By Lane F. Cooper

Managing business-unit demand for IT services has never been easy. But it has become more complicated than ever as workers become more mobile, and the once-hard boundaries that delineated an enterprise network grow fuzzy. Today's road warriors, for instance, regularly access the enterprise network using multiple devices from numerous access points, both within and outside of the firewall. Similarly, new collaboration-based business strategies with both customers and suppliers require IT administrators to make enterprise computing resources available to a growing number of nonemployees.

What's needed is a solution that can track all elements of the IT environment, starting from the moment a procurement request is submitted, right through to the time that asset is retired. "CIOs need to develop and implement the appropriate rules and policies for managing assets in increasingly dynamic environments," says Robert Stroud, IT service management and IT governance evangelist for CA. "In short, they need a strategy to automate almost all aspects of every asset's life cycle."

IT asset management, or ITAM for short, calls for developing a comprehensive and automated way to account for all IT assets in an organization, and in as close to a real-time manner as possible. ITAM also helps form the basis for understanding the cost of delivering IT services to an organization's business units. Finally, ITAM connects the dots between what assets IT owns, how those assets are used, and how the costs are accounted for.

ITAM can help organizations in three important ways:

1. By providing a clear window into what IT assets (hardware, software, network services) are currently attached to the enterprise computing environment;

2. By delivering an accurate awareness of how different business processes are making use of those assets — including IT human resources needed to provide services, fix problems and maintain optimum levels of efficiency;

3. By laying the foundation for managing the IT organization to deliver measurable business benefits to the organization, rather than as an overhead activity measured by its ability to meet technical performance metrics, such as uptime, speed and storage capacity.

"For us, demand management around our assets represents an understanding of what our financial-services clients are looking for," says Paul Hypki, risk management officer, Transaction Services, Thomson Financial, a leading provider of information, news and technology solutions. "At Thomson, we've implemented an ITAM strategy to improve operations, so that when our customers initiate a request for change, we evaluate, prioritize and price. Then we schedule that work based on our demand management philosophy. This helps us to work on the right priorities at the right time."

IT asset management solutions enable a CIO to proactively manage an entire IT asset base through automated discovery, configuration management, software usage monitoring and cross-platform reporting. By implementing asset management solutions, CIOs can also gain other significant capabilities, such as comprehensive change management and sophisticated asset billing and charge-back functionality.

The need for asset management is real. In a recent survey conducted by U.K.-based consultants Centrix Network Ltd., when IT decision makers at companies with more than 1,000 employees were asked if they had full visibility into their IT assets, more than 60 percent answered "no."

What's more, nearly a third of the respondents in the Centrix survey admitted they did not know the total number of software licenses their organization owned. Centrix also discovered that the asset-management problem is most acute at larger companies. Nearly 65 percent of respondents at companies with more than 3,000 employees admitted to having only a limited understanding of the disposition of their software assets, compared with less than 55 percent at companies with fewer than 3,000 employees (see chart below).

What this means is that CIOs will find it difficult to assess the true costs associated with maintaining their IT operations. More important, CIOs will find it virtually impossible to understand the costs associated with providing IT support to specific business processes. The possible result: Some IT assets could be misused; for example, when software is not in compliance with license agreements. Without an accurate control mechanism, a CIO's software audits may expose the organization to both legal and financial risks that stem from possibly unintentional, but still illegal, use of software.

Other assets — including storage, server and desktop applications — may be underutilized without a good asset management strategy, too. In fact, these assets could be so far "off the radar" that a CIO would acquire unnecessary software licenses because other IT executives are unaware that currently unused licenses have already been purchased. The same can happen with hardware assets for storage, server and desktop applications.

Better IT Delivery
Asset management can help. CIOs who implement asset management solutions can accurately report on the disposition of their many hardware investments, software licenses and related IT services.

Asset management can also help CIOs deliver IT services to the organization's business units and other internal customers. For many CIOs, the lack of a single system that lets them understand the costs, benefits and trade-offs among IT services makes it difficult for them to engage the business in fact-based dialogue. Lacking the ability to relate services delivered to business customers in business terms, CIOs will continue to face a credibility and communication gap with internal customers. Asset management can help by equipping CIOs with the data needed to explain IT budgets and resource allocations to internal customers. This, in turn, can help CIOs engage with their internal customers using terms relevant to the business, ultimately leading to greater credibility in the organization for CIOs.

