IT Asset Management continues to evolve and mature. The next step in its evolution requires practitioners to transition from managing assets to managing IT Spend. While many day-to-day activities will remain the same, ITAM professionals need to focus their attention on providing spend related information and spend optimization recommendations to various business stakeholders in an advisory role.
This change is required because IT budgets continue to increase and IT is a core business function in virtually every organization.
Spend is a common business language that allows everyone to understand the impact of every decision.
When you want to implement a new Business Service, you don’t ask IT to buy you 7 4-core servers and 13 database licenses, you ask for a monetary amount in the budget. IT needs to be able to speak this monetary business language with its customers and stakeholders, letting them know the cost of meeting requirements and making suggestions that can maintain service levels while freeing up capital for new investments. And ITAM organizations store the information about technology costs. They simply need to promote this fact to increase their value.
When ITAM began as a practice, it focused primarily on managing hardware assets, trying to minimize the number of unused and unaccounted for IT assets. Those tasks were often given to junior level employees and at times involved crawling under desks to capture asset tags. Hardware Asset Management wasn’t a strategic function – and those performing the tasks often were not able to demonstrate the value of the work they were doing.
After 2008 global recession, focus of ITAM shifted to managing software compliance. This was primarily because Software Industry had, for the first time, experienced revenue fluctuations. It had moved from a pure growth to a maturing industry. These publishers could no longer count on simply selling more and realized that they needed to look for other revenue streams. Unlike with hardware asset management, software asset managers weren’t crawling under desks anymore, but frequently struggled with getting the adequate data. I remember the days when capabilities like data normalization were unique and answers to a question about the ability to collect inventory resulted in “how much data do you want, we can give you all you can handle”. But was it the right data?
Times have definitely changed and asset management tools have become more sophisticated, collecting the right data, normalizing it and handling ever increasingly complex license compliance calculations.
The fact remains that one of the biggest challenges of ITAM is that it is still often viewed as a “necessary evil”, something that we have to do, rather than a strategic function within every organization. However, I believe that ITAM professionals today have a window of opportunity to redefine their role by becoming an advisor to the organization by providing financial information about IT technology costs.
What does this mean from a practical perspective?
It means reaching out to various departments to understand their needs and assisting them in creating business and budget proposals. It will require engaging “early and often” to understand future needs and building out budget plans. It means focusing on educating IT and business professionals about complexities of software licensing, so they don’t unknowingly create compliance issues. It means managing SaaS subscriptions and Cloud spend and finding new ways to control that spend.
An effective IT Asset Management organization must be able to translate day to day tracking of hardware, software, SaaS and Cloud consumption into normalized, credible financial information visible and available to be used in company’s decision making process.
ITAM still manages hardware and it still represents large spend for majority of IT organizations. Cost savings opportunities may be limited for hardware, but we continue to see large projects around datacenters – whether it’s trying to maximize the use existing ones or deciding when is the best time to move to Cloud and business services in company’s private environment run on hardware…
On the software side, ITAM professionals need to continue to focus on educating their organizations about the complex license consumption rules to reduce unintended license consumption. It means reaching out to various business units and IT professionals to understand their current and future needs and providing them with information about license costs needed to meet those needs. It means providing assistance to find less expensive alternatives (e.g. can the Business Service run on open source DB as opposed to commercial DB?).
New technologies also increase the license compliance complexity. This is especially true for virtualization and containerization technologies.
- As virtualization solutions improve their capabilities, providing easily movable and scalable workloads these new capabilities provide increased compliance risks – licenses may not support the ability to move between hosts, and if they do, those movements are likely to cause increased license consumption.
- Containers can exponentially increase that risk. Containers are meant to be very portable, quick to deploy, scale up and shut down. That core value proposition is what makes them so risky to use without understanding compliance risks. We have not seen adoption of Container-specific license rules to dates, so license consumption calculation is still tied to other metrics (like CPU/core metrics). Since containers can be deployed in private datacenters or in Public Clouds, in addition to increasing license consumption, they can also increase the Cloud Spend.
Adoption of SaaS and Public Cloud services present new challenges for ITAM since they represent pure subscription costs rather than assets owned by the company.
The ease of adoption of these technologies has also resulted in explosion of “shadow IT”. All you need to get a SaaS or Cloud subscription is an email address and a credit card. ITAM is getting involved in managing these services, but often only for few globally managed services. It’s a good start, but like an iceberg, much of its mass is still below the surface.
There is belief that using SaaS eliminates license compliance risks. That’s true in many cases, but not always.
In some cases, SaaS vendors will allow organizations to over consume their subscriptions and then come knocking on the company doors for more money. And this time there is no audit defense. SaaS vendors have the information about who and when is consuming the subscriptions.
Consumption of Public Cloud service also presents new challenges. Ability to “acquire” new virtualized OS instances (IaaS), on-demand database services (PaaS) and other services instantly can result in overspend. IT Cloud teams and other departments are using Public Cloud services, spending money without realizing opportunities for savings. Again, ITAM is perfectly equipped to help optimize Cloud spend by providing advice. Does the company have existing licenses that can be used instead of paying for these licenses as part of subscriptions? Are there special license consumption rules that affect the ability to use existing licenses? When can and should perpetual licenses be used in place of the ones included with Cloud service subscriptions?
Software vendors caught on to the popularity of Public Clouds relatively early. They responded by defining new use rights and in some cases defining special license consumption rules for those installations that lived in Cloud environments, rather than on premises datacenters. Microsoft’s new policy for SQL Server licensing is but a latest example of how software vendors (in this case also a Cloud Provider) are imposing licensing rules to protect their and not your business.
While ITAM is late to the game, the game isn’t over yet. Cloud is still in hyper-growth stage and engaging with IT Cloud teams will help ensure that license compliance risks are avoided and cost savings can be achieved at the same time (think Microsoft Hybrid Use policy). ITAM should get access to Cloud billing information, review costs of instances and become proactive at making money saving recommendations.
I see ITAM as having 3 primary functions:
- Managing assets and subscriptions to help minimize compliance risk and optimize spend. This is the traditional definition of ITAM and is a key to unlocking other capabilities.
- Providing advice (trusted advisor), so that all executives and managers understand the risks and challenges associated with use of various technologies and know to come to ITAM to ask advice before committing to new spend.
- Educating their organizations about the benefits of centralized management and risks/costs of “shadow IT” associated with all technologies.
Performing these activities will help raise the profile of IT Asset Management and allow companies to optimize their technology investments. This is one of the rare win-wins, where everyone benefits. But the key is to move away from counting servers and licenses to tracking and optimizing Spend. Money is the universal language of business and in order to be part of decision making teams ITAM needs to focus on speaking that language.