IT asset management - or IT asset management services - manages procurement, keeps inventory, tracks hardware and software assets, and manages licences, maintenance, warranties and so on. It also involves the management of contracts related to leased IT assets.
IT asset management (ITAM), says Gartner, is a fundamental discipline that enables improved cost control and better understanding of the business value of IT.
"With 80% of the average IT budget spent on maintaining existing applications, ITAM remains one of the most fertile opportunities for continued IT cost reduction," the company says.
The clear value to be derived, both in terms of cost savings and reputation enhancement, should make ITAM a no-brainer for any IT department. Certainly, in the US, it has proven to be so; a Gartner survey* conducted in 2005 revealed that 49% of respondents had ITAM programmes, 30% planned to roll out in 2006 and a further 10% planned to roll out during 2007 - a total of nearly 90% of the respondents.
This number, says Gartner, is significantly higher than it has generally been across global Fortune 2 000 companies. Anecdotal evidence suggests SA is also lagging the US in this regard, with few local companies engaged in holistic ITAM.
"A number of studies conducted recently - one by Forrester, in particular - point out that a lot of CIOs don't have a firm grip in terms of costs, and where they are with software and various assets," says MigrationWare business development manager Mike Bergen.
Says iLayo Software Solutions MD Inana Nkanza: "ITAM is a figment of most organisations' imaginations at the moment, certainly from a life cycle perspective. Companies that think they have ITAM are very closely managing the procurement aspect of IT assets, trying to get better software asset management in terms of what they are licensed for, and doing a bit of asset tracking. In terms of full life cycle ITAM, we have yet to come across a company with any degree of maturity."
This lack of local market maturity prompted iLayo to open a dedicated, outsourced ITAM consultancy in July. Said Nkanza at the time: "Organisations in both the public and private sectors lose millions each year because they manage their assets poorly. Not only does efficient asset management save companies money, but it enables them to make optimal use of their assets and thereby better serve their customers."
Crossing tracks
That IT doesn't manage its assets more efficiently has something to do with the nature of the assets involved. IT assets, by their very nature, are dispersed throughout, and used by, the entire organisation. Stories abound of servers boxed into storerooms or packed between layers of dry walling - forgotten, but still functioning, which is how they've ultimately been found.
Desktops, by their nature, along with printers, copiers and laptops, are a migratory species. A department moves and so do its IT resources. Is the asset register updated? Not usually.
Beyond the physical location of assets, the contracts governing their use, maintenance and warranties - and, if they're rentals, lease periods - are generally held by the finance department. The end-users and IT staff involved may be unaware of warranties, SLAs, maintenance contracts or rental return periods and penalties. As a result, consumables are ordered and paid for unnecessarily, technicians are called out and paid, equipment is not returned to leasing houses and penalties are incurred. In other words, far more is paid for the equipment than should have been paid, or was budgeted for.
The fact that CIOs aren't jumping to implement ITAM, says Rentworks sales and marketing GM Stuart Lewis, is because they don't want to admit their IT gets lost, cannibalised, endlessly stored in cupboards and so on.
"We have a customer with hundreds of millions of rand worth of equipment in its environment. This company will not implement tracking and tracing software for said equipment because the person in charge is loathe to admit that the system he put in place doesn't work," he states.
The whole life cycle
IT asset management is a figment of most organisations' imaginations.
Inana Nkanza, MD, iLayo Software
A holistic view of IT asset management, of course, needs to include the responsible disposal of said assets at the end of their useful life. What this means is that any and all company data must be properly removed and that the assets should be disposed of in an environmentally friendly fashion. The latter point is rapidly becoming a hot topic, as Rentworks' Lewis notes: "Something that is starting to get people's attention is the Waste Management Bill. It's a very real concept that will require companies to provide certificates to prove they have dealt with e-waste in an environmentally friendly way."
The Waste Management Bill was gazetted in July and governs the disposal of electrical and electronic waste. The new Bill allows for fines of up to R10 million and prison sentences of up to 10 years to be imposed on violators.
Says Lewis: "What companies often do when equipment reaches the end of its life is donate it to needy causes. At the end of the day, donating is dumping. Giving four or five-year-old PCs, that probably aren't running properly and probably cannot run the software needed, to a school means the school now has to work out how to dispose of them."
At the moment, the only organisations that have firm disposal strategies in place appear to be the rental companies - Rentworks, iVolve and Faritec - most of which refurbish PCs for use for short-term rentals for a year or two before consigning them to the local e-waste dumpster. Naturally, companies that rent from said service providers will have less to worry about when it comes to disposal than those that buy their technology outright.
"We think [the Waste Management Bill] will work in our favour," notes Lewis.
Managing the beast
What companies often do when equipment reaches the end of its life is donate it to needy causes. At the end of the day, donating is dumping.
Stuart Lewis, sales and marketing GM, Rentworks
What companies should be doing, says Nkanza, is creating an IT asset management portfolio. "Appoint a person or a team to focus on managing the life cycle of all IT assets. They don't need to be IT administrators or managers; they just need to track the machine, the user, the cost, the contract and what the company needs to do with it. Once you have a portfolio in place, you have a process custodian and you can then roll out automated asset management tools to simplify the job."
Return on investment on the asset management processes and technologies is almost instant. Savings vary from 18% to 25% of IT costs over a year, on a year-on-year basis, states Nkanza, quoting international statistics as local figures are not available.
That said, the returns to be generated from better IT asset management have already seen it spawn a new sub-set and a new acronym: APM. APM, or application portfolio management, is a step up from software asset management and falls under the general sphere of IT asset management as a whole.
Says MigrationWare's Bergen: "Basically, APM focuses on the software in a company - the quality of it, what's there and what state it is in. It provides statistics in terms of the number of people using and maintaining a system, the cost of the system and thus the value of it to the company. The CIO can use APM as a decision-making tool to, for example, allocate budget, identify what systems are more valuable and need more investment, which ones cost too much on a mainframe and should be migrated, which assets aren't used much and should be retired, and so on."
Like its friends - software asset management (SAM) and ITAM - APM speaks to compliance, governance, cost-savings, risk management and freeing up worth-their-weight-in-gold IT skills. Of course, organisations could also simply outsource the problem to a local rental company, or hire Nkanza's consultancy.
Either way, as IT governance, compliance, risk management, e-waste management and a host of other considerations compete for CIO and IT department attention, getting IT assets under control looks like a good way to get ahead of the game in at least one area, and also save time, money and resources.
* Conducted interactively among 192 respondents at the Gartner 2005 Data Centre Conference.
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