The leaders of most organisations have a complex array of decision criteria to balance building for business growth and strategic cost-cutting. At this point, the tactics for reducing the costs of business such as delaying projects and downsizing have been done. Where is their next source of savings originating within the enterprise?
If your organisation has an inventory-only approach to the management of IT assets, then IT assets are an untapped reservoir of ongoing savings awaiting executive support. Without executive support, it is likely that IT asset costs are not available, either because they aren't managed or because there isn't confidence that there is an alternative to the chaos that exists in the IT realm.
The answer is to change this state through implementation of an IT asset management (ITAM) program that manages the assets from a business perspective and directly links IT spend to the organisation's goals.
ITAM is a set of business practices that incorporates the proactive management of IT assets across the business unit silos within the organisation, joining the financial, inventory and contractual responsibilities that are often compartmentalised in a company without ITAM.
The mission of the IT asset manager is to maximise benefits while minimising risks from IT assets. According to an International Association of IT Asset Managers (IAITAM) 2012 survey, for those firms that have ITAM programs, over 88% have tasked their IT asset managers with making process improvements while uncovering more savings. Over 71% of the respondents were involved in software compliance management, up from 2011, which is another major source of savings through audit avoidance and strategic buying practices. These companies have placed long-term employees (over 65% have been with the organisation over five years) in these roles to gain savings results that occur with seasoned professionals such as:
* Increased homogeneity in the asset pool, reducing security concerns, establishing standard configurations resulting in reduced support costs.
* Substitution of harvested and redeployed assets to fulfil a request, eliminating over-purchasing.
* Vendor and contract management that streamline agreements to match the needs of the organisation and gain more favourable, standardised contract language.
* Software compliance management, reducing the financial penalties and settlements due to an audit as well as number of audits.
* Decreased costs of remediation for accountability, data security and privacy legislation through processes, policies and transparency through accurate data throughout IT asset lifecycles.
ITAM creates a management view of the IT portfolio, the second most expensive budgetary line item in many cases behind the employee costs. Organisations with ITAM programs assign responsibilities to IT asset managers in the following areas:
Asset identification management | 84% |
Compliance management | 79% |
Disposal management | 74% |
Acquisition management | 67% |
Policy management | 66% |
Financial management | 59% |
Vendor management | 59% |
Project management | 57% |
Documentation management | 55% |
Program management | 54% |
Communication and education management | 51% |
Legislation management | 21% |
The above table corresponds to the key process areas (KPAs) defined by the IAITAM's Best Practice Library that allow organisations to achieve significant savings and reduce risk throughout the lifecycle of IT assets while in the custody of the enterprise. The differences in this chart between 2011 and 2012 demonstrate that more are involved in the ITAM program at each level. Last year, the percentage of those involved in each of these KPAs was much lower. Knowledge, awareness and education have increased organisational involvement in the ITAM program.
ITAM succeeds because of a strong focus on policies, processes, outcomes, measurements, roles, responsibilities and goals. Implementing best practices happens over time, taking advantage of the strengths of the company and shoring up weaknesses in those areas that were invisible without a global view of the asset environment. The classic departmental structure is typically a roadblock to maximising the value of IT supporting a siloed approach to asset management while a centralised ITAM program approach eradicates that roadblock. For example, the ITAM contribution to technology acquisition includes:
* Request and approval processes, which includes application of standards, redeployment and initiating a purchase if appropriate and an expense policy that supports executive control of the IT environment and spend.
* Vendor management, which includes level of management, communication and other policies, internal feedback, scorecard process to improve data for tactical and strategic decision-making regarding vendor relations and product choices.
* Formal acquisition selection processes, contract negotiations and contracts execution that reflects organisational, department, procurement and IT rules.
* Documentation management, which includes verifying proof of purchase documentation, retention, linkages between documentation and specific assets to eliminate expensive compliance projects.
* Receipt, initiating payment of invoice and creating an incident to configure and deliver to the correct individual/location/department, finding errors and eliminating expensive mistakes.
Repeatable, sustainable reduction of inappropriate spending is squeezed out through the processes, roles and policies that govern the acquisition of IT assets.
Repeatable, sustainable reduction of inappropriate spending is squeezed out through the processes, roles and policies that govern the acquisition of IT assets. This diligence ensures the acquisition is obtained at the right price and with the best legal language. A financially-focused IT person like an IT asset manager has the advantage of a shared vocabulary and working relationship with the finance, legal and end-user departments. Where service management has failed to eliminate the IT to business gap of trust and common goals, IT asset management completes the transition and closes those gaps and returns true value back into the enterprise.
In addition to closing gaps in processes and across the hierarchy, ITAM provides a new twist to the measurements already provided to management. Multi-departmental responsibilities yield a fresh view of measurements that identify areas for savings. Measurements such as total cost of ownership are created with improved data and deliver results that are closer to the actual. Baselines and measurement of change are no longer restricted to the performance numbers from IT and the cost numbers from the budget owners. Assessment of internal processes and vendor delivery requires data and the ability to interpret beyond the silos of individual process steps. ITAM professionals measure customer satisfaction, the vendor's compliance to the contract, usage and strategic impact to support the organisation.
Specific suggestions for executive actions that empower ITAM financial savings are:
* Firm up the policies regarding purchases. Distributed control that includes IT so that IT purchases can be expensed under a certain rand figure undermines all savings opportunities as well as governance efforts.
* Negotiate more, especially software agreements. Opportunities are routinely left on the table. Obtaining a discount is a step and not the end of what should be received. The vendor management that is part of ITAM measures and manages the vendor relationships to gather the most information for leverage and also builds the value proposition for both parties.
* Increase visibility into the asset portfolio, eliminating over-purchasing through lack of information and under-purchasing that leads to software compliance penalties. Visibility reduces support and security costs as well.
Executives should demand an ITAM roadmap that delivers measurable savings in the short- and long-term and track the progress over time. ITAM goals are ultimately driven by the goals of IT, other departments and the company itself. Since the goals vary, and the processes involve individuals from different departments, working together for common goals in support of the enterprise, a program structure implemented as a core competency is what it takes to deliver value through ITAM.
ITAM best practices have a great deal to offer to IT, the business units, and the organisation itself in terms of driving savings, added value, risk avoidance, efficiencies and fiscal responsibility.
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