The IT Skeptic - Comments for "ITIL 101 for software vendors"

software audits

Cary King — Fri, 20 Mar 2009 19:49:27 +0000

Yes, it has been reported that quite a few of the vendors have added significantly to their audit staff.

I'm not sure that audits will result in that many fines - most companies just end up paying the outstanding liability. What's more of a potential problem, and what I'll be speaking about at HP Software Universe, is how the proliferation of Virtualization is affecting companies. With a couple of clicks, a VM/LPAR can be duplicated, adding another full set of liability. That applies in the development and test environments too.

Many companies have change management policies and processes for production. Few have change and configuration management for their development and test environments. Even fewer have ITAM/SAM incorporated into a closed-loop change / configuration control process.

Many companies are finding that without proactive controls that come with (level 3 or higher) ITAM / SAM incorporated with their Change / Config / Release management for the production, develoment and test environments - all the savings they planned for with virtualization are wiped out, and more, by the unforeseen software liability.

The ITAM / SAM policies, processes and controls can positively affect the execution of many ITIL processes. And, good ITAM / SAM can save companies considerable money - often reducing TCO by 25% and more when combined with proactive vendor management.

For companies looking to save money, ITAM / SAM is one of the big hitters. Quite material since, typically, more than half the IT budget is bound up with bought hardware, software and telecommunications.

Cary King
Minerva Enterprises
Managing Partner
www.MinervaE.com

Vendor SW audits increase with recessions

M.McEvoy — Thu, 19 Mar 2009 18:39:02 +0000

Recession/ down turn usually means increase SW audit activities as SW vendors look to maintain revenues. This has two impacts to the IT organisation 1) increase risk of fines 2) increase effort trying to work out what SW they have and what they are entitled to have. Some will just pay the bill to address this but they are left wondering did they pay too much. A few will have good ITAM and know the answer up front.

Right

Cary King — Tue, 17 Mar 2009 14:25:13 +0000

Yes.

A solid percentage of IT organizations cannot provide a reasonably accurate inventory of what they currently own, lease, rent or have borrowed. They haven't established even the most basic controls (CobiT?) over hardware. Those organizations that have to scramble several times a year to ask each department to produce a spreadsheet - they know who they are.

A much higher percent cannot provide an accurate inventory of their installed software titles - let alone the titles to which they're entitled and the associated contracts.

An even higher percentage - considerably more than half of IT organizations - cannot answer those questions and apply that information to who is using the item, where the item is, etc.

Less than 25% can answer those questions and what does the item cost.

Less than 5% have this information integrated with a CMS, a budgeting process, and integrated across a number of processes. A higher percentage know about some small subset of things that are "managed" in the data center, but can't produce a 70% accurate list of things outside the data center.

As is so often asked, if you don't know what you have, where it is, who's using it, how much it costs, etc. - how can you be said to be managing the item. How does one do good incident and problem management? Etc.

ITAM is not just about a crude inventory. It's about knowiing what's happening with more than 50% of your budget.

Cary King
Minerva Enterprises
Managing Partner
www.MinervaE.com

inventory management

skeptic — Mon, 16 Mar 2009 23:12:43 +0000

Good valuable discussion.

In the past I've used "inventory management" to mean rummage around on PCs and servers and see what is on them, but I think you are using inventory management in the other sense of what physical things do we own and where are they, right?

Not much advance in ITAM really

Cary King — Mon, 16 Mar 2009 23:02:13 +0000

Actually, right now I don't see much advance with companies doing IT asset management. Either more companies or companies advancing their current IT Asset Management to maturity levels that will yield good financial results.

What we're seeing is that companies that have inventory management often call that Asset Management. Inventory management is certainly the most basic part of ITAM, but it doesn't really get it done if a company wants to develop the financial evidence necessary to make better decisions. When a company's view of ITAM is stuck on this crude frame of reference, they didn't see much benefit out of the first phase, so they're unlikely to move forward. They are often the same organizations that lack the vision to understand the value of financial information to IT.

In this financial climate, unless there is a fairly quick payback, I don't see many IT organizations opting for investments in ITAM. It's a shame, really.

Good ITAM can really help with moving towards exploiting the financial benefits of the cloud. Good, level 3 maturity or higher, ITAM provides financial evidence so that continual process improvement can be prioritized to gain the greatest effects. ITAM provides fundamental information to all sorts of ITIL processes - Change, Config, Availability, Continuity, Capacity, Operations - that can provide a renewed financial focus.

Skep - sorry to take such exception to this one little point. The rest of your original post was pretty much right on. Perhaps that's why there's so little other comments.

