Insider Business Club: IT asset management

How to do you accurately value your IT assets?

Lisa Hammond, founder and chief executive of consultancy

Let’s assume you’ve gone through the graft of identifying your assets from a
hardware perspective, software perspective and a people perspective as well ­
knowledge assets and data assets are harder to value.

Looking at the more tangible ones like hardware, you are going to have to go
through where you bought it and how much you paid for it, and I think it’s
important that you buy it as part of a managed contract.

So, for example, the average cost per year of just a normal Intel-based
server is between £15,000 and £20,000 per year.

These aren’t small costs and you may be directly charged that by a vendor,
you also might have to look at how much you paid for it, then the support desk
costs, then the people who are managing it ­ the build up of those costs.

Experienced companies likes Centrix and Deloitte have methods for you to cost
hardware assets. That shouldn’t be such a slog to do. And for your software it’s
similar story.

You are going to have to look at your procurement, where you ordered them,
where the invoices are, how much you paid for them, and build a picture up of
the price of your software assets as well.

Then between your people assets, contractor rates, how many people you have
got, where they are working etc. you will quickly be able to see your costs, the
total cost of owning that asset, which is actually the really important one and
how much you’re depreciating that asset each year.

This applies whether you have got three years, or five years, typically those
are the two realms for depreciation.

Once you have done that and you have a value of the asset, you will know
where it is and you can then use that to drive service costing for IT and that
fundamentally is one of the tools you use to begin to reduce a cost of IT.

How do you use effective asset management to drive down the costs of your
IT infrastructure?

John Winstanley, director at Deloitte’s technology consulting

I think the biggest value of assets management is getting cost control into
the IT department. You can discover whether you are buying assets when you
really need them.

And for quite a lot of organisations, once they have managed to qualify their
usage, can re-deploy, which actually means you can get into a cost avoidance
situation where you don’t need to buy as many new servers because you can re-use
equipment you already have.

Similar things happen with licences and expensive development licences, which
may sit within an IT development department and will be used on a laptop on a
piece of work and then are frequently not re-allocated when that piece of work

Consequently people end up re-buying them, so similar things happen in
software where you can check whether a licence is being used and re-allocated.

So there is potentially quite a significant benefit in cost avoidance in
terms of having an up-to-date asset management register, which means you can
look at where you can deploy equipment you’ve already bought and software that
you have already bought.

Also what it allows you to do, is aggregate your spend with the vendors and
better understand the vendor’s performance, particularly around maintenance. It
also allows you to look at them commercially and renegotiate your contractual
commitments in that area and again looking at significant cost reduction.

For me it’s about having the financial data and the asset data to enable you
to run commercial strategies to reduce your on-going budgets.

Chaired by Paul Grant

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