They say history repeats itself but most people don’t think that applies to the technology industry. It is hard to believe that we are considering our industry to be repeating itself. I came into the IT industry just as time-share computing was ending. During those times, companies contracted for computing using multi-year contracts for slices of processor, memory, storage and of course applications. They used terminals to access the application. Today, everything is about cloud computing, Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) or Infrastructure as a Service (IaaS). It seems we actually have come full circle in how we contract software and IT infrastructure and it is not going to be long before desktop and laptop PCs are replaced by terminal or pad devices. These changes are going to require all of us to redesign ITAM programs.
When I spoke at the ACE 2011 in Las Vegas, one of the main points of my presentation was that all companies this decade will address the cloud in some way, the rate dependent on their top vendors and business objectives. Research conducted by Gartner, Forrester and IDC states that in some industries the estimate is 50% or more of a company’s total IT infrastructure will be cloud-based by 2015. Again, each company will address it at different paces, but even assuming that the industry research is half correct means that 25% of your company’s IT assets could be cloud-based. That change would have a significant impact on your ITAM programs, tools and capabilities.
The last decade was a boom decade for our industry, with billions spent within the Fortune 1000 on ITAM related tools and the professional services to implement and upgrade ITAM programs. This boom was due to risk, compliance and cost savings considerations. The buzz words of the tool provider industry were CMDB, discovery, and metering. Well, how do you do discovery in the cloud? Could we witness either your IT asset-CMDB combined with other asset classes into a single asset-CMDB or in the near future could it be in the cloud? How about your vendor contract repository in the cloud? Since you are running only one-instance in the cloud, what is the sales tax impact or considerations? How do you depreciate software in the cloud? In the past decade, software metering was an important tool for uncovering over-licensing generating cost savings. Think now how important accurate metering will need to be in advance of signing a new multi-year cloud (SaaS) contract.
The good news for all of us is job security! Industry Research Company International Data Corporation (IDC) makes the following projection related to industry growth:
“Despite the tough economic environment, the IT asset management software market is still expected to grow to become a $2 billion market by 2014, thanks to the need for IT asset discovery as a basic building block for automated infrastructure software solutions.”
If you attended the ACE 2011 show, you might have noticed many of the tool providers of the past where not there and there were new companies offering tools. These tool providers mostly were talking about how their tools will help you address the cloud.
As a consultant of more than 25 years in the IT industry, I know that we have to reinvent ourselves also. As career advice to young people entering the IT consulting industry, my primary advice is to plan for reinvention at least every 5-years. Prior to the economic slowdown, I too began to anticipate and consider the changes that would affect the ITAM industry and I actually got excited! My maturity in the industry was potentially going to be a major asset because history does repeat itself; and for the first time in my IT career, I looked back at history to consider where the ITAM industry might be going. Consider the future and think on the concepts outlined below regarding the cloud and the ITAM program.
Consider it the Decade of Opportunity.
If there is one criticism we have heard over the previous decade, it has been, “why are IT assets managed differently than other classes of assets within a corporation?” This question is important and the answer lies blame on two factors:
- Software assets are intangible and thus hard to track or count
- Tools to deploy, discover and manage were all subsets of other Services/Help Desk tools that resided within IT
Thus, the CIO and/or IT organizations in most companies owned the responsibility for IT Asset Management. The finance and internal audit organizations were always critical of why they could not get easy and detailed access to IT Asset data. Cloud applications for the most part run a single instance with no need to count licenses as in the past. Considering this major shift in your ITAM program and your tools, it is the perfect time to consider either relocating your ITAM program within the finance/procurement department or at least integrating and working together more collaboratively. Again, just consider the sales tax, depreciation and need to potentially consider environmental impacts of an organization for tax and compliance considerations.
