Getting a handle on all your IT assets may seem nearly impossible, but a formal approach and the right systems can make it pay Reader ROI* Discover the hidden costs and savings in comprehensive assets management* See expert-recommended steps to take* Find out what asset management practitioners have learnedLike most large organisations Kodak for years had no more than a sketchy notion of the scope and nature of its IT assets. Even today, Greater Asia Area Hub Centric manager Kodak Australasia Barry Warden admits he can't say exactly how many PCs Kodak has in the region. What he can tell you, with laser-like accuracy, is the exact hardware configuration of some 3350 newer PCs, NT servers and Unix servers, not to mention details of every item of software running on each - and any patches that may have been installed.
Not only is that knowledge valuable when it comes to planning the budget for upgrades or, say, the move from Office 97 to Office 2000, Warden says it's essential to helping Kodak to get a grip on total cost of ownership (TCO). "By using the inventory process coupled with an in-house developed change management process, we're actually controlling what is on a person's desktop," Warden says. "If somebody has software that we haven't authorised then we can go out there and move it."
With growing numbers of companies finding their IT environments out of control, experts say the best answer is a formal, comprehensive asset management strategy that not only tracks hardware and software assets, but also manages software licences, equipment contracts and leases and networks from cradle to grave. Ideally an organisation should aim to start managing individual assets from the moment they're ordered, keep tabs on them during procurement and follow them from the loading dock to ultimate disposal. That way, asset managers should be able to guide the organisation in the acquisition, use and disposal of assets, and manage their related risks and costs over every phase of the asset life cycle.
Kodak, which operates a sophisticated and heterogeneous global IT environment encompassing dozens of mainframes and thousands of servers linked by a private voice/data network, used systems management products from Tivoli Systems to support rollout of its global SAP R/3 enterprise system implementation and move to client/server computing. Now asset management is being progressively handled by Tivoli Inventory, which feeds data into Kodak's Vantive for help desk and change management software.
Warden says Tivoli Management Framework and the Vantive products are critical to Kodak's help desk operation. Tivoli Inventory monitors system configurations and then compares the results with data stored in Vantive, alerting support staff to any irregularities on the managed platforms. "Tivoli Management Framework is an essential piece of the jigsaw Kodak needs to operate effectively on a global basis using a client-server architecture. This implementation plays a key role in enabling us to monitor and maintain the health of our computing environment," says Warden.
"It's taking a while to roll this out because we've chosen not to pick up information about say 3.1 or some of the old architecture that we've got lying around; we're only picking up the new base of equipment," Warden says. "That's been going on for the last 18 months. All the same, we've now got 3350 end points in Asia that we've set up which we're collecting asset information for."
Kodak might have been slow to accept the value of asset management, but most organisations are slower. In fact many organisations still manage their assets in a haphazard way - if at all - despite a proliferation of PCs and the unremitting pressures created by Internet time.
"Most commercial companies have no idea what computer equipment they've bought and where it is located," says Gordon Anthony managing director Global Asset Systems. "Most companies have several asset registers. They've got the general ledger, which says last week I bought 500 IBM computers and they cost this amount of money. Then they have the help desk guys who usually do their own register. Since they usually don't have the resources they tend to say we do have 500 machines but they're all individual machines and last time we conducted a survey, which was when the machines were bought, this is what we had. We really don't know what's on it now."
And if you're looking for a good argument in favour of managing IT assets, Anthony rises easily to the challenge. Just consider the astounding number of organisations that replaced every PC they had in the shadow of the Y2K bug simply because they had no idea precisely which machines were running what software. It's a quick and easy way to start to appreciate the value of asset management, he says. "It particularly happened to government and large corporates. If they had put good asset management principles in place in the first place they could have very easily identified which machines were compliant and which were not compliant."
