How to Build a Business Case for IT Asset Management
Updated · Jul 25, 2016
By Phara E. McLachlan, Natheava LLC
Virtually every enterprise talks about IT asset management (ITAM) strategy, but how many have successfully integrated it into their IT culture? The evidence suggests only about a third; in 2009, only 32 percent of IT projects started were completed successfully, according to the Standish Group. Another 44 percent were considered partial failures and 24 percent complete failures.
Many reasons are cited for this record of IT failure: low adoption rates, lack of executive support, changing requirements or specifications, resource challenges and poor communication among them. All of these challenges can be negated if a comprehensive ITAM strategy is set, supported and led by strong leaders from corporate executive management down to the practitioners.
Is IT Asset Management Essential?
While executives may buy into IT asset management, it is often viewed as a cost cutting or cost savings technique, as a series of transactional functions or as an administrative duty. Even if ITAM resides with the procurement office, the likelihood is that it is treated as an administration.
This perception leads to an inaccurate perception that ITAM is not business critical and, therefore, can be reduced/downsized or even put aside during economically challenging times. As part of the ITAM strategy, corporate executives and boards need to be educated on why and how ITAM is a business-critical function.
The IT asset management business case must be compelling, but avoid these two mistakes:
Focusing solely on money savings. Although outlining savings is absolutely expected, focusing on that one goal may reduce your chances for approval and funding. Ask yourself how this project relates to corporate and CIO-specific goals. How can you present the value of the project in relation to those goals? Unless you can answer this question and include it in your business case, it is unlikely that you will be funded.
Stating benefits solely from an IT operational perspective. A business case that does not lay out benefits to customers (internal and external) is unlikely to win funding. Certainly, operational improvements will occur when the project is completed. But will the CIO be able to figure out the global value of risk reduction of loss or theft if you only explain the expected improvements in the lifecycle process?
Making a Business Case for IT Asset Management
How do you convince corporate executives and their board of directors that IT asset management is a business critical function? Just remind them that software runs the world. If a company were a human, executive management would be the “brains” and IT would be comprised of the spinal cord, nervous system and circulatory system.
Here are three simple strategies to remember when making the business case for ITAM:
- Learn to speak the language. Don’t throw out IT jargon or acronyms executives cannot decipher.
- Clearly and simply state ITAM objectives. Use concise language to clearly state the objectives of the ITAM program and its expected goals, the results that the ITAM group wants to achieve. Simplify the language and don’t get caught up in the details.
- Offer examples. In all likelihood, the organization has done some IT asset management in the past. Bring those as case studies to show the effectiveness – if you can – of the short or long-term results of an ITAM program. There are probably also plenty of examples of the potential downside of not having an ITAM program in place that can be used to show the business critical side of IT asset management.
This sounds simple, but building a business case for an ITAM program has many challenges. ITAM often receives initial funding but eventually slows in growth strategy (if one exists) or implementation. Eventually, ITAM’s funding decreases. So, how do you build a business case and speak the language of management?
ITAM Business Case: 5 Key Considerations
Any ITAM business case should incorporate one or more of the following:
Connect ITAM to Company Growth
It is not uncommon for companies to go through acquisitions, mergers and divestitures with the expectation of increased profitability. Unfortunately, IT assets often create an increased financial commitment, especially if they are not handled properly. Acquiring a company with inadequate software licenses, a pending audit or software licenses that are not transferable is a nightmare. Can the business case relate how these improvements prepare the organization for a major change? Can the documentation developed during the project be added to the due diligence team’s materials so that they can analyze a prospective acquisition accordingly?
Understand the CIO’s Personal and Corporate Goals
The role of the CIO has evolved and while many CIOs would still consider savings from IT asset management programs a win, CIOs are also less focused internally on the tactical financial element. The CIO now ties IT department activities to corporate goals such as increasing profitability or customer satisfaction. An ITAM business case that presents upgrading to maintain technology is more likely to be funded if it is related to a corporate goal such as solving a specific business issue.
Always Include Service Management
Customers can make or break the company, so customer service management has been a key factor in many corporate IT presentations. If an IT project will help improve the execution of a service or the adoption of service management principles, be sure to explicitly state how the change will lead to enhanced service management.
Relate ITAM Projects to Impending Tech Changes
Sometimes a major technology project already under way is the most important aspect to mention in the business case. If the business case can be construed as competing against money already spent, you have already lost. However, if you can show how IT asset management adds value to the ongoing project, you gain a perception advantage as well as champions who are invested in the success of the other project.
For example, the adoption of virtualized servers changes the relationship of server to cost center, eliminating one per application or department. What if an automation project business case lists as a benefit that that configurations and inventory will be easily tracked in a virtual environment? Surely the business case is much more likely to snag attention than if it focused on the goal of improving control of the asset inventory.
Uncover ‘Found Money’
A business case must always talk about the cost versus benefit to be considered at all. In many cases, IT projects can offer a reasonable expectation of savings based on expenditures that will not occur, enabling bulk purchasing or freeing up resources through automation. Make sure that the savings are real and measurable. Sampling is a reasonable method for gauging the potential savings. Other sources of information to back up predicted savings can come from research on the internet, analysts or even your vendors, eager to help you receive funding.
By stepping away from the detail and relating the project to external influences, the ITAM project is more likely to be understood and weighed appropriately against other initiatives.
Phara E. McLachlan is the CEO of Natheava LLC, an IT consultancy specializing in IT and software asset management and advisory services.
Sean Michael is a writer who focuses on innovation and how science and technology intersect with industry, technology Wordpress, VMware Salesforce, And Application tech. TechCrunch Europas shortlisted her for the best tech journalist award. She enjoys finding stories that open people's eyes. She graduated from the University of California.