The Acquisition Process – A “Must Have” in a Tumultuous Economy

By Dan Ingouf, IAITAM

ITAK V4 I1

When we think of acquisitions, a wide range of thoughts and actions should come to mind.  On one side of the spectrum would be the news worthy acquisition of a major banking organization, purchased by an even stronger financial institution. Such an acquisition would include the recent actions of Wells Fargo acquiring Wachovia. Acquisitions such as this are becoming the daily norm in today’s business environment where the competition is fierce, and business woes are compounded by an economy that is in a bleak condition.

 

The other side of the acquisition spectrum might be portrayed in our daily existence and needs such as the acquisition of personal goods including food, lodging and automobiles; all of which are directly affected by our current economy.

 

The acquisitions that we will cover in this article will fall somewhere in the middle of the hypothetical range.  They are the acquisitions needed for the operational needs of an organization, and though these acquisitions will not be presented in the global press, they are exceedingly important to each and every organization in meeting their specific business goals.

 

The existing condition of United States’ economy reaches and affects all sectors of global civilization, which of course includes IT Asset Management communities worldwide.  There are very few organizations that have not felt the “belt-tightening” effects of the current down-spiraling economy.  Immediate and sometimes drastic changes must be initiated to compensate for the negative outcomes of our less than robust economic situation, some of which you might already be experiencing in the forms of personnel reduction, salary freezes or pay and compensation reductions, workload increases to compensate for loss of personnel, notable project reductions, and the list keeps growing. Every organization must determine how to best reorganize their individual environments to continue achieving the specified organizational goals.

 

As I mentioned earlier, every organization must fine tune existing business practices to meet the new directives imposed by our economy. We at IAITAM restructured a portion of our training curriculum, which was necessary to better meet the needs of the global ITAM community.  Has your organization recently enacted changes to trim the budget?  And if so, do those changes include an effective Acquisition Program?

 

If you are familiar with IAITAM’s Best Practice Library, or if you have taken any of our courses, you know that we strongly promote practices that provide the most value to the organization.  Achieving the greatest value during any organizational process requires knowledge of the organizational need, and the resources available to fill that need.  That methodology applies to every functional part of IT Asset Management including acquisitions.

 

Acquisition: More Than an Action; It Must be a Process

 

Acquisition must not be considered as just an action.  While it’s true that acquiring assets can be as easy as ordering online from reputable vendors, in most circumstances that is not the best method to achieve maximum value for the organization.  A Best Practice Acquisition Process includes many Key Process Areas that provide input before, during and after the acquisition of IT assets.

 

During the breadth of this article, we will examine many pertinent aspects of a Best Practice Acquisition Process that will include:

 

  • Importance of forming an Acquisition Process
  • Implementation Goals
  • Procurement considerations
  • Acquisition Team
  • Acquisition Workflow
  • Disposal Considerations

 

The state of your current Acquisition Process is dependent on many variables that include the size of your organization, physical make-up, organizational goals, and the maturity level of your existing ITAM program.

 

Furthermore, we will examine the structural elements that are the foundation of a Best Practice Acquisition Process starting with identifying the need, all the way to understanding the methods involved in acquiring IT assets, in the most cost-effective manner that will provide the most value to your organization.

 

The Importance of a Best Practice Acquisition Process

As it stands now, your organization may very well be acquiring the necessary assets from one vendor, and only as many as necessary, whenever needed.  In an organization that has 10 or 20 people, this is a process that is direct and appropriate, mainly because the person filling the role of IT Asset Manager is probably filling all other IT roles as well.  With an organization of this size, there are just not enough personnel to build an IT Asset Management team; one well informed person can effectively handle all IT related matters.  The size of this organization represents the size restriction that that was covered earlier.

 

Our focus will be aimed at organizations that are medium to large sized, and in that size range, will almost assuredly have more than one central location. This is a very good starting point for amplifying the importance of an effective Acquisition Process that in an optimum program will also reflect the importance of a centralized point of acquisition.

 

To prove that importance, let’s make an example that includes an organization the employs 3,000 people in 28 different locations.  18 of those offices are located within the United States, and 10 locations are located in 3 different countries, let’s say 6 in China, 1 in Australia, and 3 in Germany.

 

Imagine the utter confusion of every office location trying to individually order assets without an established Acquisition Process in place.  There would be no effective vendor negotiations for volume discounts because all locations would be buying on an “as needed” basis for each location, there might be language barriers encountered, and will each person who purchases assets also be in charge of adhering to the local laws and regulations concerning asset purchases and disposal standards?  Have those personnel been properly trained in maintaining compliance standards?

