IT Asset Management

the foundation of all IT Success

Cora L. CarmodyJohn R. WarburtonOffice of the CIO

Litton PRC

2

In general…• Decentralized IT spending in the

absence of standards leads to– inefficient spending without volume

purchase agreements– lack of insight into what we possess– severe interoperability problems– low ability to implement modern

technological solutions

3

Areas of common concern- Process inefficiencies

“we spend too much and wait too long”lack of standard processes

- Lack of asset insightstill paying taxes on assets long gone

- Lack of uniform support and supportability help desk, back-upsdueling DLLs...uninformed installs

- Lack of technological agilitymigration planningmigration implementation (manual software

distribution)

4

AssetEntry

Use

Insight

TechRefresh

AssetRetirement

Ass

et U

sefu

l Life

Acquisition

Configuration

Set Up

Training

Accounts/Payable

AssetRegistry

ProblemResolution

ApplicationSupport

Moves, Adds,Changes

BaselineInventory

InventoryMonitoring

AssetReconciliation

Financial Analysis/Reporting

Asset Refresh

SW LicenseManagement

Tech ChangeManagement

Upgrade

AssetRedeployment

AssetDisposal

EnterpriseIntegratedAsset Mgt

System

AssetRepository

Deployment

AssetPlanning

IT CapitalPlanning

ForwardPricing

SoftwareBuild/

Distribution

ContractMonitoring

ProgramTech

Refresh

Std DsktopPolicies

ContractMods

LeasingManagement

StandardDesktopProgram

Management

Capital 26%

Technical Support

17%Admin14%

End User Operations

43%

Total Cost of Ownership

Standard Desktop

IT Asset Management(Seat Management)

Common Operating EnvironmentArchitecture, Standards, Policies,

Processes

COE Strategy to Lower TCO

CO

E Strategy to im

prove Asset

Manageability

Foundational Strategy

Foundational Strategy

Building

Block

SoftwareDesktopsServersNetwork

5

IT Asset Management

The Policies, Processes, Systems and Controls for the Orderly

Planning, Acquisition, Entry, Use, Insight, Refresh, and Retirement (Reallocation and/or Disposal) of

all IT Assets

6

Common Operating

EnvironmentDefinitionStandard Desktop Team

ITAM Team

Process & IT Improvement Teams

COE Teams Approach; the Beginning(and the simple view)

Standards,Policies &

Macro Processes

DetailedProcesses

Architecture

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AssetEntry

Use

Insight

TechRefresh

AssetR etirem ent

Ass

et U

sefu

l Life

Acquis ition

C onfiguration

Set U p

Tra in ing

Accoun ts/Payab le

AssetR egistry

P rob lemR eso lu tion

ApplicationSupport

M oves, A dds,C hanges

BaselineInventory

InventoryM on ito ring

AssetR econcilia tion

F inanc ia l A na lys is /R eporting

A sset Re fresh

SW L icenseM anagem ent

Tech C hangeM anagem ent

U pgrade

AssetR edep loym ent

AssetD isposal

E nterpriseIn tegra tedA sset M gt

System

A ssetR epository

D eploym ent

AssetP lann ing

IT C ap ita lP lann ing

ForwardPric ing

S oftw areB u ild /

D is tr ibu tion

C ontractM on ito ring

ProgramTech

R efresh

C ontractM ods

Leas ingM anagem ent

IT A sse tM anagem ent

Support C enter

S td D sktopPo lic ies

Enterprise IT Asset Management Macro Patent pending

8

AssetEntry

Use

Insight

TechRefresh

AssetR etirem ent

Ass

et U

sefu

l Life

Acqu isition

C onfigura tion

S et U p

Tra in ing

A ccounts/P ayab le

AssetR eg istry

P rob lemR eso lu tion

App lica tionSupport

M oves, A dds,C hanges

Base lineInventory

InventoryM onito ring

AssetR econcilia tion

F inan c ia l A na ly s is /R eporting

Asset Refresh

SW L icenseM anagem ent

Tech C hangeM anagem ent

U pgrade

A ssetR edep loym ent

A ssetD isposa l

EnterpriseIn tegra tedAsset M gt

System

A ssetR eposito ry

D eploym ent

AssetP lanning

IT C ap ita lP lann ing

ForwardPric ing

S oftw areB u ild /

D is tribu tion

ContractM on ito ring

P rogramTech

Refresh

ContractM ods

Leas in gM ana gem e nt

IT A ssetM anagem ent

Support C enter

S td D sktopPolic ies

Some Qualitative Benefits•Reduced Process Time•Reduced Product Costs•Avoiding Costs

Incurred Through Shadow Support •Quicker Resolution

Time

•Reduction of Redundancy•Ability to Standardize•Obtain Volume Pricing

•Reduction of Liability Incurred Through Illegal Licenses•Cost Avoidance Through License Reuse

•Decrease of Taxes Paid on Absent Equipment

•Cost Savings Through Better Utilization of Existing Assets

•Enhanced Employee Satisfaction and Productivity

‘nuff said

Patent pending

9

Enterprise IT Asset Management Architecture

DesktopSystems

Network & Systems

Management

AssetManagement

BusinessSystems

SoftwareBuild

(OS, OA,Custom Apps)

SW Metering

DiscoveryClient

ElectronicSoftware

Distribution

ITAsset

Registry

DecisionSupport

SupportCenter

Procurement

Accounts Receivable/Accounts Payable

Fixed AssetManagement

SoftwareLicense

Management

ITAsset

Registry

Asset Repository

HumanResources

InventoryManager

NetworkMonitoring

Web Enablement

Web Enablement

Seat Management Dashboard

Patent pending

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Worst case Costs2,500 PC Wkstns.

over 12 months

% Costs ReducedWith Asset Mgmt.