Badly Done
Asset management is particularly important in the end-user computing area, where many organisations need to keep track of thousands of PCs, handheld devices, printers and networking bits and pieces, says GartnerGroup research director Bruce McCabe. Yet adoption is anything but pervasive among Australian organisations, and even when it is done, it is not done very well. "Most of the organisations that I speak to really do it only at a fairly superficial and basic level," McCabe says. "It varies of course, but in general it's not done well in this country."
McCabe believes one reason why asset management is given such scant attention is that too few people have been educated about the rewards of asset management and the problems associated with not doing it.
"It's not necessarily obvious to people that it can cost them an awful lot of money if they don't manage their assets well," he says. "And it's not one of those subjects which is exactly exciting; it's what you call an internal or defensive topic. It's very much focused on cost reduction or cost management as opposed to competitive advantage like e-commerce or customer service. It's one of those things that can get ignored in the rush."
GartnerGroup estimates that just 20 per cent of Fortune 1000 companies run specialised software designed to monitor IT and telecom costs, software contracts, maintenance and lease agreements. Yet the research company says enterprises that initiate asset management experience up to a 30 per cent reduction in cost per asset plus continued annual savings of five to 10 per cent over the subsequent five years.
Likewise, US research from IDC suggests that a well-managed formal asset management strategy can generate considerable savings, especially when measured in terms of total cost of ownership. IDC puts the average annual staffing cost per PC at a 1000-user site at $US5236. Sites that practise asset management found they could cut their costs to an average of $US4880. That's 15 per cent lower than the average cost for non-practitioners. By contrast sites that don't practise asset management were forking out $US5593 per PC.
But if adoption of asset management has been slow until now, all that may be about to change. GartnerGroup expects IT asset management programs will be one of the top CIO initiatives in 70 per cent of global enterprises through 2003, driven by mergers and acquisitions, especially in the pharmaceutical area and banking industry. Many analysts maintain asset management is critical to companies that are planning acquisitions. Without it it becomes all but impossible to value a company.
Loose Definitions
Internally the principal objective of asset management is to help organisations meet their service delivery objectives efficiently and effectively. At a minimum it can help the organisation determine what assets it owns, where they are located, how well they are working, how much they are costing the organisation and how well they are supporting the business.
"Managers responsible for assets have recourse to a range of techniques to assist them," says Paul Leeder, principal, Paul Leeder and Associates. "These include value management, demand management, economic appraisal, life cycle costing and risk management. Risk management is particularly important as it underpins many of the key decisions made about assets."
Leeder says to be effective, asset management needs to be considered as a comprehensive and multi-disciplinary activity that takes into account a range of factors such as: u the asset life cycle and asset management principles; u the needs of the users of the asset; u the policy and legislative environment; u the entity's corporate management and planning framework; u technical adequacy and commercial viability; u external or market factors (commercial, technological, environmental or industry implications); u the competing demands of stakeholders (in some instances); and the need to rationalise operations to improve service delivery or to enhance cost-effectiveness (in some instances).
"Asset management is one of those things that mean many thing to different people," says Anthony. "For example, asset management from one viewpoint is just scanning the fleet, identifying hardware, software. If people are leasing then asset management for those people is a method of keeping the lessor honest. To us it's all of those things."
Don't rely too heavily on your leasing company to manage your assets for you, Anthony warns. Leasing companies that offer asset management capability may be more interested in locking in the customer than in providing a service. And since most of the profits for the leasing company come at the end of the contract - and particularly from penalty rates for late returns - they don't have much of an incentive to help their customers get equipment back on the exact end of lease date.
"The enigma is the leasing companies are trying to persuade the customer they can manage their assets for them, except the major source of their revenue actually comes from the customer not being able to manage their assets. That's called sales and marketing I suppose. They're supposed to provide the information and that's against their best interest," Anthony says.