 

The above factors listed alone are just a sampling that would indicate that efforts of maintaining compliance standards for this organization would be absolutely inept and therefore quite futile.  There is no way this organization could possibly be considered as having an effective Acquisition Program.

 

It may be true that through individual efforts and diligence, all necessary assets were acquired to accomplish the organization’s mission; but at what cost?  Rest assured that one phone call to an enforcement agency such as the BSA with information concerning these non-centralized acquisition practices could very well mark this organization for a compliance audit.

 

Remember that the Acquisition Process is meant to act as the “Gatekeeper” for the purchasing and introduction of assets into the ITAM environment, and is a critical factor in all IT Asset Management strategies that include policy enactment, asset standards, and all asset lifecycle processes.

 

Establish Your Implementation Goals

We could easily continue with specific examples of the importance of an effective Acquisition Process, but for the sake of article length, we will continue with the understanding that there are many ways that proper acquisition management will benefit an organization.

 

Since we understand the importance, goal setting would be the logical next step.  Through extensive research including input from global ITAM practitioners, IAITAM has defined 5 primary goals as part of the Best Practice for the IT Acquisition Procurement Process:

 

  • Request and Approval Process
  • Asset Selection Process
  • Negotiations Process
  • Contract Terms and Conditions
  • Redeployment Process

 

Request and Approval Process

The Request and Approval Process acts as the “gatekeeper” within the Acquisition Management Process, providing managed control between the requisitions process and the procurement process.

 

Before the necessity of a Request and Approval Process was recognized, purchasing an asset was for the most part a one-step process.  Someone decided there was a need, and requested the asset.  Management would either disagree or agree.

 

If the decision was to purchase the asset, accounting would authorize funds for the purchase, and that was the end of the process; ask for it, and you will either be granted or denied permission to purchase.  Due to regulatory and compliance directives, and an ever tightening budget pool, the one-step procurement process is a thing of the past.  Now, scrutiny and defined processes are the norm.

 

Properly designed, the Request and Approval process will be a structured and predetermined series of events that allow for streamlined acquisitions of commonly requested assets using a standard asset acquisition request process.  The standard asset request process will allow the procurement of pre-screened standard assets in a timely and efficient manner that will use the least amount of management efforts.

 

The same reasoning applies to non-standard asset requests in that there is still a specified process in place, but the requested asset is an exception to the standard asset procurement process, and as such, will require a higher level of authorization, more product research, and possibly different sourcing avenues.

 

The Request and Approval process provides benefits such as asset uniformity which allows for volume purchases of the same type of assets, less maintenance and training costs than having many different asset types, and maintaining compliance standards is much easier with less variance of asset type, including software.  Another very notable benefit is the fact that a strong Request and Approval Process will greatly lessen the compliance threat of rogue purchases conducted outside the normal purchasing process.

 

Asset Selection Process

 

We very briefly covered the need of a process for requesting assets, but how can we determine which assets are best for the organization’s needs?  One person alone should not make the selection decision.  In a Best Practice scenario, the IT Asset Manager will form an Asset Selection Committee that is the culmination of selected individuals from various departments within the organization.

 

The chosen individuals will represent the needs of their respective departments during the Asset Selection Process. The number of people selected for the committee will be proportionate to the size and makeup of the organization.  In a larger organization the makeup of the Selection Committee might include the IT Asset Manager, an organizational Business Manager, a well-versed end user, a Technical Manager, a Financial Manager, Help Desk Manager, and an Executive officer.

 

By choosing a team of knowledgeable individuals from various areas of the organization, the decisions rendered concerning the selection of assets will be well-rounded and in the best interests of the organization.

 

After assembling the Asset Selection Committee, the first meeting should include an examination of current asset information gathered by means of the discovery report for stationary and networked assets, and a physical inventory covering the rest of the assets including mobile assets such as laptops, PDAs, etc.

 

The asset information is important as an overall view of what is currently in use, what is working well for the applications, and will bring to light any assets that have been known to present problems during their use.  This is an optimal time for every team member to provide specific input concerning recurring asset problems, or end user issues encountered such as unlicensed or inappropriate software, and unauthorized use of assets for activities such as gambling, pornography, social websites, and so on.  This is also a good time to present instances of personnel using non-organizational hardware such as personal PDAs and MP3 players.  Knowledge concerning these items is critical when trying to control and maintain compliance.

