The main goals of every organization tend to be universal: mitigate risk, increase financial gain, and increase productivity. IT Asset Managers keep these goals in mind when writing up their IT Asset Management (ITAM) programs and creating processes and procedures.
An area that can allow for many of these goals to be met is during the acquisition step of the IT asset lifecycle. Acquisitions can be a cost-savings area and it controls what is let into the IT asset environment, giving it the nickname, “the gatekeeper”. The major goals of acquisition are to procure IT assets that will increase productivity in a cost-effective manner. Acquisition Management is one of the 12 IAITAM identified Key Process Areas (KPA). KPAs are best practice processes that ITAM programs need to have in order to reach success. Acquisition Management focusses on managing the procurement side of ITAM.
During acquisitions, the IT Asset Manager must make sure that the newest assets add value in some way to the organization. When unnecessary assets are added to the organization, time and money is wasted. The IT Asset Manager needs to figure out the value of the assets before adding them into the organization.
While acquiring assets is the main goal of acquisitions, it also is an area where other benefits are met. In order to reach these benefits, the ITAM professional in charge of the Acquisition Management, the Acquisition Manager, needs to create, follow, or enhance an acquisition program containing best practices.
Vital Acquisition Best Practice Steps
The acquisition process can be broken down into two major parts: planning and purchasing. The planning part occurs before any asset is purchased; it is where steps like identifying goals, assessing the need, investigating vendors, and testing IT assets happen. Planning is where more contemplation and research steps happen.
Planning may take more time because the Acquisition Manager must account for the many calculations and factors that exist with each purchase. The extra time spent in planning can lead to more benefits. Usually, more time spent planning equals less issues for the rest of the lifecycle.
The purchasing part is the actual execution of buying the asset. The asset is purchased and it is delivered to the organization. This part is where steps like negotiations and receiving the asset happens.
If there is not an existing acquisition process to follow, the Acquisition Manager will need to create and incorporate one. Creating a stable process will improve the ease of procuring new assets and make tracking the new assets much more straightforward.
A basic acquisition process flow chart is shown to help to visually demonstrate the process. It is also a good foundation to use to start creating an acquisition procedure.
Basic Acquisition Process Flow Chart:
Make sure to track during acquisition
Tracking during acquisition is important because it saves the organization time and money. Confidently knowing where everything is during acquisition helps the Acquisition Manager prepare to accept the assets when they arrive. It also saves time because the Acquisition Manager knows exactly what is arriving, where it needs to go, who will operate it, etc., and they can alert those in charge of Asset Identification Management to be prepared for when the asset arrives.
One effective way to track these assets is to use the Documentation Management KPA. Documentation Management is when documents are properly maintained and recorded. By documenting and recording where the assets are, where they need to be, when they need to be there, which vendors were spoken to, when and how, etc., and keeping the purchase documents and negotiation documents, the Acquisition Manager is able to keep track of the assets throughout the acquisition process.
Part 1: The Plan
Planning allows the Acquisition Manager to map out the organization’s needs and goals, assess the needs request and current ITAM processes, and form a plan to procure an asset. The Acquisition Manager should account for the entire lifecycle for the candidate asset before purchase, from initial investment, to operations and maintenance price, all the way through to disposition cost. Consideration needs to be given for the costs and benefits for each phase in the lifecycle along with the reliability and quality of what the asset will bring the organization. Knowing this information benefits the organization because it helps to make accurate decisions when adding new assets.
More time spent planning is what will ultimately lead the Acquisition Manager to make the most knowledgeable and precise decisions. Even though it can take longer and may be viewed as wasting useful time, it serves an important purpose in getting the information needed to achieve the highest Return on Investment (ROI), the lowest Total Cost of Ownership (TCO), and the longest asset life.
Planning makes assessing the current environment easier, ensures that needed resources are available, discovers surplus assets or poor performance assets, etc. More planning helps to smooth the process in the future. For example, two organizations purchase different assets that are made to complete the same tasks. One asset was purchased without too much planning because they needed to implement the new asset as quickly as possible. Due to lack of knowledge, the organization had a few issues that shortened the asset’s lifecycle, greatly reducing its ROI and increasing its TCO. The other organization spent a long time to plan before purchasing the asset. They had virtually no hiccups and were able to extend the asset’s lifecycle, increase its ROI, and decrease its TCO, all thanks to thorough planning.
