Over the past few years, I’ve noticed a consistent theme, across a number of clients, for projects that include hardware and software – the lack of strong asset management – which ultimately leads to a lengthy discovery period before a strategic sourcing strategy can be developed and executed.
For many organizations that expand quickly or grow through acquisition, the previous asset management tools or processes may not be equipped to scale to the needs of the new organization or to support rapid changes in the company’s infrastructure. While there are quite a few subcategories within IT that benefit from strong asset management practices, I’ve focused on three of the larger areas of spend and biggest perpetrators of inadequate (or completely absent) inventory and asset management.
Office Machines/Equipment: This includes an organization’s printers, copiers, and even those relic, standalone scanners and fax machines. These are devices that are usually serviced by a third-party and very often are based on cost per copy/page. While you may only be paying for the per page cost of these devices, it is important to ensure your organization has a handle on the current inventory in order to:
Replace equipment no longer needed: Stand-alone devices like those scanners or fax machines and personal printers have higher maintenance rates and can usually be replaced by multi-functional printers at more efficient rates. Similarly, if you do lease devices, you’ll need to make informed decisions in advance of the lease end date to buy out, remove, or replace the equipment.
Evaluate your service provider: You’ll need an accurate inventory and idea of print volumes and printer age in order to go to market for a managed print program or even to evaluate the impact of pricing changes from your incumbent supplier.
Optimize your equipment: Many times as offices grow or reduce in size, you will need to evaluate the class of device or throughput in order to align to the needs of different areas. It’s also important to track service calls and end meters to plan for equipment refreshes and look for opportunities where replacing a device would be more efficient than continuing to service it.
Key attributes to capture (and maintain) for office machines include: class of device (e.g. A3, A4, personal printer), make, model, serial number, asset tag, leased vs. owned, current service provider, contract end date, service address, add-ons built in (e.g. paper trays, standing unit/cabinet), end meter, and average monthly volumes.
Network Equipment: This includes the routers, switches, firewalls, and other devices or solutions used to monitor and manage your network. For network equipment, organizations typically receive a base level of maintenance from the manufacturer and have either internal or external support for additional maintenance and day to day management needs. For network equipment, it’s important to understand what is in place in order to:
Manage credits: If you replace a piece of equipment that had prepaid maintenance, you should ensure that the pro-rated portion of unused maintenance is applied to the new device maintenance cost or credited against future purchases. If you don’t track these changes or ensure your network management provider is tracking the changes, you will miss out on these credits.
Manage service needs: If the device is not registered to your organization or has an inaccurate service address, you can run into issues when trying to get support from the manufacturer for an issue or if a technician needs to be deployed to service or replace the device.
Plan for the future: You need to understand what equipment supports your network today, when that equipment will no longer be supported by the manufacturer, and how equipment needs may change based on changes you make to your network architecture or solutions. Understanding these different components will allow you to plan for timing of changes as well as continue to evaluate solutions alternate infrastructure models.
Key attributes to capture (and maintain) for network equipment include: type and/or class device (e.g. large router, edge switch), make, model, serial number, asset tag, service address, service provider, contract term, level of service, inter-connectivity with other devices, and estimated EOL date.
Software: While software may not be as tangible as hardware for asset management, it is one of the larger asset areas to maintain. As organizations grow organically or through acquisition, both the need for different solutions and the dis-aggregation of spend/software purchases typically expands. There are many divisions or individual business units making choices around the solutions they need to support their business and with the breadth of SaaS solutions available in the market, the need for IT’s involvement can be less apparent. Software asset management allows organization to:
Plan for replacement: If a business unit or IT is looking to replace a solution, you will need to ensure enough lead time for the sourcing event, supplier and product evaluation, and implementation period; this timeline can typically be backed into given the contract end date for the current solution.
Plan for negotiation: Whether negotiating a recurring subscription cost or maintenance associated with your perpetual license, you’ll need to have visibility into these end dates and increase your negotiation leverage by understanding any other upcoming purchases with the suppliers, testing the market for comparable options, rightsizing your subscriptions to the current need, or developing scenario planning for license model changes (just to name a few).
Mitigate audit risks: By working with a supplier to understand entitlements and contract allowances in place across your solution base, your organization can be prepared for audits from the software publishers and ensure compliance as the organization grows.
Key attributes to capture (and maintain) for software include: supplier, module or name of specific software, what the software is being used for, license model (SaaS, perpetual), reseller or VAR leveraged (if applicable), contract end date, maintenance percent or dollar amount, maintenance term, estimated number of users or breadth of deployment in the organization, department or business owner, and administrator for the software.
Once a clean inventory is created within these areas, the critical piece of asset management is putting controls in place to manage updates to the inventory and ensure moves, adds, changes, and deletions are captured (and captured in a timely fashion). Some companies will look to invest in asset management programs while others rely on Excel-based databases; your individual need will depend on the breadth of different equipment and solutions you have in place and the risk associated with inaccurate inventories of those assets. There should also be a clear policy in place for purchases and who owns inventory tracking, likely something that IT and Procurement should work together to develop, communicate, and enforce within the organization.
Ultimately, strong asset management practices ensure that the organization has clear visibility into the devices and solutions leveraged throughout and allows you to better anticipate and act on sourcing/negotiation strategies to better manage the spend.