IT asset management moves to the forefront as key governance function

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Every organization is now dependent on digital technology for almost everything it does. As a result, IT asset management is critical not just to the running of ‘IT,’ but to making business decisions as well.

However, organizations are also having to do ITAM differently – while IoT device proliferation is driving a return to hardware asset management, the consumerization of digital technology is lowering the cost of IT. This forces a reassessment of the reasons for managing assets. It’s no longer about the cost of the asset, or about the asset class, but about the valuable information that the asset contains or provides access to.

Organizations with relatively mature ITAM capability are using ITAM data to support their technology strategy, which in turn should support their business strategy. As stakeholders become aware of the data that is available, they are keen to use both the data and the insights it provides to support their activities and help them make data-driven decisions.

Common examples of this include:

  • Application rationalization – understanding what’s actually being used, by whom and what value it creates.
  • Cloud shift – how systems are being used and how the costs compare between on-premises and cloud, or between cloud provider offerings.
  • Technology migrations – upgrading OS, moving to SaaS applications or changing from one technology provider to another (e.g. MS 365 to Google) can be planned using ITAM data to ensure appropriate provisioning and minimize business disruption.
  • Rightsizing contracts – utilization data facilitates purchasing the correct products on the correct license model in the correct volumes at the correct price.
  • Making investments based on business value derived from technology assets by linking technology to business outcomes.

ITAM as a governance function

While ITAM moves from being an administrative activity to a governance function, it’s governance framework and the insights provided by ITAM data enable business units to source technology-based solutions effectively without being categorized as ‘shadow IT’ or ‘IT bypass.’

As organizations focus on the value they drive from their investments rather than simply looking at costs, ITAM data must make the link between technology, and business process and value. Detailed asset data is providing business unit stakeholders with a clearer understanding of IT services and the associated cost. Increased transparency is building trust between IT and the business.

How did we get to this point?

As IT has changed over the last decade, so has ITAM. The types of technology assets that we need to deal with has expanded. The number of technology assets has grown exponentially and the way in which these assets are procured, provisioned and consumed has also changed.

The hardware years

ITAM’s focus in the early years was on hardware, partly because of the relative size of the capital investment in the hardware compared to the software and partly because unlike software, the physical hardware asset was (relatively) easy to locate and identify. Barcode tagging and scanning allowed for identification, and location of hardware didn’t generally move much.

Software was much harder to identify and locate, and the accounting requirements were less onerous – software was often bundled with the hardware and accounted for as a compound asset. As a result, the focus was on the operational requirement to be able to deliver functionality to end-users to support business needs and to populate the CMDB with data to support IT service management.

The compliance years

This changed with the economic downturn at the end of the 2000s. As organizations cut back on software spend and started to sweat both hardware and software assets beyond the initial planned lifetime, canceling maintenance contracts and reducing spending on new products, software vendors started to focus on compliance as a way of making up the shortfall in revenue.

New license sales are new license sales whether they result from genuine growth or are identified as historic shortfalls due to poorly informed purchasing decisions in previous years. This audit activity didn’t impact all regions simultaneously – it started in Northern Europe, then expanded into the rest of Europe, moved to North America and from there on to Australasia, Asia Pacific and Central and South America.

Audits are now part of business as usual for most organizations, but thankfully are not occurring with the same frequency they reached at their peak. At one point, multiple organizations had experienced more than 10 audits in a single 12-month period.

The cost optimization years

Once the shock of the audit activity had worn off and compliance had broadly been addressed, ITAM turned its attention to another pressing priority of the economic downturn – cost reduction., Software asset management (SAM) in particular has significant potential to identify waste – unused licenses that can be canceled (if subscription) or reused (if in demand), or at least have their support and maintenance canceled or renegotiated.

There are numerous ways to reduce costs in this space, so IT organizations under budgetary pressure focused on SAM to deliver cost savings by cutting waste. Once the waste was gone, the focus moved from cost saving to cost optimization, with procurement looking to SAM to provide the data needed to right-size software contracts.

The cloud years –Abdicating responsibility for non-traditional IT assets

The growth of SaaS (and other cloud-based services) initially resulted in ITAM being sidelined. Given a perception that there were no compliance issues to manage and that buying services rather than hardware and software was cheaper, business customers and IT alike were quick to adopt these solutions and saw no need to manage them as technology assets. Given that they were neither hardware nor software, and that the costs were no longer capitalized or amortized, this was an easy mistake to make - until the bills arrived.

The ability to self-serve functionality direct from the vendor rather than going through IT processes resulted not only in significant unbudgeted costs, but analysis of the data quickly showed that the issue of shelfware was not limited to on-premises software – shelfware-as-a-service had arrived. Software asset management is key to controlling these costs, and SAM teams focused purely on compliance were forced to mature their capabilities to enable cost optimization.

Things are looking up

In the last 18-24 months, business priorities have started to move away from cost cutting and cost control towards growth and improved profitability. As a result, ITAM information is being used not simply to identify compliance issues and cost savings, but to pinpoint opportunities to drive value, whether through leveraging existing assets or understanding the opportunities presented by new technologies.

While compliance and cost optimization are still relevant, they are essentially by-products of effective ITAM for organizations focused on growth and innovation.

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