The case of the Elusive Assets

If Sam Spade were around today and opted to make his living in information technology, chances are he’d find a home in IT asset management. It’s the sort of job that can use the talents of a good gumshoe.

If you want to excel at IT asset management, it helps to be hard-nosed, thick-skinned, and compulsive about getting to the bottom of things. In fact you pretty much have to be; it’s the nature of the business.

IT Asset Management

Lessons Learned

Both John Fort and Nikki Cule have figured out a thing or two about IT asset management during their years at Zurich North America Canada. Here are some of their key lessons learned:

Cule: Think ahead. In making the decision to lease, don’t just think about the initial phase of the agreement, think about how your going to manage the end of it. You can get yourself into a lot of trouble by not thinking about what happens three years down the road. And keep your paperwork! I’ve gotten in the habit of keeping every single email that’s ever sent to me, because you never know what might become important.

Fort: Put good processes in place. The most interesting lesson I learned was how difficult it is to unearth some of this information. Unless you have some kind of well thought out process to manage and unearth information, things become embedded and hidden – they become routine – and finding them becomes much more effort that you ever would have imagined.

Cule: Learn from others. We’ve been attending meetings of the Canadian Software Asset Management Users’ Group for the last two or three years now, and it’s amazing how much you can learn from talking to your peers. You think that your problems are all your own, but once you start talking to your peers you realize that they’ve all thought through the same problems and some of them even have some solutions – or they’ll tell you what not to try.

Fort: You must persevere. You can never stop looking or give up. You have to persevere to make it to the point where you can stand up and explain the value of every dollar spent. It takes a tremendous amount of time but it’s well worth it. The effort pays for itself many times over.

Cule: Shamelessly promote your efforts. If you have a success you’ve got to make sure everybody hears about it, because asset management is a buzz word for some people – it really doesn’t mean a lot to them. If you can actually show that you are saving real dollars, you will have champions right at the top of the org chart, who will spread the good word.

Fort: Know the value of the asset. Most assets you buy have a shelf life to the business, and their value changes over time, becoming less and less valuable. You always have to be refreshing and replacing assets, and getting rid of those that have marginal value to the business. As CIOs, we have to make sure every component of our IT infrastructure, contracts, staff, etc. delivers the most value possible. That’s our job. That’s what they’re paying us to do.

At Toronto-based insurance company Zurich North America Canada, CIO John Fort fully appreciates the value of IT asset management. When he took over the IT reins in 2002, getting IT costs under control was a big priority, especially given the changes taking place in the business. “The first thing I wanted to look at was where the money was going,” he said. “And it bothered me that I didn’t know all the answers, and couldn’t easily find them.”

To help him solve his problem, he quickly enlisted the company’s best IT sleuth, Nikki Cule. As Supervisor, Technology Asset Management, Cule had been involved in tracking the company’s IT assets since the first substantive efforts were made in this area in the late 1990s.

At that time the company’s IT procurement was decentralized; different people were buying the same things at different prices and not taking advantage of some of the opportunities available. The company had also started leasing by then, and its first off-lease was coming up the following year – another area that needed attention.

“We were doing a lot of the right things but also a lot of the wrong things,” recalled Cule, who was a business analyst at the time. “We started focusing on the areas that needed immediate work and would give us quick bang for the buck.”

Getting the go-ahead from then CIO Kerry Long, the program began in moderation. It did not call for investing substantially in tools. Instead it started with the nuts and bolts: implementing standards; putting policies in place where there had been none; establishing processes where nothing had been documented.

One area that was ripe for the picking was software. The company had two different areas buying software licences. Some were buying full-package products at $900 and others were buying licences for $200. By centralizing procurement, consolidating licencing and doing volume licence agreements, the company reaped substantial benefits without a large outlay of money.

Tracking the Hardware

The fact that Zurich North America Can-ada needed to do better hardware asset management hit home in the spring of 1999, when it was realized that starting at the end of May a large number of assets were coming off lease. The company had made the not uncommon mistake of moving into leasing without putting processes in place to track the changes that would occur over the life of the lease. Consequently, it didn’t know what was coming off lease, what department or city the equipment was in, or who was using it.