Planning can make a difference in how much money is saved, how much quality the asset can bring, how well the asset performs in the environment, and how long its lifecycle can be extended.
The Plan: Identify organizations goals
The Acquisition Manager needs to know what the organization’s goals are before they begin to search for a way to fulfill the need for a new asset. This is overarching information that the Acquisition Manager will need to keep in their minds during processes. Knowing these goals helps the Acquisition Manager to:
- Create organizational structure
- Form optimum purchasing and vendor processes
- Maintain firm inventory requirements with minimum and maximum stocking levels
- Form a solid lifecycle management plan
Regarding the IT asset lifecycle, an organization’s main goal is to improve the bottom line and stretch the use of assets. There might also be other goals like improving data security, upgrading the IT asset environment, becoming more eco-friendly, expanding the organization, etc. Every decision the Acquisition Manager makes should mirror the organization’s goals to help reach the objective.
Once the goals are determined, the Acquisition Manager needs to decide how to prioritize them in order to get the major objectives completed. For example, an organization wants company expansion to be a major goal, which would mean that the Acquisition Manager would need to purchase new IT assets to meet the incoming flood of new employees. The Acquisition Manager made the decision to purchase IT assets that were higher quality and more expensive. Unfortunately, they did not negotiate or thoroughly read contracts which led to the organization paying a high cost for the new assets. The organization ended up putting too much funding into purchasing the new assets, leaving the executives furious. While the goal of expansion was being met, it was being met while neglecting the financial goals of the organization, hurting the organization’s overall well-being. As a consequence, the organization may decide to cut funding for the ITAM program or consider terminating the program all together.
The Acquisition Manager needs to account for different goals and prioritize them in order to make decisions to help the organization reach success.
The Plan: The need is presented
What will initiate the acquisition process is when a need is presented to the Acquisition Manager. This need could deal with issues like an employee needing a more advanced computer to perform better design work, an executive ordering a technological update, a coworker explaining that an asset no longer works properly, etc. Those that come to the Acquisition Manager with need for the new asset are categorized as requestors.
When the need is presented, the Acquisition Manager will determine if the request is approved or not. The Acquisition Manager will figure out the need requirements, like the resources necessary, the amount of time needed, what and who will be affected, etc. When deciding if the answer is a yes or no, the Acquisition Manager should consider the organization’s overarching goals.
The Plan: Perform a needs assessment
To be able to decide if the request will benefit the organization, the Acquisition Manager needs to self-assess the current ITAM processes. A detailed assessment will allow the Acquisition Manager to learn if the new asset would be beneficial to the organization or not. They can make decisions on what infrastructure investments can happen to improve the organization’s productivity. They might also discover if there are any extra assets the organization has that can complete the same task as the request.
While assessing how far the benefits of the new IT asset stretch, the Acquisition Manager will need to factor in financial expenses, including the ROI and the TCO. Finding cost-savings and improving the bottom line is always a factor when making decisions. The Acquisition Manager will need to weigh the price of the asset to the benefit of incorporating it into the environment. Will the asset improve productivity? Will the asset improve the product being created or service offered? Will it improve how processes flow within the organization?
If the Acquisition Manager decides to not approve of the request, they can kindly explain why it will not be beneficial to the overall organization. If the requester is hard to get ahold of, the Acquisition Manager can create a rejection document that explains why the request was rejected and email it to the requester. Once the rejection is given, the process ends. However, if the Acquisition Manager decides to approve of the request, they will continue along with the acquisition process.
If the Acquisition Manager approved the request, they will look through the catalog, if one was implemented, to find an asset that will fulfill the new need. A catalog contains the assets that were approved to bring into the environment. It also contains assets that are prohibited from entering the environment. If it simplifies the process, the unapproved assets, like asset types, could be written in the catalog. The catalog could also include specific things like configuration, versions, approved vendors, etc.
Within the catalog are established standard assets that will not need to go through extra approval processes.