The IT Asset Manager will benefit greatly from the assembling this team.  The IT Asset Manager will obtain real-time valid and accurate information about software problems and expectations, maintenance issues, service technician issues, vendor issues, planned asset refreshes and projected asset needs.  This team builds the case for the asset and sheds insights into the need and value it will give to the organization.

 

The Asset Selection Committee should be convened on a regularly scheduled basis, more often at first, then tapering off to a quarterly or semi-annual basis after guidelines of standard asset acquisitions have been established.  The team will also be called upon as necessary when requests for non-standard assets are presented.

 

The importance of the Asset Selection Committee rates as critical.  In a large or diverse organization, there is no better way of making asset procurement decisions than to have many collective inputs all presenting valid and specific points of view.

 

A Strong Negotiation Process

If you are familiar with my articles, you have probably read my views on the importance of Executive Buy-In, where the outcome of that support rests heavily on the effectiveness of your negotiating skills.  The importance of those skills will turn decidedly more important during the Acquisition Process, because now the ammunition of presenting facts and figures to an executive within your organization that will show obvious benefit to the organization is no longer part of the equation.

 

The Vendor Negotiating Process is not a case of soliciting support from controlling authorities within the organization, but a true test of bargaining skills with an outside vendor to achieve the best deal for your organization, while also satisfying the needs of that vendor.  In essence, achieving a “win-win” contractual agreement between your organization and the selected vendor is the goal of all negotiation efforts.

 

If your organization has the need and the buying power to purchase what can be considered a large quantity of IT assets, software and services, then negotiating for the purchased items and services is absolutely critical to best benefit your organization.  The importance of negotiating is undeniably huge on so many levels.  Winning negotiations will save money on volume purchases of assets, service level agreements and leasing agreements, will provide terms and conditions that are groomed to best meet your organization’s needs, and will be beneficial in the mitigation of compliance risk.

 

The attributes of effective negotiations are many, and the advantages achieved through negotiations are not limited to Asset Management by any means.  All businesses use negotiations as a means to satisfy their needs of achieving the best terms obtainable.  There are countless books written on the subject of negotiating, listing volumes of information concerning the specific nuances, skills and procedures necessary to perform successful negotiations.

 

We at IAITAM maintain the contention that negotiations are vital, most notably in the Acquisition Process, where there is so much to be gained by using a defined Negotiation Process.  Understandably, that is why the Negotiation Process is a primary goal to be achieved during the formation of the Acquisition Management Process.

 

For a complete dissertation of the Negotiation Process as used in the Acquisition Process, please refer to the IAITAM Best Practice Library Volume 10, Acquisition Management for almost 90 pages of definitive guidance in the Negotiations Process.

 

Defining Contract Terms and Conditions

We know that during negotiations, we have the capability of defining terms and conditions that will best suite our organizational needs.  To best achieve this goal, we must first determine our requirements.  Which terms and conditions are acceptable (or non-negotiable) and which ones are unacceptable as presented.

 

Speaking of non-negotiable, it has been said many times over that “everything is negotiable”, and while that might be true, there is a down side.  Imagine yourself to be in the role of the Vendor Manager, and after an extremely one-sided negotiating session, your organization’s negotiating team absolutely raked one of your best vendors over the coals by negotiating so fiercely that the vendor is now providing services to your organization at nearly a loss.  How effective do you think your communications will be with this vendor during the negotiated time period?  Is there much of a chance that this vendor is going to go above and beyond expectations to please your organization?  The answer is no.  Negotiations need to be a win for both sides, and that certainly includes the contract terms and conditions.

 

Defining standard terms and conditions that are necessary to your organization’s needs are the ones that need to be negotiated into every contract.  Ensure that the standard terms and conditions include factors that would help to standardize organizational contracts, provide an understanding of contractual clauses, better define audit and verification rights, and provide for contingency planning.

 

Standard terms and conditions are set to be in alignment with the organizational goals, and when approved by the Legal Department, will mitigate risk and maximize the value of the contract to the organization.

 

Terms and Conditions are also the specific guidelines set forth in the form of a contract and when accepted by all signors, it will be contractual law.  Well written contracts are designed to remove all guesswork.  What is right and wrong, allowed or not allowed has to be written into the contract and must be clearly understood and adhered to by all involved personnel.

 

Ensure that your Negotiation Team is well versed on the organizational needs from the vendor providing the products and services.  Once the terms and conditions have been negotiated and agreed to, there is little chance to change the negotiated deal.  Amendments can be requested for contract inclusion, but if the request does not meet the needs of the vendor, odds are that it will not be accepted.