Around this time Ronald A. James became CIO. He reinforced the importance of this work by getting directly involved, taking a very active role in overseeing the initiative.

“We realized the substantial cost if we didn’t get our act together, so we quickly had to figure out what was off lease and how to deal with it,” said Cule. “And I’d bet that over the first couple of months we didn’t do better than about 60 per cent return.”

Luckily, the problem arose just as Y2K preparations were starting to ramp up. Projects were already underway to replace a large number of the company’s PCs, and almost every PC was slated to undergo a software upgrade for Y2K compliance. This set the company up a little better for subsequent off-lease schedules.

But still there was no long range asset management vision, and even though the Y2K project touched almost all of the company’s PCs, there were still no processes in place – apart from some spreadsheets – to track equipment over time. The result was inevitable; a year later the company was still struggling to find equipment coming off lease.

Enter ZAM

After the Y2K project was wrapped up on the desktop side, the company started to look for a new leasing company. And it took notice of the fact that some leasing firms had their own tools to track IT assets, which they would provide free of charge.

“Sometimes you get what you pay for,” said Cule. “These tools were great at keeping track of what was important to the leasing company, but not necessarily what was important to us. The kinds of information we needed weren’t there.”

Zurich did, however, take note of the fact that one of the most effective leasing-company tools had been built on a Lotus Notes database. This led the company to think that its best course of action would be to build its own tracking tool, also based on Lotus Notes. With the help of some talented in-house Notes developers, Zurich Asset Manager, or ZAM, was built.

“Lotus Notes was something that everybody in Zurich had access to,” said Cule. “For example, the tech support people in our Vancouver office could go into ZAM and see what was in their office, and if they switched equipment they could update the database.”

This meant that when it came time to track down off-lease equipment, the IT department no longer had to go looking for who the asset had been deployed to originally. The technicians and the offices had been updating that information.

Head office in Toronto also implemented move/add/change processes so that whenever something moved or got switched, the changes would be tracked. The accuracy rate for tracking equipment is now estimated at eighty to ninety percent.

Obtaining User Buy-In

For ZAM to work properly, it takes a great deal of cooperation from users in order to make sure changes are entered into the system. Fostering this kind of cooperation starts with at the top with CIO John Fort and other members of the senior management team.

Like most other organizations in the last few years, Zurich North America Canada has become extremely bottom-line conscious and has been moving towards a charge-back model for IT services.

Explained Fort, “Our users are saying ‘If I’m not playing the game I’m going to end up paying more than I need to pay’. So they now understand the importance of this, and they’re all becoming amateur asset managers. They’ve become extremely interested in helping us do a great job of tracking assets and making sure that records are accurate. We’re not all the way there yet, but at least they’re on board.”

While Fort gets to play the ‘good cop’, encouraging users to get with the program, Cule must sometimes play the ‘bad cop’, enforcing unpopular but necessary policies.

“Asset management people are often not popular, except with those who manage the budget,” she admitted. “People don’t like the fact that they can’t have two computers; but it costs a lot to have a laptop in addition to a desktop.”

Nonetheless she gets the job done, even if it takes a tough-guy approach. “I’ll be honest,” she said, “intimidation works very well.”

You Have to Know the ‘Why?’

From John Fort’s point of view, gaining control over inventory is only half the battle. “Just tracking your assets isn’t good enough. You have to know why you have that asset – what value it delivers to the business,” he asserted. “And if you can’t answer that question, then you’d better find a way to answer it. You have to bird-dog your assets to the point of ‘why?’.”

To illustrate the point, he cited a recent example. Scrutiny of the firm’s IT assets turned up the fact that the company was licencing four COBOL compilers. Being a somewhat archaic technology, this seemed like an unusual amount. A subsequent investigation into the use of the compilers determined that only three of the four were needed. By eliminating the licence for the unnecessary one, the company will save itself $30,000 annually.