Also, consider it might be time to select tools or design integration points that enable you to have a single CMDB for all the assets within your corporation. Expect major changes in the tool industry including new players and new capabilities. Here are just a couple of examples: If you have been around for awhile, you surely remember the company Peregrine. They were one of the leading companies in the Asset Management business overall and of course the ITAM space. The company got into some major trouble, but Hewlett Packard purchased their ITAM tool and today they are integrated into their Asset Center product. A company called Tririga purchased most of the remaining non-ITAM tools that belonged to Peregrine, rewrote them and then emerged as a major player in other asset management software. They were purchased by IBM in mid-2011. As a venture capital group that has invested heavily in several different companies in the ITAM space, JMI Equity has also invested in Service-Now which is emerging as an ITAM/ITIL SaaS player. The major trends to watch for are new players, cloud players and for the tool and ITAM capability to become more tightly merged with the other asset classes. As a thought-leader in this industry and as an executive in a leading IT and Software Asset Management consulting firm, we too are looking at tool ITAM providers not only for their current offerings, but are pushing them to outline their agendas for the future so that we can give the best possible advice to our clients.
Anticipate, Plan a Path to the Cloud
During the ACE 2011 show in the Q&A portion of my presentation, a very experienced ITAM executive asked the following question, “Do you really foresee sensitive contract data in the cloud?” She went on to say, “I do not see that happening.” My reply was, “CRM data, the most sensitive client data to any company, is today in the cloud with the industry leading vendor SalesForce.com, so yes it is coming.”
ITAM tools are only one consideration for the cloud. The biggest and most impactful consideration is your software/IT top vendors today. As you anticipate and plan your path, make sure you understand the path and price proposition your key vendors today are offering and it might also be a time to consider other vendors. For example, Microsoft has a virtual monopoly on the desktop productivity suite business with Microsoft Office and has basically been unchallenged for the past decade plus. Today, they are already offering migration and contract paths to move to their cloud based productivity suite Office 365 with the same applications (Word, Excel, PowerPoint) most corporations already use. This is an opportunity to rethink your company’s paths and alliances with key technology. It is time to really do some heavy analytics on ROI and this work needs to be led by your CIO and the financial side of the house. Let me add this personal narrative, not endorsement. I attend graduate school and my university had an archaic campus-wide email system (50,000 users). Faculty and students complained about it, so a couple months ago I received an email that announced that the university had contracted with Microsoft to roll out the new Windows Live email and Microsoft Office 365. They told students we had until December 15 to execute the migration step, so immediately did it. It took less than 3-minutes for all of my emails, folders and address book to be transferred over. On top of my Outook email box was Office 365 and 30 GB of disk storage. I have been using the Office 365 on-line, saving my documents to the cloud and it has performed seamlessly. Again, it is coming, you can’t stop it, plan a cost effective path, including its impact on your ITAM program.
Vendor Contract Management
Consider the changes to your software licensing for your top vendors. You need to understand their migration paths to the cloud. You might have to go with them or change vendors. The change is coming, so start with Microsoft, a top 5 vendor in most companies. Consider their product offerings, pricing, and contract terms. Windows 8 is going to come out with at least two versions, similar to Windows 95; one that is fully backward compatible with existing applications and a new version that is cloud-ready and mostly based on browser functionality. Like Windows 95, there are technical, cost and contract considerations. This decision will also potentially affect your other vendor cloud decisions. In the new world order of “as a” services, the “as a” does not always equal less expensive or less concerns to your ITAM and other corporate vendor management programs. Actually, you need to reconsider all of the primary components of your vendor management program because even though the “as a” might use the same terms, the contracts and SLAs require a new way of thinking, negotiating, deploying, managing and securing. To make this transition, most companies are going to need outside help or you are going to need to invest in a knowledge base. When we have helped companies negotiate SLAs with leading SaaS, PaaS and IaaS vendors like NetSuite and SalesForce, we have identified different meanings for upgrades, billing, exit clauses, integration, backups, business continuity, data access, regulatory risks, performance, vendor maturity, sales tax impacts, depreciation, performance and security. You will need a new contract template for “as a” services and don’t forget the basics of SAS 70, you have to know where your applications and data are being hosted.
Hardware Asset Management
Over the years, Hardware Asset Management has always been somewhat simpler and more straightforward than SAM. Most mature programs have been doing asset tagging for many years. Many of our clients started migrating over to RFID tagging and that market has matured greatly. At ACE 2011, we were pleased and amazed at the functionality and pricing of RFID options by vendors like RF Code. However, one of the newest trends in the procurement of hardware started first in the cellular/smart phone side of the house. Historically, Telco asset management and cost management was as difficult if not more difficult than ITAM. Of course, there were physical handsets, PBX’s, voice mail, long distance and international calling. Adding into that list was the cell phone and cell phone reimbursements, annual contracts, voice mail, roaming and cell data costs. Our counterparts on the cell Hardware Asset Management side have had many of the same type of headaches. One of the major trends on the cellular/smart phone side the last few years has been Bring Your Own Device (BYOD), where companies just reimburse you for bringing your own device. It started as a cost consideration and justification. Today, they have addressed security and other usage policy issues fairly effectively for the most part.