 

Develop a Redeployment Process

Redeployment is a valuable aspect of the Acquisition Process.  It makes no sense to Purchase hardware and/or software if those needs can be met by using the Redeployment Process.  If you find that your organization purchases assets unnecessarily when redeployment was a valid option, then the communication portion of your ITAM process will need to be thoroughly reassessed.

 

Redeployment can be a standard and commonly used process if an organization’s assets are centralized and owned exclusively by IT Asset Management, but this is not always the case.  Many organizational business units purchase or lease their own assets, which tends to lead to a “mine” attitude.

In essence, “I paid for it, go buy your own”, or that the communication of what each business unit owns, and what is not currently in use, is not effectively conveyed to other business units.

 

Chargebacks or the internal leasing of idle equipment from one business unit to another is an excellent process, but in the eyes of many, is too much paperwork and a hassle to keep track of.  This type of attitude is common, and not at all conducive the goals of the organization.

 

First and foremost, knowledge and communication are essential.  We have already covered many aspects of the Asset Acquisition process, which in part includes utilizing asset redeployment whenever possible. Redeployment is part of the reason for such a process, to maintain an overall view of organization’s assets, and using those assets to their fullest capacity.

 

Redeployment provides many benefits such as budget expenditure savings by not purchasing unnecessary assets, compliance risk mitigation by using assets with software that have been confirmed as fully licensed, keeps license counts to a minimum, time involved to access the needed assets is minimal since the assets already exist within the organization, and leased assets that are under contract but not in use can once again generate ROI by being sub-leased to other business units, etc.

 

A fully functional Redeployment Process is a dynamic cycle of events.  As an example, let’s run through a basic cycle.  The process will begin when an asset is received, accepted, issued an asset tag, and is then delivered and set up by the IMAC team for the end user.

 

7 months later, the end user position is eliminated. The IMAC team will pick up the assets that were in use, take them to their shop and prepare the assets for storage by wiping the hard drive and harvesting the software, all of which will be stored in an asset pool.  The asset’s status change will also be entered into the IT Asset Repository.  At this point, the assets have been properly prepared for storage, and will remain there until an acquisition request can be filled with the use of this asset, or if leased, when the lease expires and the asset is returned.

 

There are other considerations such as assets being purchased for satellite offices in different states, transporting assets to other states or countries while abiding by local tax laws.  These considerations are usually minimal when weighing the overall benefit of a Redeployment Process for a sizable organization.

 

Asset Procurement Considerations

 

Procurement is the actual purchasing of the assets that have been decided upon by means of the processes that we have covered thus far.  This act is the culmination of all directed personnel actions and the guidelines that were established to ensure that each asset procurement results in the best overall value for the organization.

 

To be rated as a best value, each procurement will be conducted using previously established guidelines such as volume purchase agreements, maintenance agreements, service level agreements, outsourcing agreements, leasing agreements, and lifecycle considerations; all of which should have been negotiated to achieve maximum value.

 

There is not much to cover in the way of procurement specifics beyond what has already been covered.  Procurement is simply the act of purchasing assets as directed by the complete Acquisition Process to ensure that every asset that is purchased meets all business needs and provides optimum value to the organization.

 

The Acquisition Team

 

We have dissected many portions of the Best Practice Acquisition Management Process, yet we have not thoroughly examined the team members of this process.  The Acquisition Team, as with so many other aspects of any process within IT Asset Management, is dependent upon the size of the organization and the roles filled within that program.

 

An optimal Acquisition Team would consist of the IT Asset Management entities:

 

  • Stakeholder
  • Acquisition Manager
  • Financial Manager
  • Receiver
  • Asset Identification Management Personnel
  • Technical Personnel (IMAC Team)

 

The Stakeholder

The Stakeholder can best be described as the initiator of the request.  This is the person who has found a need, and conveys that need to the Acquisition Process for validation.

 

The title or role of the stakeholder should have little bearing on the Acquisition Process.  A strong process is designed to not be influenced by such factors.  Any influence from the Stakeholder would be in the form of being a part of asset evaluation and acceptance during the Acquisition Process.

 

The Stakeholder has a reporting responsibility to the department to which that person is assigned, yet during the Acquisition Process, will lend strong support to the Acquisition Manager to enhance the possibility of success concerning the Stakeholder’s acquisition request.

 

The Acquisition Manager

The Acquisition Manager is the controller of all acquisition processes and functions.  View this person and role as a funnel for all requests to pour in to, with an outlet in the form of a very tightly controlled screening process for all requests; in effect, the “gatekeeper” of asset acquisitions.