Standard assets VS. Non-standard assets
The Acquisition Manager must determine if the request can be fulfilled with a standard asset or a non-standard asset. Standard assets are the items in a catalog that are preapproved. The one who approves of the standard assets is called an Asset Selection Committee. They are given the job of developing and updating the standards. The Committee should have representation from various business units.
Acquisition Managers can be involved in developing the standards, but this is not always the case. If they are involved in developing the asset standards, there are steps that can be taken to make approvals quicker and easier. For example, many times, software and hardware are often grouped together into a standard image. This image is approved together instead of the hardware and software being approved of separately. This method is often done for any employee or a specific subset of employees, like a department. Doing this saves time for those involved in approving the standard assets.
The process for approving a standard asset type is simpler than the process for approving a non-standard asset. When acquiring a standard asset, it does not need to go through extra approval processes from multiple parties, like the executives and the financial team, since it was already approved. A non-standard asset does need to be approved by these parties since it did not have the chance to be approved before. Due to the extra approval steps, the Acquisition Manager will need to prepare a special approval process for non-standard asset requests. Non-standard approval processes should be more complicated than standard requests.
If there is no catalog or standard asset list in an organization, one can be implemented to help make the acquisition process easier. The Acquisition Manager can create a standard asset list and get approval for the entire list from the executives. In a long-term point of view, creating this list saves the time that would be spent during approval processes and investigation. When making the request process for standard assets, keeping it simple is best because it saves time and does not involve more parties than it needs to. Since standards change, especially as technology advances and organizations change, the list will be revisited and updated.
When the Acquisition Manager realizes that the request can only be fulfilled with a non-standard asset, they will need to send a non-standard asset request to the appropriate parties. When sending it to the necessary parties, a justification document must be attached. A justification document explains the reason for the request and the subsequent approval. The Acquisition Manager will need to have the justification document explain what the asset is, why it is needed, the price of the asset, the benefits the asset will bring, and why the benefits outweigh the cost. Make sure it is as clean and clear as possible; those reviewing the document are busy, so make things easy to understand and remove unnecessary information and fluff.
Once the approval for the standard or non-standard asset is given, the Acquisition Manager will now need to form a plan to effectively procure the asset.
The Plan: Form a plan
The key to planning is to think long-term. An Acquisition Manager has the role of being able to predict when and where investments need to occur. They must also understand the costs of the improvements and the benefits and risks associated with them. They need to have a detailed knowledge of the current infrastructure of the IT asset environment so that a choice can be made on whether to implement or defer improvements.
After the Acquisition Manager has investigated internal processes, they now have the knowledge to know what steps to take next. They can form a plan and decide what kind of asset they need, if they are going to need to get a standard or non-standard asset, if they can get the asset from an approved vendor, if they will need to go outside of the approved vendors, etc. In order to figure out how to best acquire the asset, the Acquisition Manager can work with the requestor, department manager, Financial Manager, IT Deployment Manager, IT Standards Manager, and Security Manager. Getting the extra advice and education from these parties can help the Acquisition Manager to know what to look for and what to avoid.
When planning, consider the organization’s goal of improving the bottom line. The Acquisition Manager should try to increase ROI, lower TCO, increase productivity, and find other ways to benefit the organization. Make sure to schedule time to plan and research, especially if a non-standard asset is being purchased. The field is saturated with many assets and tools. All IT assets are different and each have their own pros and cons. Since every asset needs its own procedures and practices, the Acquisition Manager needs to contemplate each asset carefully to decide if it will be the best fit for the organization. The Acquisition Manager might need to examine the ITAM program’s budget to determine how much they can spend on the new asset. These factors all affect the planning process.
Researching is how the Acquisition Manager can find the best deals and best assets for the organization. Since there are so many assets, tools, payment methods, and vendors available, the Acquisition Manager will need to sift through the options and narrow down the list to find the best fitting assets.
During research, the Acquisition Manager will investigate different asset types and how they function, implementation processes, disposal methods that the assets will need to go through, vendors, etc. The Acquisition Manager will likely need to perform calculations to account for initial cost, ROI, TCO, and any extra fees and costs that may come up with the asset. Remember to factor in necessary disposition prices as well. Since saving money is always a major goal, take the time to calculate the price of the asset, the asset’s typical lifespan, its benefit to the organization, what the disposal method would likely be for the asset, etc. Learning about these expenses and benefits will help find the most suitable assets for the organization and effectively fulfill any non-standard asset requests.