The strategic implications of asset management can be significant, too. For example, among companies that are growing through mergers and acquisitions, CIOs and other executives must track how existing assets are managed, even as the entire array of new assets is introduced and integrated into the merged organization. More important, as the merged organization begins to rework business processes to gain the full benefits of joint operations, executives need to understand what technology to keep, what to throw away and how to work with the skill sets of the integrated IT staffs.

From an organic-growth standpoint, asset management can help to improve a company's time-to-market strategy. "You have to know where your assets are currently deployed, what projects those assets are associated with, and what the forecast for new capabilities is going to be as certain projects go to completion and new projects fire up," says John Plucinski, director of technical sales at CA. "All of this analysis requires extensive coordination of hardware, software and people assets."

Another role for asset management: supporting the IT department's move from a cost center to a business unit that delivers tangible financial contributions to the enterprise. "We're seeing a lot of the IT organizations among our clients move to demand management models so that they can exercise foresight and be more proactive in the IT resource planning process," says Kelly McMahon, senior technical services manager for CA's Global Assessment Team.

These CIOs no longer need to wait for business units to approach the IT organization with a list of new requirements they would like to see implemented over the next fiscal year. Instead, they can participate in the strategic-planning process. They can also accurately explain to business decision makers which IT resources are available, which can be made available soon, and which can be put into the application development pipeline for the long haul.

Inform Colleagues
In effect, CIOs can use the intelligence they glean from their asset management strategy to inform other, non-IT colleagues of the full range of opportunities that can be exploited in different operational scenarios. For example, a human resources officer could be made aware of Web-based services that the organization might offer to employees for self-service applications dealing with payroll, benefits and other HR information and services.

But such changes can themselves be a challenge. Many organizations change business practices and technology management techniques, but that doesn't mean such changes are greeted with excitement. Business people often like things to stay the way they are, even if "the way they are" is no longer efficient. This can also be the case when executives are confronted with implementing an asset management strategy.

"Perceived complexity is a barrier to developing and deploying comprehensive demand management initiatives," says Stroud of CA. "Some people are intimidated by the complexity. And indeed, automating the process can be a tremendously complex process without the right technology."

Asset management is inherently a multidisciplinary, interdepartmental activity. In other words, it involves non-IT skill sets and non-IT managers and departments. This may be troubling for any organization that allows its business units to operate in isolated silos. At these companies, the management team tasked with implementing asset management must first learn to speak the languages of businessunit leaders, application developers and hardware people.

At companies that implement asset management processes, CIOs can gain many advantages, including greater proactivity in planning and supporting the needs of the business. For example, a CIO with an asset management strategy in place can help manage storage assets, reducing both cost and risk without sacrificing performance. "Most of your large companies have some type of storage management system that is typically expensive to purchase," says McMahon of CA. "When you start putting the processes in place on the front end for capacity management and put some foresight into when you're going to need that demand, you can budget better, allocate dollars more efficiently and be better prepared to support the demand management model."

Also, CIOs who are expected to field highly available, highly reliable IT systems will find asset management a boon. According to McMahon, companies that implement asset management also report fewer emergency blackouts and outages than those who don't.

Life-Cycle Planning
Another reason to implement asset management: The ability to engage in effective full-life-cycle planning. "Most organizations will let an asset live on and on and on, even though it's fully depreciated," says Stroud of CA. "They do not understand the full cost that its ongoing use may have on the organization." That said, IT shops that implement an asset management strategy may need to rethink their maintenance contracts in terms of what's available today and whether anyone is even using a particular asset anymore.

With more organizations focusing on how all business processes can be better supported by the IT infrastructure and architecture, asset management will become an increasingly important initiative. By using asset management best practices, IT managers can better understand the concerns of the business, financial, technical and legal disciplines within their organizations.

An asset management strategy can also provide IT executives with an accurate, ongoing window into the technologies being deployed in their organizations. It also provides a view of the financial impacts — both costs and benefits — that these assets have on business processes. Finally, an asset management strategy can also list both the short- and long-term changes the organization must make to secure a differentiating advantage and remain competitive. For CIOs struggling to track their IT inventory, asset management is the solution.

Lane F. Cooper is an editor and analyst covering the impact of technology on business operations. He has written for InformationWeek, Optimize, Enterprise Systems Journal and other publications.