Internally, end-to-end asset management tools can track desktop and network information and also laptops, handheld devices, mobile phones and in-house phone equipment. The most comprehensive provide a central repository, automated desktop and network discovery, software licence detection, management of lease, and maintenance contracts. The software will send you e-mail alerts when a software licence is up for renewal or when a scheduled hardware delivery is missed and also produce a range of end-of-the-month reports from software licences by type through monthly costs by vendor and asset status reports.
Such knowledge makes it easier to know when to discard or redeploy unused equipment, or to recognise whether maintenance contracts are offering real value for money. It can help you know when you've paid too much for software licences and to recognise any discrepancies. And it will let you see whether your users are operating their software according to the special terms or entitlements you negotiated with a vendor.
But asset management can give value way beyond the IT infrastructure. For instance, Sydney Airport and other airports under control of the Federal Airports Corporation (FAC) have adopted a proactive stance to asset maintenance and now use PSDI's Maximo, an enterprise asset management (EAM) solution, to streamline maintenance and regulatory functions, measure performance, analyse equipment failure, and implement improvements. At the airport, asset management extends to air bridges, people movers, lifts and even toilet facilities. In fact anything deemed of importance to the airport's customers is monitored from an uptime or system availability perspective.
It's taken a couple of years to refine and get right but Walter Rafin, passenger facilities manager for Sydney Airport, says the airport now has a very comprehensive equipment and asset database. That feeds into a centralised fault reporting centre that operates almost like a call centre.
"If we have any problems at the airport whatsoever, people call through to a number and the operator automatically logs all that information into the Maximo system," Rafin says. "The system generates a fault number, that fault number then gets assigned to a work crew which prints off a work order. That gives us the benefit of trend logging, so we can go back into any asset, back into any item of equipment and see how many times it's failed."
Sydney Airport uses the system to generate a number of key performance indicators (KPIs), including mean time to fix faults; open faults at the end of each week for each work crew; overall preventative maintenance conclusion as a percentage; number of faults recorded; and system availability.
"As far as my guys' use on a daily basis is concerned, the results have been that they have a very much more focused understanding of lifecycle costs of assets," Rafin says. "And using trend logging - going back into the history of some of these assets and asking how many times has it failed and whether that's at certain peaks during the day - they can do predictive modelling and actually tell me when assets are going to fail. We plan our maintenance schedules around that. Because they're looking at predictive scheduling, they're also planning well in advance any refurbishment or renovation or upgrade program."
As a result, the airport no longer over-maintains equipment. It can find out how much any asset costs to maintain, how frequently it needs maintenance and the likelihood of failure. "If it does fail, we look at it from a consequential risk point of view, which we've never done before," Rafin says.
Start Slowly
Effective asset management isn't all that difficult. Start by putting in a system where you can store information about all the devices or assets to be tracked, suggests McCabe. It really doesn't matter whether you choose to use a dedicated asset management system or just a database.
Then ensure asset management is part of the process in everything the IT department does. "For all the moves, the adds, changes and upgrades that are done in the organisation it should be a documented process that the asset register be updated," McCabe says. That advice stands even if your leasing company has supplied the asset management software and helped get it up and running - internal IT staff still need to maintain a very high level of awareness of the need to keep the system up to date.
Once a company chooses an asset management strategy and package, the temptation is to install everything and get the system up and running as quickly as possible. That may be neither desirable nor realistic.
Warden admits Kodak was overly optimistic about how fast it could start managing all its machines. "Recognising that we're operating in about 23 significant locations through Asia, trying to get all of those people to load the agents and get all the infrastructure in place has been a longer job than we originally anticipated," he says.
Maroochy Shire Council on Queensland's Sunshine Coast implemented a comprehensive asset management program for its $1100 million asset base in 1997. The installation was completed by October 1998 with the posting of the finalised asset register for 1997/98 financial year. That gave the council an asset register for its roads, buildings, storm water, drinking water and sewerage infrastructure, and enabled it to meet its requirements under the AAS27 standard for accounting standards. Now it is heading into phase two of its asset management project.