The Plan: Investigate vendors
Once the Acquisition Manager has narrowed the search down to a few asset candidates, they will need to investigate the vendors that offer the assets.
In order to properly and legally investigate vendors, the Acquisition Manager will need to prepare either a Request for Proposal (RFP), a Request for Information (RFI), or a Request for Quote (RFQ). These requests give the Acquisition Manager more information about the product and the vendor. Each request process is different:
- RFI: An RFI asks the vendor for more information about itself like its history, ownership, future plans, etc. It may have specific questions that the vendor can answer. The Acquisition Manager can send RFIs to multiple vendors and compare their answers to one another.
- RFP: The RFP usually comes after the RFI. It requests more information about the vendor along with information about the asset. This would get sent to the vendors that filled out the RFI.
- RFQ: An RFQ requests more specific information, like payment terms and contract types. For organizations that are really focused on keeping pricings low, this request delivers more information about pricing than the others.
Depending on how an organization operates, the Acquisition Manager will choose the best suited request process to contact the vendors.
If a standard asset is being purchased, the Acquisition Manager can consult with those in charge of Vendor Management to review the vendor’s historical data. Vendor Management is another KPA that is a best practice for an ITAM program. It focusses on handling the vendors and keeping track of interactions with them. The Vendor Management team can show the Acquisition Manager the vendor scorecard to see which vendors are preferred, which are lower on the list, vendor historical data like negotiation interactions, etc. Those in charge of Vendor Management will also likely know what the RFP and RFQ policies are for the vendors on the asset standard list.
Once the vendors give the requested information back to the Acquisition Manager, the Acquisition Manager can use this knowledge to decide what vendors they will want to work with and proceed to IT asset testing.
The Plan: Test the IT asset candidates
Once information comes back about the vendors and their products, the Acquisition Manager can decide which vendor and product they want to test out. It is now time to see how the competing assets perform in a real IT asset environment. The goal of testing is to learn more about the vendors and IT assets, examine them, and analyze them in a testing environment. A good test is when the asset candidate is put into an environment similar to the organization’s. The asset can be assessed accurately based on this process.
The Asset Selection Committee is the one who makes the final decision. If the Asset Selection Committee likes the asset’s functionality, the purchase can proceed.
Part 2: The Purchase
After accounting for many factors, the Acquisition Manager can make the final decision and purchase the asset. Purchasing focuses on negotiations and the time from ordering to delivery.
Purchasing process activities need to be completed prior to delivery. The Acquisition Manager is responsible for making sure these activities are complete, keeping the goal in mind to have the organization completely prepared for the new asset’s arrival. When this is done, the asset can be implemented into the environment immediately. Once the asset is received in the agreed condition, the purchasing step is complete.
Before the purchase is made, the Acquisition Manager will go through the negotiation process.
The Purchase: Negotiate
Many times, the Acquisition Manager can negotiate the price and conditions to make the purchase more beneficial to the organization. Most contracts can be negotiated. There will be rare times when a negotiation is not necessary or possible, like during an emergency purchase or a commodity purchase. The Acquisition Manager will merely pay the cost during these circumstances.
It is important to view a negotiation as a first of many. The Acquisition Manager wants to save the organization money, but they should also want a healthy relationship with the vendor. Do not treat the negotiation like it is a war. Perceive it like it is the first step to creating a long-term, positive business relationship. Every person involved wants something from the other person, this is just the time to uncover their agreements. The goal for these interactions is for both parties to receive a win-win.
A way to get this win-win is to be fair during negotiations, fair to both the organization and the vendor. If the Acquisition Manager takes advantage of the vendor, the vendor may not want to do business with the organization again or they might make negotiations much more difficult. If the vendor is aggressively trying to take advantage of the organization, the organization may not continue doing business with the vendor down the line. Pay attention to how the vendor handles the negotiation to see if they will be good to continue working with in the future.
