. This metric, along with utilization metrics, can quickly identify opportunities for cost reduction. In particular, look for direct costs that are associated with poorly utilized resource
CapEx to OpEx: This gives you an indicator of how much of your expense represents an investment for the business. Since these investments create useful assets, a higher ratio means you are investing more of your money in long-term value. However, a higher ratio also contributes to a higher fixed cost structure, as fixed asset depreciation is a fixed cost. (On the other hand, renting capacity through service providers represents OpEx, but generally provides a much more variable cost structure.) Regardless, there is no magic number for the right level of investment; it depends on your business goals
Capex to Asset: compares your annual capex budget with the purchase value (original value at time of creation) of your assets that are fully depreciated or will be fully depreciated within the planning horizon. For example, if you have fully depreciated servers with a combined purchase price of $10 million, and another $2 million in servers that will fully depreciate in the next fiscal year, your capex budget for server refresh should be based on $12 million. Studies have shown that failing to invest adequate capital back into IT generally costs more in the long run. This ratio is crucial to maintaining the long-term cost-effectiveness of your IT organization. For a discussion of IT capex-to-asset ratio, see: Buchanan, Stewart and Jack Heine. “Use Financial Sustainability Metrics That Optimize the IT Asset Portfolio to Optimize Cost.” Rep. no. G00171629. Gartner, 26 Oct. 2009
Budget vs Actuals and Forecast: By identifying variances early, you can take prescriptive action. At a minimum, you must inform stakeholders who are directly impacted by variances, such as the business units that will be charged for them. See: Gartner. “Gartner Says Changing the Cost Structure of IT Will Become a Business Imperative for Most CIOs.” Gartner, 14 Oct. 2008. Web. 15 Dec. 2010.
Metrics | Service Delivery Metrics.
Performance is measured at the service-level, not the technology component level. Services (and service-levels) must be defined and their costs determined.
TCO by Business Service: Monitor the unit or per-user TCO trends for each of your business services. In general, the unit costs should fall over time as hardware depreciates and license costs are fully amortized, along with other benefits such as reduced operating costs. They should also fall as more users adopt the service, resulting in a broader distribution of fixed costs. In some cases, TCO will rise as the result of major new releases and upgrades.
Operating Profit and Margin: is total revenue less operating expenditures. Operating profit and margin depend on quantifying the value of your IT services in financial terms, which few IT organizations do today. Consider establishing prices based on market rates and costing the IT services whose value is most heavily scrutinized by business leaders, such as desktops, storage and business applications. Then produce and communicate operating profit and margin to business leaders and other stakeholders in order to demonstrate the importance of quantifying the value of your services. This can justify the expansion of pricing to other IT services.
Return on Assets (ROA): A common metric applied to capital intensive companies and reflects how efficiently your assets generate income. Since IT is capital intensive, it applies equally well here.
The return on IT assets (ROITA) is calculated by dividing your annual (or trailing twelve month) operating income by your average annual IT assets (capitalized hardware, software, and other costs). The higher the return (as a percentage), the better you’re doing to derive service value (e.g., IT billings) from your fixed assets.
What is a Model within Apptio?
Model
In the Apptio applications, a model is a logical and graphical representation of the flow of financial resources and services between parts of an IT organization. A model represents data groupings and allocations of a given metric, such as cost. A model is composed of objects and allocations.
The structure of the models in a project determines the type of information that can be displayed in the reports for that project. For example, by creating separate models for cost and budget, you can obtain plan-versus-actual reports. Also called data model.
