IT assets represent large investments that CIOs must effectively manage if they are to deliver business value to the organization. The first step in effective IT asset management is to have an accurate inventory of those assets. Today’s IT asset management systems provide the CIO with tools to not only identify the hardware and software assets they own but also determine their key characteristics such as value, operating status, and security.
The full version of this report, IT Asset Management: A Foundation for IT Value, provides examples and additional analysis of the business value of IT asset management systems. The report also breaks down IT asset management into its detailed components, which IT executives may use as an outline for identifying the specific benefits to be included in the business case for improving the IT asset managment systems and processes of the organization.
Doing More with Less
Although implementing an IT asset management system is a significant effort, its proper application can pay dividends that recur year after year. These returns represent funds available that could be put to use in other areas. In other words, in companies where funding for new IS initiatives is restricted, an asset management system is a tool that management can use to do more with less.
IT asset management also provides protection from software vendors claiming violations of licensing agreements. If software licenses are not tracked, or only primitive spreadsheets of their status are maintained, vendors may insist on a full audit of the company’s license compliance. Such audits are expensive, and if violations are detected the vendor may demand financial penalties from the offending organization.
Getting control of thousands of IT assets can be a complex task, and too often IS managers caught in a resource squeeze will table the implementation of a formal asset management program in favor of projects that are required to support line of business operations. Consequently, the effectiveness of asset management is frequently unacceptable. In a recent Computer Economics survey of CIOs and senior IS managers (Figure 1), 32% of the sites reported that asset management in their company was only minimally effective. Another 8% of managers said that their asset management was not effective at all.
Asset Management as a Foundation for Documenting IT Value
IS budgets today are a major expense in most corporations, and IT assets form a major part of the typical IS budget. Furthermore, those budgets are increasing.
When the IS budget is broken down by line item, the importance of fully leveraging hardware and software asset becomes evident. When tallied as a single line item, all of the various hardware platforms, network devices, and peripheral equipment typically account for over 35% of the total IS budget. Additionally, operating system and application software will typically account for another 15% of the budget. Thus, hardware and software assets account for just over half of all IS expenditures. (The other major IS budget line item is personnel, which accounts for approximately one-third of the typical budget).
Because of the high cost of hardware and software assets to the organization, it is clear that they must be well-managed and accurately accounted for. A properly administered IT asset management program will enable comprehensive reporting, which will provide the foundation for management to show tangible value from the assets owned and the services they provide.
The reach of an effective IT asset management system must encompass IT assets throughout the enterprise. Less than full coverage will likely defeat the intent of the effort. The purpose of asset management is to provide full visibility into all of the IT property of value owned by the organization so that executives can make informed decisions regarding their use. Without this level of visibility, managers are severely hampered in their ability to make effective decisions.
November 2005
Information for this Research Byte was taken from full report on this subject entitled, IT Asset Management: A Foundation for IT Value. The full report provides more information on the advantages and trends in IT asset management. Clients can view this report for free, and non-clients can purchase it online via credit card, at following link: https://avasant.com/report/it-asset-management-a-foundation-for-it-value-2005/