Well, you need to expect that in this decade we will see the BYOD device on the desktop, laptop or at least pad device and this is going to be another consideration in management. However, the cloud makes this consideration on the PC, laptop and pad much more realistic because there will be no corporate or licensed software to install on the devices as they will run from the browser.
Change with the Changing Tides
In the last decade, lots of our companies’ IT capabilities have gone either off-shore or been purchased as a managed service. The cloud (SaaS, PaaS and IaaS) will change the makeup of our internal IT organizations greatly. We are anticipating a growth in either ITAM outsourcing, ITAM in a cloud as a managed service and/or ITAM staff augmentation where you can bring in specific expertise to complement or even replace your existing ITAM staff. Also, as pointed out above, expect ITAM analytics to move over more toward, if not completely into, the finance and/or procurement side of your company. Embrace this as a good thing. Over the last two decades, I have talked to many CIOs and they shared in private and some in public that they would love it if the ITAM program management responsibility would move away from them.
Here are a couple additional industry research quotes that complement my theme:
Gartner: “Financial management applications are at different stages of their market life cycles. CIOs and CFOs need to base the strategies for their finance systems on the way the different market segments evolve. This is the current challenge within ITAM and the current tools today to bridge gap or allow easy access to ITAM information.”
Forrester: “Say Hello to IT Asset Management 2.0, the past decade has seen a considerable improvement in IT management software, especially where operational effectiveness is concerned. However, the economic downturn as well as new technologies such as virtualization and new thinking such as green IT will force IT to optimize its costs beyond operational efficiency in the coming decade.”
When Gartner identified in 2010 the following list as the top CIO priorities for this decade, the research strongly supported ITAM because most of the priorities directly or indirectly involve ITAM:
- Cloud Computing
- Virtualization 2
- Web 2.0
- Business Intelligence
- Data Storage & Management
- IT Management
- Service Oriented Solutions
The last piece of industry research that I wanted to share was again from Gartner:
“IT asset management (ITAM) is an information hub and consolidates data for multiple uses by different groups within IT. The polling results indicate that ITAM data is broadening its use case within organizations to facilitate configuration management databases (CMDB), virtualization and green IT. In this next decade, Virtualization/Cloud, Green IT and corporate-wide access to CMDB information si going to be key drivers.”
All of the industry research is intended to support the theme; however, this last piece gathers the key drivers we are focusing on when designing services.
- Virtualization and cloud
- Green IT capabilities
- Centralized CMDB for all asset classes, with a common set of analytics and reporting tools
Lastly, partners have always been important in business and we are looking at new non-traditional ITAM partners that are in the green space and partners in the accounting and tax industry to help clients properly prepare for their decade of ITAM transition.
I hope this article leaves you excited about the future of the ITAM industry. Remember, the cloud does not necessarily mean less expensive, at least initially; however, expect other values and it will have major impacts on your ITAM program. Be excited, consider the history, embrace the changes, plan and rethink as it is the perfect time to reinvent your ITAM programs including all the things you have wanted to improve. It is more important that you incorporate software usage metering and do heavy analytics on usage variables focused on actual instances of software desktop and server side that you actually USE in advance of migrating to the cloud. Expect major changes in the architecture and functionality of ITAM tools in the next few years. Have a clear understanding of how your ITAM tool vendor plans to incorporate cloud capabilities into their tools. Look for a growth in ITAM managed services, outsourcing and staff augmentation for specific specialties you will need to include in your next generation ITAM program. Anticipate that your CFO and finance department will either be more integrated, if not in full control of your ITAM program in the near future. The cloud will make that easier with single instances of software. Based on my experience working closely with CIOs and IT in the last two decades, you can expect that they will be happy to relinquish their ITAM responsibilities. Lastly, seek assistance and closely monitor the ITAM industry best practices as you seize the opportunity to redesign your ITAM program for the future.