Strategy

EstimatedImplementation

Costs

Net 12 MonthSavings**

1 Help DeskDiscovery Time

$420,000 57% $46,900 $192,500

Worst Case Desc.: End-user works 100 min. per year (@$30/hour) on support calls Technical support analyst works 100 min. (@75/hour) to discover configurationAssume six calls per user at average length of 17 minutes per call.

Implementation Cost : Auto-discovery software license @ $10 per workstation, plus labor for one year (4 hours per server install; 2 man days/month maintenance)

Savings: Assume reduction in work by user at 75 percent and technology by 50 percent

2 Maximize HW/SWDeployment

$375,000 55% $93,000 $113,250

Worst Case Desc.: Assume manual software distribution at 2 tech. hours (@ $75/hour) per wkstn. per yearImplementation Cost: Electronic software distribution software licenses plus labor; one major distribution job

($30/node; 4 hours per server install; four person-weeks configuration and test)Savings: Assume automated software distribution eliminates at least 55 percent of manual costs

3 New HardwareAcquisition

$2,860,000 10% $286,000

Worst Case Desc.: 715 new machines (at $4,000 each) purchased by multiple buying centers from multiple vendors over 12 months; (Assume 42 months or 3.5 yr. average life ofmachines, therefore 2500/3.5=715 new PCs per year)

Implementation Cost: NoneSavings:

and installing machines purchased under same contractAssume at least 10 percent improvement in cost associated with acquiring

4 Software VolumePurchase

$500,000 25% $125,000

Worst Case Desc.: Assume multip le groups within enterprise buying software without discount or at a minimal discount (i.e ., 10 percent to 15 percent)

Implementation Cost: NoneSavings: Assume groups buying software under same contract w/ higher discount (e.g., add 15%)

5 SoftwareOverbuying

$500,000 27% $46,900 $88,100

Worst Case Desc.: Assume strategy where enterprise buys one $200 software package for all machines regard less of usage level

Implementation Cost: Software metering licenses plus labor for one year ($10/node; 4 hours per server install; two person-days/month labor)

Savings: Assume at least part of enterprise can license per usage (i.e., 1000 users at 30 percent concurrent-use level)

6 MaintenanceContracts

$150,000 17% $25,500

Worst Case Desc.: Assume flat rate on all desktops in enterpriseImplementation Cost: NoneSavings: Differentiated service levels based on workstation criticality

instead of uniform service for entire enterprise7 Property or Usage

Taxes$312,500 20% $62,500

Worst Case Desc.: Tax calculation of 5% on 2500 machines with average value of $2,500Implementation Cost: NoneSavings: Assume average industry savings after only paying taxes on workstations

that have residual value.

TOTALS $5,117,500 $186,800 $894,050

** Net savings calculated by total savings less implementation costs

Source: Gartner Group“Enterprise IT Asset

Management: Executing the Vision”,

January, 1997

Some Potential

Quantitative

Benefits

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Total Cost of Ownership• Annual TCO for a Desktop averages

between $10,000 and $12,000 annually

• 74% of Annual Costs are spent in operating a desktop– potentially upwards of $8K a year

• Most is generally not accounted for separately

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Exposing Key Metrics• The defined processes of IT Asset

Management expose savings potential– Software Licenses

• Dollars saved by transferring licenses rather than buying new ones

– Shadow support• Having an 800# to call for application support

instead of using the engineer next door– Asset Reallocation

• Dollars saved by avoiding capital acquisition through redeployment

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Examples of Early Problems and Resolutions

• Biggest issues– Communication and currency of

configuration information– Rapid delivery of orders

• Problem Resolutions– All processes now documented – We provide manufacturers with changing

configuration baselines– We post configuration info on web in real-time– We provide manufacturers with monthly forecasting

data

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Some General Lessons Learned

• Now have enterprise-wise prediction of IT capital spending– We are using that knowledge to standardize and

obtain volume purchase agreements• Team approach has greatly assisted a major

cultural change • Taken a long longer to get to this point than we

thought• Plummeting desktop costs and rapidly

improving technology provides challenges

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Asset Management’sEvolving Goals

and Phases of

Value Contributionto the Enterprise

from“Economic Performance GainsWith IT Asset Management”

the Gartner Group, 23 February, 1999

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Summary -- Benefits of ITAM• Accurate Prediction and Control of IT Funds• Foundation of asset insight

– Necessary to continuously migrate our information technology

– Increased decision-support ability• Reduced expenditures. For example,

– process efficiencies– elimination of redundancy, – decrease of license costs, – increase of volume discounts, – decrease of unnecessary property tax

For further information

carmody_cora@prc.comwarburton_john@prc.com