Digging down to bedrock

FINANCIAL REPORTING is simple, in theory. It is ultimately a balance of assets and liabilities and as long as the former outnumber the latter, you're in business. But in many businesses the balance sheet is a work of fiction only slightly less inventive than the average expense claim; a bold claim, but one based on the happy-go-lucky approach many businesses have towards asset management.

Asset management has at least two components tracking assets and managing liabilities associated with them. Traditionally, using hardware such as desks and chairs as an example (or even computer towers and monitors), this meant counting and depreciation. This paradigm applies to a company's information technology (IT) assets as well.

Wikipedia reminds that IT asset management (ITAM) is a "set of business practices that join financial, contractual and inventory functions to support life cycle management and strategic decision making for the IT environment. Assets include all elements of software and hardware that are found in the business environment.

"Asset management (AM) software brings accurate inventory data together with business information and reports requirements, discrepancies, changes and other important information to administrators and decision makers," says NetTrace MD Jonathan Bass. "AM software automates the laborious task of data consolidation and matching which gives administrators the opportunity to manage large amounts of data and have a clear indication of what to action. Asset inventory data is exhaustibly dynamic and without AM software sending alerts on set conditions or tracking specific criteria, asset management would be impossible."

The online encyclopaedia describes two types of AM software: that looking at software and those tracking hardware.

"Software asset management (SAM) applies to the business practices specific to software management, including software licence management, configuration management, standardisation of images and compliance to regulatory and legal restrictions - such as copyright law, Sarbanes Oxley [for US companies or SA companies listed there] and software publisher contractual compliance."

Legal software use in an organisation is enforced by such compliance organs as the Business Software Alliance (BSA) globally, the Software and Information Industry Association in the US and the Federation Against Software Theft in the UK.

"Software is referred to as entitlements so that SAM programs confirm the right to use, or entitlement to that software by the user. Automation is used to facilitate this management," the Wikipedia's writers add.

"Hardware asset management (HAM) entails the management of the physical components of computers and computer networks, from acquisition through disposal. Common business practices include request and approval process, procurement management, life cycle management, redeployment and disposal management," the encyclopaedists explain.

FrontRange Solutions Africa product manager Paul Bornhutter says it is "an irony of modern industry that despite investing huge amounts of financial and human capital into IT, many organisations often have less interest in effectively tracking and managing these IT assets than they do in maintaining their physical assets."

He adds that most IT directors will claim to know exactly how many PCs they have on their network. The reality - backed by Gartner research - is that more than two-thirds of organisations have a discrepancy of up to 30% between expected and actual inventories.

"This lack of knowledge poses obvious problems - how can you accurately budget and plan if you don't know what you've already got? How can you eliminate waste if you don't know what people are using?"

The other problem, says webINTELLECT CEO and CIO Poena le Roux is that "most companies do have some form of an IT asset management solution. The problem is that the solution only tracks one component of the asset's life cycle."

"Companies," he says "need to ensure that their IT asset management strategy addresses the complete IT asset life cycle, from 'planning' right through to 'disposal'."

Bornhutter adds that Gartner research shows "SAM can result in savings of up to 30% of the IT budget. These savings result from accurate purchases of licences (neither too many nor too few) and the full use of all licences purchased. Software which is not used is eliminated from the environment, meaning an audit by the BSA need never cause concern."

He says discovery and licence management are quick and simple to implement.

"Licence management provides a significant, immediate return on investment by reducing both wastage and risk by providing visibility of the licences held and therefore avoiding overbuying and under-licensing."

"These can deliver a much more immediate business and financial impact: lower costs, greater security, decreased risk and improved corporate governance. These initial steps will also set organisations on the road to achieving full ISO 19770-1 compliance when the time is right."

The positive results are plain to see, but for some IT directors and CIOs SAM is still viewed as overly complex and costly, in part due to the convoluted ISO 19770-1 standard, says Bornhutter. "However, the truth is that it is far easier to get started than it may appear and steps are being taken to further simplify this process."

That said, SAM is rapidly rising on the CIO's agenda, says Bornhutter. "A commitment to SAM demonstrates that an organisation understands the critical role that software plays within a business and the necessity to glean as much value from its IT assets, while remaining operationally compliant at all times. In this time of heightened regulation in a volatile economy, government organisations cannot afford to have anything less than complete knowledge and control of their IT estate."

But ITAM can do more than help count the beans, says Magix Integration director Amir Lubashevsky. It can help predict failure and ensure business continuity.

"The simple fact is IT systems fail. It may be the technology that is at fault, or it could be something beyond the control of IT, such as power outages or communications facilities that are damaged, but the consequences for business are always the same, unproductive downtime."

"Predictive IT management (PITM) goes beyond simply offering a bird's-eye view of a company's infrastructure," explains Lubashevsky. "It consists of building a real-time virtual model of the infrastructure and allows what-if analysis to be performed.

"Instead of running business continuity planning on a best-guess scenario, PITM allows business to gain an accurate understanding of the consequences of any disaster. A company will realise huge savings in the event of a disaster if it has been able to model various scenarios and prepare for them," says Lubashevsky. "Either the company can ensure redundant systems are in place for critical operations, or it will have the recovery planned to the most intricate level.

"Management is also able to use the model to ascertain the consequences of not having redundant systems in place when budgets are limited. Resources can be assigned to critical areas of the business to ensure continued functioning, while other components of the operation can be left for later resolution.

"Additionally, when problems do occur unexpectedly, the root cause can easily be traced via the model," he explains.