An effective strategy to negotiations is to assign the right people onto the negotiation team. While one team member negotiates, have one actively listen and one actively observe. These roles are important because they may catch things the negotiator misses. Try to anticipate pricing so that the negotiation team knows what it is in for. Keeping the interactions formal and professional is beneficial because it keeps things business oriented and keeps things peaceful in case there is ever going to be a walking away point.
In order to sway negotiations, some use negotiation tactics and styles. These include styles like non-negotiable ploys, trying to force the first contract to be signed, using threats, stalling, etc. These tactics are used to try to get the most out of the negotiation. An Acquisition Manager might adapt one or more of these styles, but one of the best negotiation tactics is to listen. Understanding the other party’s side is important, and when the other party recognizes that their concerns are being heard, they are more likely to hear and understand what the Acquisition Manager wants. Being flexible is also important because both parties want to get something favorable from the negotiation. Follow a set plan, but do not follow it too closely or stray too far from it.
Negotiations must work closely with the legal team. Legal language can be difficult to understand, so getting legal advice must happen. Consult a lawyer if detailed advice is needed.
If the negotiation is not going well and is becoming unfavorable for the organization or the vendor, there is always a walking away point for both parties. If this should happen, the negotiation should end peacefully and the Acquisition Manager can seek out another party to do business with.
Terms and Conditions
When negotiating, pay close attention to the Terms and Conditions. Look for hidden fees and conditions that may be harmful to the organization or be hard to uphold. These terms can be negotiated and parts of the contract can even be developed together with the vendor.
To help ensure that the organization is compliant and is not breaking the contract unknowingly, certain terms should be defined and time periods should be stated. These can include things like making the number of licenses and licensed users that are included in the agreement clear, defining conditions of termination, defining the vendor’s right to audit, clarifying how the Certificate of Authenticity is defined, defining proofs of purchase, clarifying what the time period covered by the agreement or license is, etc. Doing these things helps to protect the organization to be compliant and help it to not break the contract unknowingly. Make sure the contract reflects these clarifications as well.
The Purchase: Receive the IT asset
The Acquisition Manager needs to check on the newly arrived asset to ensure it arrived in the agreed, proper condition. If there is anything wrong with the asset, it can lead to many issues down the road like hazardous situations, improper functionality, decreased ROI, and increased TCO. They need to identify any defects as quickly as possible because the asset may have been damaged during the transportation process. If the defects are discovered quickly, the organization will save time and money. The organization is already losing time by going through the process of getting an asset that works properly, so finding the incorrect conditions is vital.
There can be other, more devastating consequences if a quality check is not performed on the recently arrived asset, especially if it is damaged or defective. A broken asset might not be needed for years, which leads it to be put into storage. Years pass and the asset falls through the cracks before it is finally brought out to be used. Since so much time has passed, there might not be an accurate record of the asset. The organization may believe that the asset is broken due to damage during storage when it was actually due to negligence at the asset’s time of arrival. Money was wasted on an asset that was never going to work anyways, but now the organization believes the damage was their fault. Another issue that can happen is if an unknowingly damaged asset is implemented. This can lead to a number of issues like threatening employee safety and data security, harming other assets that interact with the damaged asset, decreasing finances, etc. These reasons are why it is so important for new arrival assets to be checked.
Once the asset is verified to be in the agreed condition, the Acquisition Manager can pass the IT asset off to those in charge of Asset Identification Management. Asset Identification Management is a KPA that focuses on inventory management by identifying and accounting for every asset. It gives a physical indicator, most likely a unique, identifying code, that shows the asset was accounted for. The Acquisition Manager should alert the Asset Identification Management team when the asset is supposed to arrive so that the Asset Identification Management team can waste no time labelling the asset with its individual code.
Once the asset is passed off to the Asset Identification Management team, the acquisition process is complete.
The acquisition step in the IT asset lifecycle can be a major cost-savings opportunity. The goal of acquisitions in an ITAM program is to procure IT assets while increasing productivity and improving the organization’s bottom line. Acquisition determines what IT assets are allowed into the environment. Acquisition Managers should make sure that the added assets add value in some form to the organization. Creating and following acquisition best practices while keeping acquisition goals in mind is what will ultimately lead the organization to success.
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