IT asset managers should play a bigger role in buying decisions they do now, says Gartner. “Without a new approach, CIOs and their management teams can struggle to pay off life cycle technology debts left by failed or superseded digital technology initiatives,” says research director Stewart Buchanan. ITAMs have to help CIOs select the most sustainable digital business initiatives, which will attract enough funding to cover their full contract or asset life cycle costs. Here’s how, and why it will help CIOs. All images from Shutterstock.com.
Be in there early
The asset manager should establish an early role in digital business initiatives to ensure that all the costs of scaling successful projects can be covered. says Gartner. Advising on every technology procurement and risk management assessment will make CIOs far more influential than running a few digital business initiatives at their own financial risk. As business managers struggle to control digital technology costs and maximize success rates, ITAM skills and life cycle planning experience will become more valuable and sought after.
Be a teacher
IT asset managers must help business leaders learn from their mistakes. Even a successful digital technology initiative can be more dangerous than a failed one: For example, software licensing costs to store data from the Internet of Things could grow exponentially. A dramatic upturn in unforeseen demand can prove even more expensive to satisfy at short notice. Supply costs rise, unless negotiated as part of the initial deal. Worst of all, there may not be enough money in the allocated budget to meet demand.
So life-cycles have to be managed to ensure that digital business costs are funded beyond the initial investment. Despite being expected to promote digital technology by business users, experienced IT managers are selective because they understand the long-term costs, risks and benefits of technology. Whether acting as an internal service provider or a broker for external providers, the CIO and the ITAM team will be reluctant to buy more technology than they can sell on to business users in return for budget or another form of cost recovery, such as chargeback.
Point the way
IT asset managers can help CIOs chose digital business initiatives that will attract enough funding to cover their full contract or asset life cycle costs. Financial sustainability doesn’t depend on the initial return on spending, says Gartner, it depends on the firm’s willingness to continue spending for as long as contractual commitments or there business need. IT asset managers must also help CIOs adapt to the need for shorter, more flexible contracts, where available, to deliver short-term digital initiatives, as well as to time the migration to lower-cost commitments for those that prove successful and can be made viable in the long term.
Share and share alike
Share financial risks with business sponsors and external providers to ensure they are committed to paying. CIOs need to develop new funding methods before they can hope to access the digital technology elements in every business budget. IT spending on digital technology is at risk because business users are often better negotiators than the IT service managers who depend on them for funding. Direct engagement with suppliers ensures that the business sponsors behind each digital technology initiative will cover their costs.
Learn from the ITAM
Gartner says IT asset managers understand where long-term business costs are being created. Often business users want a monthly consumption price without a long-term commitment to pay for specialist assets, which would take the IT organization or an external service provider many years to amortize. Or short-term services create data that must be retained forever, or at least for many years.
The CIO’s role
CIOs should determine how best to share these costs with the business by identifying who should “own” the IT organization’s assets, says Gartner. A common strategy is to encourage lines of business to run pilots and experiment with digital innovation, ready for the CIO to scale and industrialize them when they prove suitable for longer-term adoption. As a result, CIOs can control and manage these services without ever taking ownership of their contracts or assets.