Cary King
Minerva Enterprises
Managing Partner
www.MinervaE.com

AM is often the low-hanging fruit

skeptic — Mon, 16 Mar 2009 19:42:50 +0000

Absolutely agree that AM is often the low-hanging fruit in terms of quick wins and short-term ROI. Better license management, better lease management, reduced pilfering and "lost" equipment...

Also agree much of that is due to either slackness in good times (also known as too busy doing new stuff) or the sheer unsexiness of AM.

Possibly the biggest silver lining on this recession might turn out to be driving IT into professional attitudes and behaviours. And one of those is keeping proper records and accounts.

Good points

M.McEvoy — Mon, 16 Mar 2009 11:35:09 +0000

Do you think with the current economic climate we will see a better focus on proper Asset Mgt??

The poor state of asset mgt in most organisations is shocking – there are always more important things to get done. It seems when organisations are making lots of money, high levels of waste is acceptable and less exciting processes like Asset Management get zero attention. Maybe this is about to change.

disagree some more.

Cary King — Sat, 14 Mar 2009 05:47:01 +0000

No argument that assets are only one part of IT financial management.

An interesting discussion often arises when one realizes that more than half the budget goes to assets, and about two-thirds goes outside the organization. Which should be the dominant interest? IT Asset Management, with it's external focus? Or IT financial management, with a limited focus on internal aspects of labor? Chicken or egg? Especially as IT organizations do more outsourcing and exploit the economics of utility (cloud) computing?

IT assets have a separate lifecycle from the IT Service and service management. Assets are replaced on a regular cycle. The view here is basic utility engineering economics - just like your electric power service goes on the component assets are replaced on their cycle per the assets expected lifespan.

Additionally, IMO, ITIL, even v.3, virtually ignores IT Asset Management - the actual budgeting, requesting, buying, warehousing, maintaining and recycling of items. The very minimal part that's spread around in SACM, Supplier Management and other places doesn't even rise to the level of elementary.

Interesting, semi-related article in CIO.com
http://www.cio.com/article/484429/Capex_vs._Opex_Most_People_Miss_the_Point_About_Cloud_Economics

Budgeting - if over half the budget is from asset management, and much of that is purchased as replacement every three years, it is difficult to imagine doing an accurate or effective budget on an individual service without good asset management.

Fulfillment costing - see budgeting above. And, in many cases, the fulfillment requires parts or externally supplied services - asset management. More than 50% of the budget goes to assets.

Service Value POTENTIAL? Not part of IT Financial Management - but, part of the value equation is based on costs - capital, labor and applied overhead - no discrete asset management to determine costs of a particular service, no real discussion of value because half the equation is missing.

Perhaps it is best for the buyers of the service - the business - to define the value potential? Does BMW define the VALUE of their cars to their customers? Or, does BMW define the cost of their cars and point out the features so that customers can make that decision for themselves?

Another example is that many customers are implementing virtualization because of the possible labor savings and efficiencies to hardware usage. Unfortunately, without disciplined software asset management and change management the proliferation of copied VMs/LPARs create unexpected software liabilities that far exceed the labor savings. If an organization cannot control their VM/LPARs, and they don't know, in detail, what the cost of those VM/LPARs are, then how will they make financially effective decisions about the cloud?

Demand Modeling - demand for what? Services? The individual pieces? Bought products? Tough to control demand if there are no prices on services. Poor asset management means very poor financial management means distorted service pricing.

Cary King
Minerva Enterprises
Managing Partner
www.MinervaE.com

it depends what dimension

skeptic — Sat, 14 Mar 2009 04:40:20 +0000

Guess it depends what dimension we are measuring on. In terms of $ under control you'd hope AM had most of them. But I'm speaking about the amount of the FM process that AM provides supporting data for. My case is weakest on this point :) but nevertheless AM is crude data as compared to what we need for budgeting, fulfillment costing, service value potential, demand modelling and all those other opaque concepts in Service Strategy

Asset Management

Cary King — Sat, 14 Mar 2009 04:03:45 +0000

"So your Asset Management tool is not playing a huge part in the ITIL financial processes."

I suppose that depends upon what you mean by huge.

Bought hardware, software and telecommunications - Assets - amount to 40% to 60% of the budget - typically, more than half of the total IT expenditure. In many companies, the capex for IT is approaching half of the total corporate capex.

Labor applied to manage those assets generally amounts to another 20% or more of the typical IT budget.

More than half may not be huge. More than two-thirds may not be huge.
But, it's bigger than anything else.

Generally, if one is trying to control expenses, one will get more benefit from paying attention to the bigger portions of the budget than the smaller portions.

Managing the expenses of the data center as one giant cost pool will become increasingly problematic as IT organizations become more interested in exploiting the economics of the "cloud."

I guess, however, it's not huge if IT doesn't care about saving money.

Cary King
Minerva Enterprises
Managing Partner
www.MinervaE.com