Successful IT Cost Optimization Beings with ITAM

There is a scene in Moonstruck (1987) where two new homeowners are in the thrall of plumber Cosmo Castorini. Played by Vincent Garenia, he explains their options:

There are three kinds of pipe. There's what you have, which is garbage - and you can see where that's gotten you. There's bronze, which is pretty good, unless something goes wrong. And something always goes wrong. Then, there's copper, which is the only pipe I use. It costs money. It costs money because it saves money.

The scene works because we all know that guy. We all know that pitch. And we all sympathize with those poor, in-over-their-head homeowners. Swap some of the latest/greatest technology or service with copper pipe, and it is the same script:

• SaaS costs money because it saves money…
• Off-shoring costs money because it saves money…
• This vulnerability scanner costs money because it saves money…

There is logic in the reasoning. An upfront investment of CapEx is perfectly acceptable (nay, encouraged) if it reduces year-over-year OpEx obligations. The COVID-19 crisis impeded many organizations from properly vetting and researching which solutions and providers would provide worthy investments and improvements. Now, though, with the end of the crisis drawing near, organizations are re-examining how best to optimize and control their budgets and expenditures. The first question that needs to be asked is: where should an organization begin its IT cost optimization efforts?

If the title of this article has not given the answer away, it is ITAM (information technology asset management). Of all the other service management and delivery initiatives within an IT Department, ITAM best aligns with IT Cost Optimization strategies: maximizing the return on investment (ROI) while minimizing the total cost of ownership (TCO). There are numerous articles from Gartner, Forrester, Info-Tech, and others extolling the benefits of ITAM to ITCO initiatives, but one factor gets overlooked. The cost of entry for a successful ITAM initiative is the lowest of all the other cost optimization targets. In fact, ITAM threatens to turn poor Cosmo Castorini on his head:

ITAM costs nothing because it saves money…

In 2017, ISO/IEC updated their ITAM standards. They now describe a three-tiered approach to tracking hardware and software assets within an organization:

• Optimization: maximizing the efficiency and cost-effectiveness
• Life Cycle Integration: accurately tracking and reporting how assets are entering and leaving the computing environment, which requires…
• Trustworthy Data: knowing what you have, so you can manage it

In typical ISO/IEC fashion, they give you a definition of “trustworthy data” but no good guidance on how to achieve “trustworthy data.” How does one go about finding trustworthy data?

Trustworthy Data

In my book, Rethinking Information Technology Asset Management, I recommend leveraging inventories from three sources. One source is a given: every modern asset management service has a “discovery tool” bundled in it (designed to efficiently scan and harvest the necessary details for the service to function). For the other two sources, I reach out to the IT Security and IT Service Management teams. In most modern IT Departments, the scanning and discovery tools leveraged by IT Security and IT Service Management operate independently of ITAM. Furthermore, since all three toolsets are scanning the same computing, we can use all three to verify the presence of any one asset (at least hardware) in use at any one time. And even if your organization doesn’t have formal ISO/IEC initiatives, your IT Department likely has tools performing these functions. The result is a dataset that is verifiable and trustworthy, and requires no effort other than to retrieve information from tools your organization has already deployed.

Lifecycle Integration

The next tier — Lifecycle Integration — is now achievable by gathering more data about when and how various assets enter and leave the computing environment. Most organizations leave this as a manual process, which I argue in Rethinking Information Technology Asset Management, is a mistake. Bring in data from your procurement and disposal vendors, and ITAM has enough information to automatically know which assets are where in their journey from purchase, inventory, usage, recovery, and disposal.

Optimization

Optimization is now within reach, and nowhere within the previous two phases was mentioned the purchase or integration of a new tool or dedicated system. A sufficiently experienced and motivated ITAM professional should now have all the details necessary to begin cost optimization activities in earnest. It begs the question, just how much optimization can ITAM achieve?

In 2016, Gartner published an article titled “Cut Software Spending Safely with SAM” (ID: G00301780). That article posits IT Departments can reduce their software spending by 30% by maturing three key processes:

• Optimize Software Configurations: Ensure you are not paying extra for the features or services the end-user does not use
• Recycle Software Licenses: Identify unused assets and redeploy as quickly as possible
• Use SAM tools: Identify, automate, and expedite as much of the software asset management (SAM) activities as possible

As cost optimization processes go, these three are pretty standard fare. However, there are two deeper implications. First, “Optimizing Configurations” and “Recycle Assets” work for both software and hardware assets, which means extra savings can be had beyond the 30% software prediction if the focus expands beyond SAM. This aligns with the expected results of our ISO/IEC efforts discussed earlier (and confirms the ISO/IEC tiered method has merit).

Second, while SAM tools will cost money (especially if you are starting from scratch), those costs can be saved to the very end. Better still, by going through the described ISO/IEC tiered approach and only focusing on hardware optimization, there should be enough savings to imply more can be had by investing in SAM tools. Best of all, I do not know of a SAM tool or service on the market who’s implementation costs would come anywhere near 30% of the organization’s software budget.

The last question then, is if this 30% is actually achievable? In my 20+ years of experience in the ITAM and SAM space, this closely aligns with my experience. I’ve seen clients reinvest the savings into hardening their cybersecurity efforts, funding service support automation, or updating equipment. I’ve seen others expand the scope to achieve cost optimization savings against SaaS agreements, telecommunication services, data center conversions, and the like. But these high-profile, high-visibility, and high-impact developments usually cannot begin without a sizable CapEx commitment. ITAM, though, can free up enough OpEx to bootstrap these other initiatives into existence.

ITAM costs nothing because it saves money…

If you’re unsure of your team’s capability or capacity to do this, or if you’d like an outside perspective, reach out to Vaco. You will find our expertise to be broad and deep.