Asset Management: Success in the Post-Y2K Business Landscape

When the ball dropped in Times Square on New Year’s Eve, the sky didn’t fall with it. Nuisance Y2K-related disruptions popped up, but it did not become the national catastrophe that some analysts feared. That’s not a matter of luck, but the consequence of years of hard work and billions of dollars in system investment to smoke out and repair non-Y2K-compliant systems.

The real cost of Y2K has been much greater than the numbers reflected on company P&Ls. For much of the past two years, system development and software purchasing has come to a grinding halt in most big companies, as attention and financial resources have been commandeered for Y2K.

But, it’s not been a total loss. One of the very valuable spinoffs from Y2K is that, for the first time in a long time, most big companies now have a complete inventory of their systems and software. Making the most of that new in-depth understanding of IT inventories is the key to making the huge investments in Y2K pay big dividends over the long term.

Effective IT asset management is one of the critical success factors for any company seeking to maximize the value of IT, manage the total cost of ownership and invest appropriately in new systems. Software companies with the right skill sets can help companies convert their new IT inventories into the foundation stone of highly effective, cost-saving, IT asset management systems.

But, those conversions had to have started as soon as the Y2K problem settles down, because one-shot inventories are rapidly losing value. Unless they integrate their inventories into a comprehensive IT asset management system, companies will be throwing away one of their most valuable system investments.

The Impact of Y2K on IT Spending
Many large organizations have initiated what the GartnerGroup calls an IT "lockdown," putting strategic IT initiatives, such as ERP, e-commerce and CRM projects on hold as they wait to see how they will fare in the first months of the new year. While analysts predict that Y2K failures may string out for as long as three years, even the more cautious companies should be starting to feel comfortable about moving ahead on strategic IT projects by the end of the second quarter of 2000. The end of the first half of 2000 will mark the end of a two- to four-year software development hiatus for many organizations and will unleash a potentially huge amount of work for internal IT groups, software vendors and systems integrators.

Seizing the Post-Y2K Opportunity
Like the start of a new stage on the Tour de France, this coming period of IT activity represents a fresh and competitive start after an enforced lull. Companies who move ahead of the pack by choosing their IT investments wisely and planning and timing them most efficiently, stand to gain a lead over competitors who misstep at this critical juncture. To succeed in the post-Y2K world, companies must maximize the efficiency of their IT efforts, including:

  • Building the infrastructure (network and storage capacity, database and code language upgrades) to support all of the IT projects in the queue.
  • Cleaning up the pervasive waste in current systems, such as unused software licenses and workstations, and multiple non-standardized software packages for the same job.
  • Fixing chronic under-performance in existing mission-critical systems before introducing new systems.
  • Prioritizing customer-impacting projects such as CRM or sales force automation, and integrating longer-term infrastructure projects like ERP as they are completed.

    Those are mom-and-apple-pie principles that every system manager subscribes to. But few IT shops have lived up to them, because of the lack of a knowledge base on current systems. The new Y2K inventories that most companies completed as part of their compliance process can now become an important step toward best-practice IT management. But, these are almost all one-shot inventories, highly valuable snapshots of the state of IT at a point in time. Even with lockdowns, the accuracy and value of these inventories is already eroding. Finding a way to retain the value of the huge investment that goes into a comprehensive Y2K IT inventory is one of the critical success factors for companies seeking competitive advantage in the post-Y2K landscape.

    What Is IT Asset Management?
    Asset management tools have recently emerged as a new breed of IT solutions. These products were traditionally developed to address two separate needs: identification and logging of existing IT inventory to assist in support and provisioning of end users; and tracking and accounting for IT expenditures from procurement through retirement in support of accounting activities, especially depreciation and license compliance.

    The latest best-of-breed asset management tools have integrated the two disciplines and offer the best of both worlds. Using auto-discovery routines that scour the network, they identify all hardware and software, including information on how old the asset is, what applications run on it and the license status of those applications. This inventory data is used to populate a database that also contains external data from vendor databases, including license parameters and upgrade availability; as well as internal data including procurement information, vendor contracts and IT policies.

    Benefits of IT Asset Management
    Once the database is accurately populated, the best asset-management tools offer companies a range of immediate and long-term benefits. First, there is the immediate cost savings associated with finding unused software licenses and even hardware that can be re-purposed. Procurement and inventory data can be reconciled and exceptions highlighted for further investigation.

    Asset management systems also provide the ongoing benefit of keeping procurement and inventory data constantly up-to-date and reconciled. This benefits the accounting side by rapidly identifying unfilled POs and other inconsistencies, and can even enable the automation of many purchasing processes. The IT group also receives a tremendous benefit from having this up-to-date information, improving their help-desk capabilities and giving early warning of potential problems so preventive measures can head off costly emergencies.

    Most important, asset management is a critical, strategic tool, to enable senior management (CIOs, CFOs, CEOs) to plan IT investment for maximum value and efficiency. Best-practice IT investment – keeping infrastructure tuned to new development; cleaning up long-standing waste and under-performance; keeping priorities straight – requires an intimate and detailed understanding of the current state of all IT assets. The more detailed, complete and current the information, the more effective strategic IT planning will be.

    Finding the Resources to Implement IT Asset Management
    With IT organizations already stretched thin by Y2K-related activity and other mission-critical IT projects, few resources are yet available to devote to implementing enterprisewide asset-management systems. Finding the right partner to turn to for assistance in such a crucial area can be challenging, but many companies will find that partner already in place. IT solutions providers, particularly those that have handled Y2K identification, and remediation, language and database conversions and infrastructure design and management, are often ideally equipped for asset management implementations.

    Service Vendors Plus Tools Partners
    Companies that have had a successful experience with their Y2K vendor, and built the necessary compliance inventory, should consider taking the next step by completing a comprehensive IT asset management system. A critical determinant of a Y2K vendor’s capabilities in asset management will be the range and quality of their tool partners. High-quality asset management tool suites should include:

  • Automated building of a global IT inventory
  • Tracking of business information on authorized and actual IT assets
  • TOCManagement
  • Electronic distribution and installation of software
  • Integration to third party system management and help desk tools
  • Leasing and maintenance contract management.