"The initial installation was to meet our accounting standards requirements and to put in place a modern, up-to-date and robust system that could help us register all our assets, which you can imagine in a developing shire like ours is quite critical," says information systems manager Mauren Klinkert. "But what we're moving towards is looking at all of our processes in relation to those assets, including all the jobs to maintain assets, and having the system to integrate to our new financial management system that we're implementing right now.
"We're positioning ourselves to leverage off those two systems being in place on the same platform so that we can integrate them and make sure that all our processes and systems are integrated in relation to asset maintenance," she explains.
Maroochy handled change management by appointing an overarching project manager for the IS area then creating sub projects that gave all asset owners a stake in the project. Klinkert says it proved an excellent approach to what otherwise would have been a huge project to manage.
She says it is equally important that the business managers be involved from the start, in the interests of IT-business alignment. "And have a decent project office managing this: you can't do it as a Sunday afternoon after-lunch exercise. You really have to focus," she says.
You also need buy-in from all parties concerned. To achieve this goal Kodak held a series of meetings to sell people on the benefits. Warden says the organisation adopted a soft-sell approach to asset management as part of its complete TCO program. "The thing about asset management as opposed to some other systems management processes is that it's not generally as well recognised by people that the benefits are there. If you could only work out a way to better explain those benefits up front, then you might be able to get the buy-in quicker," he says.
So whenever asset management proves its worth, Warden is out there telling people about it. For instance, when Kodak recently came across a number of products needing NT Service Pack 4, Warden found that being able to give management accurate numbers on how many machines required the upgrade really helped to sell the asset management concept.
Do's and Don'ts of Asset Management
Do's
DO focus on soft cost savings.
DO get buy-in from upper management.
DO determine your "pain points" - the areas that would benefit the most from assets management - before you begin.
DO go for the biggest return on investment first; that way, you reward your executive sponsors.
Don'ts
DON'T neglect the hard work of setting practices and policies within your company to make the system truly effective.
DON'T think of asset management as an accounting system; it is a way to manage the accounting of an asset.
DON'T try to do everything at once; start slowly and expand as it makes sense.
DON'T expect results overnight; asset management is a long-term process.
Nonstandard Issue
Managing wireless devices often consists of simply knowing they're falling through the cracks Business people rarely leave their desks without some variety of wireless equipment - notebook computers, mobile phones, personal digital assistants and pagers are the accessories du jour. The increasing use of these devices presents a nettlesome challenge for companies looking to track assets. By their very nature, these devices don't stay in one place for long and are off the corporate intranet much of the time, making them difficult - if not impossible - to track.
Centralised administration is the heart of asset management, and "wireless devices spend a lot of time sitting in someone's back pocket", says Kevin Burden, a senior analyst in the asset management services division of IDC (US). "There is simply no way to poll the network and find out how many handheld devices you have out there."
Wireless devices are also difficult to manage because they are so portable. For example, Joe might leave the company on the same day that Mary joined, so somebody has the great idea to give Joe's laptop to Mary. All of a sudden, a unit manager realises she is being charged for Joe's laptop when Mary is in a different division.
But in general, IT managers don't seem particularly worried about tracking these devices. First things first, they reason - and that means having good, centralised control of expensive IT assets before even considering tracking mobile devices.
A key problem with wireless devices is that quick usage cycles - as fast as six to eight months - make the units particularly frustrating to track. Although it's at the bottom of corporate to-do lists now, tracking wireless units will become more important over time. "Even though the majority of IT departments haven't yet committed a formalised support program for them, you know help desks are getting calls," Burden says. "What will probably happen is that companies will realise how much time users are spending supporting themselves and their neighbours. Eventually, they will direct the IT department to develop support policies."
The only way IT departments will be able to deliver support efficiently, Burden says, is to mandate the procurement of a small subset of handheld devices so they can be as familiar as possible with the devices they are supporting.
-Karen Schwartz
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