If you want to reduce cost, owning the budget is the first step
It’s an all too familiar story, taking care of someone else’s finances is not always as important as looking after your own.
Having the responsibility of money is one area that truly focuses the mind in rationalising how you spend it.
Before the free availability of credit, as highlighted by the recent financial crises, having the money in your pocket engendered a sense of responsibility along the lines of, “I can’t afford it”, “I don’t need such a high quality”, “I already have something which can adequately do this”.
Unfortunately, managing an IT estate from an asset management perspective usually only allows you to input into a decision making process, but if you don’t own the budget for future spending, it does not necessarily mean that your influence will be truly considered. You may already have identified something that can adequately satisfy project requirements, but a new purchase is made anyway.
Take for example an asset refresh, how often are you asked for data around what assets exist in the estate, where they are, who has them etc. This information is fed into a project and they then subsume control of the process by which the assets are replaced. Usually therefore asset management is a precursor to defining the program scope, but the program’s aims are to replace the assets with the whole cost of the project taken into consideration, not just the cost of the hardware itself.
Could you have done it more cheaply?
Well yes, but it may have taken you longer to obtain the result, but only if you had ownership of the IT hardware budget. Let me explain.
At the outset, you would have set your budget in the previous financial year, which would have required an element of forecasting. As you have all the data to hand it is quickly apparent how many assets would be in scope, but you would also have the knowledge of where, with a bit of effort, available assets also exist. These available assets would be those which could be recovered by an amnesty, those where there are multiple assets in single ownership, store room excess and of course the lag between assets being delivered and the replaced asset being collected. By the latter we would commonly assume this is where an individual is being upgraded to a laptop from a desktop. A project is unlikely to delve too deeply into this kind of information; it won’t have the timescales in the delivery plan.
Therefore you have a very good idea of exactly what you will need and moreover, you can enact a continuous rolling refresh avoiding all the project set up, management and close out costs. Similarly as you now own the budget, which is probably one of your objectives, you are going to ensure that you manage it as tightly as possible, any extraneous expenditure should be driven out by your common sense approach.
But why do I want this responsibility?
Simply put, it will make managing the asset database easier. There won’t be vast databases to upload from projects; everything was already under your control and being managed in your timeframe. You have the relationships both with the suppliers of your hardware, allowing you to be intrinsically involved in both the negotiation on pricing and also on delivery schedules, locations and quantities. You will also be looking to see what can be reassigned from elsewhere for the reasons stated above, which is going to help with the verification and audit of your existing data set.
It may mean that you need to extend the scope of your team, or at the very least develop better relationships with other parts of the IT Department; Help Desk, Service Delivery, Procurement but that is not bad position to be in. The better the quality of the relationships, the more you can use asset management to exert an influence over the delivery of other services and more importantly their delivery to you.
It also allows you to develop a network of stakeholders across other business functions as you start to relate the costs of IT to them and impinge upon their good nature to help you retrieve assets that are otherwise dormant. A clean, slick and highly effective position to be in as Asset Manager.
Are there any other benefits?
Absolutely, the example above deals simply with a desktop refresh, but the principle can be applied across all the desk-based equipment, from printers and laptops to the peripherals such as monitors, cables, mice etc. All comes into play. Once you have the control, can forecast accurately your requirements and know where your stock is, you can make prudent decisions:
- I have a surplus to forecasted need in location A, it will be cheaper to courier them to location B than buy new
- In two months I will need X laptops, if I buy now on a long delivery I can avoid a price rise / protect myself from end of life issues / purchase via sea rather than airfreight at reduced cost and environmental impact
- Build a good relationship with your resellers keeping them informed of your forecast requirements which they will appreciate as it feeds into their pipeline projections.
What about Software?
Software and licence management is a growing trend in the industry, SAM solutions abound, but often they appeal more to the applications management group and look at installed quantities, usage and licence compliance. Suffice to say however that in enterprises where licence purchases are a local cost but centrally managed, harvesting the licences where there is non-usage often leads to tricky politics. You can be entirely compliant but have you the authority over local ownership to be able to licence harvest, have you had appropriate policies created to deal with disparate licence ownership?
Owning all licencing via a central budget will provide a loophole to the political discussions. However then making it the responsibility of the asset manager ensures maximum harvesting and reuse and minimal extraneous purchasing.
Indeed by looking at forecasted licence usage based on historical trends, will allow the potential for single bulk purchases at discounted rates at the start of the year, rather than piecemeal housekeeping. The knock on effect being that the maintenance agreements can also be adequately forecasted so there should be no nasty surprises come payment time.
Finally as you are managing the rolling refresh, you will be in a position to know licence quantities installed on dormant machines that will feed into reducing your overall budget spend.
What are the downsides of this approach?
Numerous and varied to say the least. The first is extracting the budgets from their current owners, which is likely to be a drawn out task. Secondly most asset managers probably won’t have had experience of managing a budget before, but asset management principles are a good start to gaining an understanding of how to do so.
It is likely that the team would need to grow, or at least extend its reach beyond its existing boundaries, but this will ensure that asset management has a much greater influence within the department and should therefore lead to improved commitment to the on-going ITAM practice.
There will undoubtedly be a need for process design and mapping, which will in itself take time, effort and revision, but could potentially lead to overall departmental headcount reduction once the processes are settled.
Finally, ensuring governance within the budget ownership transfer. There maybe some disquiet around managing the assets and managing the budget for the assets in the same place. Internal Audit at least will have an interest and probably champion the change, this can be supported by the reduction in expenditure on project management elsewhere in dealing with refresh cycles.
Having responsibility over the asset estate is an onerous, yet enjoyable task. However the level of commitment to asset management usually begins because it is needed to underpin other implementations, rather than being done for its own sake, E.g. Implementing a help desk system. By owning the budget, greater responsibility flows into the asset management arena, which not only focuses the team, but also focuses upper management’s view of a job well done. This will lead to greater commitment to your needs, whilst allowing you to directly impact the reduction in IT spend.
About Martin Chalkley
Martin is a specialist in optimising IT costs and IT Sourcing Strategy. Martin has driven collaborative relationships with IT and Telco Vendors and is co-author of the IACCM course on Supplier Relationship Management.Martin is the owner at Consultandomi Ltd, SRM Programme Manager at the IACCM and an Associate Consultant at Gartner.