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ITAM – A ‘Must-Have’ Function for Cost Containment and Competitive Advantage

By Phara McLachlan
October 11, 2013

In a down economy, business owners and managers are looking for creative ways to cut costs wherever they can. Information technology asset management (ITAM) is not typically the first place most owner-managers look for cost reductions, perhaps due to the perception that this is a ‘nice-to-have’ versus a ‘must-have’ function.

If you’re still among the ‘nice-to-have’s,’ there’s wonderful news: your company undoubtedly has substantial unrealized cost savings and value enhancements that will help you weather this economic downturn.  If you’re already an ITAM ‘must-have’ believer/user, this is a perfect time for fine-tuning.

What’s Makes ITAM a Must-Have Function?

Regardless of what business you’re in, chances are good that IT spending is near, or above, 50 percent of your total corporate capital budget these days.  One reason ITAM has caught fire and become a hot buzzword in recent years is software cost savings of up to 45 percent during the first year, and ongoing annual savings of 15 to 30 percent.  But there are many other reasons:

  • Increased productivity/efficiency across all functions and departments.
  • Risk reduction and cost avoidance relating to Sarbanes-Oxley (SOX), software licensing audits, litigation and other e-discovery demands, operational inefficiencies, etc.
  • Better alignment of IT with corporate and departmental business goals and functions.
  • Better short- and long-term planning based on better data organization, storage and retrieval.
  • Better assessment of company needs in terms of current and future human resource development, technology and other capital investments.

In short, ITAM is a critical tool for increasing the value of what you deliver to your customers while reducing your own costs, mitigating a variety of enterprise risks, optimizing your use of assets, and enhancing your chances for growth and success.  Rather than address the basics of ITAM, in the short space left I will highlight just a few of the opportunities and issues you should be raising with your IT team to see if ITAM might help your bottom- and top-line results.

Consolidation Opportunities

Mergers and reorganizations are on the rise as the economy worsens, which means consolidation of operations and/or assets.  Complex, political, and difficult by nature, consolidation initiatives often fail to achieve predicted savings.  One culprit identified by many experts is the lack of a strong, influential ITAM team.  The Wall Street Journal addressed this issue in an article by Justin Scheck: “Taming Technology Sprawl: H-P Hits Snag in Quest for Savings through Systems Consolidation.”  One major issue at HP was an unexpected software catalog of 6,000 and no previous efforts to standardize software applications.  Similarly, Citigroup identified a catalog of 10,000 software titles instead of the assumed 6,000 when consolidation efforts began.

Questions for your IT team (that an ITAM program could/should help address): Do we know how many software titles the company has currently?  How much unnecessary duplication is there?  Are the licenses up to date?  Are we paying for duplicate licenses?  Do we have policies and procedures in place for redeploying hardware and software?  Do we have a chargeback plan in place for disposing of old equipment?  What opportunities are being missed due to data gaps?

Shelfware Opportunities

Every company of any size typically amasses a certain amount of software purchased for good reasons but never used or effectively deployed.  A related asset collecting dust might be IT-team “idea-ware” – ideas that might be ripe for adoption now, perhaps some of them related to the untapped shelfware.  Instead of focusing solely on IT department cost reductions, ask them about the untapped value that might be sitting on the shelf, as software or dormant IT-team ideas.

Some questions that ITAM could help resolve: How much shelfware do we have collecting dust?  What did we pay for it?  Is any of it potentially valuable?  Why wasn’t this software implemented previously?  Could this software help us automate the XYZ process, or the ABC department?  What about some of the IT-team’s creative ideas that never got approved … is the time ripe for any of them?  Can IT do anything now to help reduce tax bill X, or maintenance cost Y?

Automation Opportunities

Among the more valuable aspects of IT is the ability to automate a variety of functions, within the IT department and throughout most enterprises.  Indeed, automation is an important aspect of a proper ITAM system.

Questions: How much of our IT asset base is automated?  Is there any unused automation potential we could harvest?  Are there automation features and functions not currently in use?  How much ROI are we leaving on the table by not tightening the lifecycle processes for IT and other assets?  Are there groups within the organization struggling with spreadsheets to manage their assets?  What can you do to help streamline and automate IT and other assets/processes to make us more profitable and efficient?

Compliance Dangers

If you don’t expect a software licensing audit soon, you could be in for a rude awakening. According to the BSA, many software audits happen because the company has been reported by a disgruntled employee, or ex-employee (had any layoffs recently?). In addition, all software vendors are becoming more vigilant about software compliance as a means of enhancing their own bottom lines. Penalties for being out of compliance can add up to tens or hundreds of thousands of dollars.

Just one question for your IT team: Do we have a system in place that automatically monitors our software compliance?

The Time for ITAM is NOW!

There are literally dozens of other ways that a proper ITAM system can contribute to cost reductions and higher efficiencies, ranging from improved budgeting and forecasting to enhanced service management and better contingency planning in the event of emergencies and disasters.  ITAM has the potential for making your company smarter, faster and leaner while reducing the total cost of ownership (TCO) substantially.

Many business owners/managers have delayed the implementation of ITAM due to a false impression that it is an overly complex, expensive, ‘nice-to-have’ function that can be adopted when the economy – and your profitability – recover.  But why would you delay implementation of a tool that can reduce your TCO by 10 to 15 percent or more now, when you need it most?

Another reason for delay that we commonly hear is that ITAM is just “too big a project for my IT team right now.”  That’s what outside experts like Nahteava are for – an audit to determine your issues and potential ITAM benefits, followed by help with training and implementation of a system that can start paying dividends immediately.

If your IT department has already implemented a proper ITAM program, congratulations … now, challenge them to make it even more efficient.  If you have not yet implemented an ITAM program, cheer up … there’s nothing but upside when you finally wake up.