Not only was a costly compiler eliminated, the fact was also highlighted that three remaining compilers are still in use. It may in fact be cheaper to keep these licences than to redo the work, but at least the company is now aware of the problem and can look into validating the value of those assets to the business.

In the end, it all comes down to value. That is one of Fort’s guiding principles.

“If we spend a dollar on an unnecessary compiler, that’s a dollar we can’t spend on something the business can really use. So it’s the value quotient of the asset that we’re adding to the task,” he observed. “That’s something we’ve really tried to go after this year, and it was triggered by the enormous amounts being spent on technology without understanding the value.”

Fort said that in some cases his department has had to go back to the technical staff using an asset and ask them ‘why?’. And one of the interesting outcomes of this, he noted, was that sometimes the technical staff are not sure.

“Not only have we found that we don’t need a particular piece of software any more, we’ve also found that we were running jobs with it, but no one was using the results,” he added. “So there is a multiplying effect. Not only are you paying for an asset, but in some cases that asset is doing something that’s of no use to the organization.”

Answering the ‘Why?’ Question

Validating the ‘why’ behind Zurich’s IT assets has fallen largely on the shoulders of Nikki Cule. It’s not her job to answer those questions herself, but to make sure that the answers are there.

Like the savvy gumshoe, she knows the right questions to ask – and when.

“I’ve been at Zurich long enough to know how things work and to know when I should ask ‘why’,” she said. “It’s a lot easier now that all of the invoices come to me. When I get an invoice that’s not in line with the budget, that’s the first clue that something is wrong.”

And in this business, a lot can go wrong. Keeping track of IT assets is often so complex that it’s not uncommon for some firms to pay invoices simply because they’ve been paid in the past.

Focus on Contract Management

Along with tracking assets and getting a handle on their value, another key focus has been on contract management.

“With all the change that has been happening here over the past five years, we started to delve more into our contracts to see if the terms are appropriate for today’s environment,” said Cule. “We’ve been caught in the past by not giving ninety days cancellation notification, and we don’t want that to happen again.”

Fort is a firm believer that you need to thoroughly understand the contract: why you entered into the agreement, what the purpose of it is, what the economic value to the organization is, and what the company’s and the other party’s obligations are under the contract.

“You must not only track the contract, but also really understand the rules of compliance and the termination provisions of that agreement,” he noted. “Ultimately, it’s far more complex than tracking PCs and cell phones.”

Looking Ahead

Though it already has some significant accomplishments under its belt, Zurich North America Canada will not be resting on its laurels.

Now that it has successfully tackled PC off-lease and PC management, the asset management team has been asked to take over more of the management of the machines in the data centre, such as helping with the RS6000 off-lease. This ups the ante significantly. It’s one thing if a desktop comes off lease; it’s another if a production box comes off lease and you only have a month’s notice.

Telephony is another big area that’s ripe for cost savings, according to Fort and Cule.

“We’ve now upgraded ZAM to be able to track such things as fax leases,” said Cule. “And this year we’ll put in cell phones and pagers, so that if someone leaves Zurich, not only do we recover the laptop, we also recover the cell phone or the pager, and we cancel the cell service and all of those kinds of things.”

Finally, as of January 1, 2003, Zurich North America Canada’s US counterpart in Schaumburg, Illinois started managing the infrastructure side of IT in Canada. Canadian IT staff have remained in place and are continuing to work on processes such as IT asset management, but the US has operational responsibility. The great thing about this change is that Zurich North America Canada now has the leverage of the entire North American region when it comes time to purchase or lease hardware and software.

“Leveraging across the region will be the most important thing for us moving forward,” concluded Fort. “We’ve been working on it for the last three years, but there are more opportunities.”

And the opportunities will no doubt materialize, so long as the company continues to do its spadework. Sam Spade work, that is.

David Carey is a veteran journalist specializing in information technology and IT management. Based in Toronto, he is managing editor of CIO Canada.

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