TBM Taxonomy
What is TBM Taxonomy?
The TBM Taxonomy is the TBM Council's standard model for classifying technology costs. It organizes spending into cost pools, resource towers, solutions and consumers so costs can be compared and traced.
Updated November 2026 · 5 min read
The TBM Taxonomy is the standard classification model at the heart of Technology Business Management. It defines a common set of categories for technology spending, from the type of cost in the general ledger to the services and products that business units consume. Because the categories are shared across organizations, the taxonomy also gives companies a consistent basis for benchmarking.
The taxonomy is created and maintained by the TBM Council, which updates it as technology changes. Its most recent major release, version 5.0, was published in 2025 and added dedicated treatment for public cloud, SaaS and artificial intelligence. Organizations use the taxonomy as the backbone of their TBM cost model, adapting it to their own needs while keeping the standard structure.
Definition of the TBM Taxonomy
The TBM Taxonomy is a layered hierarchy. Each layer represents a different view of the same spending, and costs flow from one layer to the next through allocation rules. In version 5.0, the four layers are Technology Cost Pools, Technology Resource Towers, Technology Solutions and Technology Consumers.
Each layer answers a different question. Cost pools answer what the money was spent on. Towers answer which technology resources it pays for. Solutions answer what those resources deliver, and consumers answer who uses them. Together, the layers let a single dollar of spending be followed from an invoice to the business outcome it supports, through a chain of cost allocation rules that anyone can inspect.
Cost Pools and Resource Towers
Cost pools form the finance view. They group spending by type, such as Staffing, Outside Services, Cloud Services, Software and SaaS, Hardware, Data Center Facilities, Telecom and Miscellaneous Costs. Each pool is further split into sub-pools, with operating and capital costs separated.
Technology Resource Towers form the technology view. Towers such as Compute, Storage, Network, Application, Data, Security, End User and Tech Management group costs by the resources IT runs. In earlier versions these were simply called towers or IT towers.
Solutions and Consumers
Technology Solutions form the business view. They represent the services and products technology delivers, grouped into categories such as Business, Workplace, Shared and Corporate, AI, Infrastructure and Delivery. A customer relationship management platform or an employee collaboration service would each be a solution.
Technology Consumers form the final layer. They represent the business functions, value streams, partners and external customers that use the solutions. Linking solutions to consumers is what allows a TBM model to show each part of the organization what its technology costs.
Importance of the TBM Taxonomy in IT Financial Management
Without a standard taxonomy, every organization invents its own categories for technology spending. Those categories are hard to explain, hard to keep consistent from year to year and impossible to compare with other companies.
A Common Language
The taxonomy gives finance, IT and business leaders a shared vocabulary. A CFO can see spending by cost pool, a CIO can see it by tower and a business leader can see it by solution, all from the same model. This makes discussions about budgets and investments faster and less contentious.
The common language also helps when organizations change. New leaders, mergers and reorganizations are easier to manage when the categories for technology spending follow a recognized standard rather than local conventions.
Benchmarking and Comparison
Because many organizations use the same categories, the taxonomy makes IT benchmarking more meaningful. An organization can compare its cost per tower or per unit of service with peers and identify areas where it spends more or less than expected.
Internally, the taxonomy supports comparisons across time and across business units. Year-over-year trends in a tower or solution category reveal where costs are growing and whether that growth matches the value delivered.
How to Implement the TBM Taxonomy
Most organizations adopt the taxonomy step by step, starting with the layers closest to their financial data and adding detail as their data improves.
A common approach is to start with cost pools and towers, which can be built largely from financial and asset data, and to add solutions and consumers once the organization has a reliable inventory of its applications and services. Trying to build every layer at once often stalls programs before they produce useful results.
Mapping Financial Data
Implementation begins by mapping general ledger accounts and cost centers to cost pools and sub-pools. This step is mostly a finance exercise and can usually be completed with existing accounting data.
The next step allocates cost pools to towers and sub-towers, using data such as asset inventories, headcount by team, cloud bills and contract records. Labor is often the hardest pool to allocate, because it requires knowing how staff time is split across resources.
Extending and Maintaining the Model
Once towers are in place, organizations define their solutions and map tower costs to them, then link solutions to consumers. The TBM Council publishes taxonomy extensions for specific industries, and organizations may add their own sub-categories as long as they roll up to the standard structure.
The model needs regular maintenance. When the TBM Council releases a new version, organizations review the changes and decide when to adopt them. Version 5.0, for example, introduced a dedicated Cloud Services cost pool and new AI sub-towers, which affect how cloud and AI costs are modeled.
Examples of the TBM Taxonomy in IT Financial Management
The examples below show how the taxonomy turns raw spending into useful views.
In each case, the same spending appears in every layer of the model, so finance, IT and business leaders can each start from the view they know best and still arrive at the same numbers.
Tracing a Software Contract
A company pays $2 million a year for a database software agreement. In the taxonomy, that spending lands in the Software and SaaS cost pool. It is then allocated to the Data tower based on where the databases run and from there to the solutions that use those databases, such as an order management system and a reporting platform.
Finally, the solution costs flow to the business units that use them. The sales organization can now see its share of the database agreement as part of the cost of the systems it relies on.
Modeling Cloud and AI Costs
A retailer adopting generative AI wants to understand what its new customer service assistant costs. Using the taxonomy, cloud provider charges go to the Cloud Services cost pool and are allocated to AI compute and AI model sub-towers, then to an AI solution.
The model also adds the internal staff and outside services that support the assistant. The result is a full cost for the AI solution, which the retailer can compare with the savings it delivers in customer support.
Conclusion
The TBM Taxonomy provides the standard structure that makes Technology Business Management work. Its four layers connect financial data to technology resources, solutions and the consumers who use them, giving every audience a view of spending it can understand.
Adopting the taxonomy gives organizations a common language for technology costs, a basis for benchmarking and a model that adapts as technology changes. Keeping the model current with each new version helps ensure that cloud, SaaS and AI costs are reported as clearly as traditional infrastructure.
Related terms
Cost Allocation
Cost allocation is the process of assigning shared costs to the products, services, departments or customers that use them. It shows the full cost of each and supports pricing, budgeting and chargeback.
Cost Pools
Cost pools are groups of costs that share the same type or purpose. In TBM, they form the finance view of technology spending, such as staffing, hardware, software and cloud services.
IT Towers
IT towers are groups of technology resources, such as compute, storage, network and end-user devices, used to organize IT costs in TBM. The current TBM Taxonomy calls them technology resource towers.
General Ledger
A general ledger is the master record of all financial transactions in an organization, organized by account. It is the source for financial statements and the starting point for analyzing costs.