 

This is THE primary role in the Acquisition Process.  This person is responsible for negotiating the terms and conditions for all contracts, (with advisement of the legal department) will provide final determination in asset sourcing via the RFP/RFQ process for standard assets as well as exemptions, and will ensure that redeployment options are utilized whenever those options are available.

 

The Acquisition Manager is also the overseer of the asset return process, and will ensure the prompt notification to all involved personnel and groups of completed purchases.

 

In this role, the Acquisition Manager has a reporting responsibility to the Program Manager.  Working together, they will ensure continuity and contribute to the success of the Acquisition Management Process.

 

The Financial Manager

The Financial Manager is responsible for the financial transactions involved in the Acquisition Process.  These responsibilities include the issuance of purchase orders, timely payments for assets and vendor services, invoice reconciliation, document retention and archiving through Documentation Management, and prompt notification to all involved personnel and groups of completed purchases.

 

In this role, the Financial Manager has a reporting responsibility to the Program Manager.  Working together, they will ensure continuity and contribute to the success of the Acquisition Management Process.

 

The Asset Receiver

The Asset Receiver can be a role, a function, a responsibility, a person, or a combination of any of these.  This statement is not meant to be a point of confusion, but to draw attention to the fact that depending on the maturity of the Asset Management Program, the “Receiver” can be an individual assigned a specified role and function in a specific receiving location, to the situation where assets might be delivered to the front office, accepted by whomever happens to be there to sign for the delivery.

 

Clearly, the lack of a specified receiving process will invite problems and hardship into any Asset Management Program.  Best Practice would dictate that there is at least one person to fill the role of receiver, with all packages being delivered only to a specified receiving area.

 

The receiver’s function is relatively simple, and that is to accept asset shipments providing that there is no physical damage to the asset shipping container.  If there is obvious damage, the package will normally be rejected by the receiver.  This step of the process can vary widely depending on organizational policies.

 

If the package shows no physical damage, then the asset will continue through the acceptance process, including notification of the appropriate parties involved.

 

The Receiver has a reporting responsibility to the Asset Identification Manager, and in this role provides functional continuity to the Acquisition Management Process.

 

Asset Identification Management Personnel

This is a team of personnel who are responsible for assigning each asset a unique identifier, and assuring that each asset is inventoried on the fixed asset list and recorded within the ITAM repository.

 

The assignment of asset identifiers and the documentation of assets will provide the capability of an accurate inventory of assets throughout their complete lifecycle.

 

The Asset Identification Management Personnel will ensure the prompt notification to all involved personnel and groups of current asset information and timely informational updates.

 

In this role, the Asset Identification Management Personnel have a reporting responsibility to the Asset Identification Manager.  Working together, this team will ensure continuity and contribute to the success of the Acquisition Management Process.

 

The Technical Personnel

The Technical Personnel are the “hands on” team that provides initial testing and evaluation of all incoming assets.  This team will test for functionality within the environment and ensure that the assets are configured exactly as they were purchased to be configured, as well as performing repairs, maintenance, updates, and moves as necessary.

 

Sometimes referred to as the IMAC (Installs, Moves, Adds, Changes) team, the Technical Personnel will install the assets into the organizational environment as per current standards, and monitor all networked assets via an automated discovery tool.

 

The Technical Personnel will ensure prompt notification to all involved personnel and groups of the current status of assets.

 

In this role, the Technical Personnel have a reporting responsibility to the Program Manager.  Working together, this team will ensure complete functionality of assets within the environment, and contribute to the success of the Acquisition Management Process.

 

Acquisition Workflow

Now that the personnel, their functions, and the Acquisition Management Process have been explained, how is all of this orchestrated to achieve an effective combined process?  For simplicity sake, the answer can be represented in a standard flow diagram, such as the one seen in the IAITAM Best Practice Library volume 10, Acquisition Management Templates area.

 

The flow diagram is drawn to represent the basic chain of events and the choices that will be made during the Acquisition Process.  We will begin with the need that will start the process.

 

Perceived Need, start the process – The need is presented to the Acquisition Manager for validation. Possible modifications are made at this point or the request is denied if deemed unnecessary.

 

Redeployment Opportunity Assessed – If the need is deemed valid, the Asset Manager will check inventory to match request criteria and make ready the existing asset if available.

 

Asset Request “Standard” or “Non-Standard” Outside Purchase – A standard asset may require only a stamped signature, and require little infrastructure support.  A non-standard asset is a request for an exception, and will require closer scrutiny and input from the Asset Selection Committee, and possibly strong infrastructure support.

 

Identify The Vendor – The Vendor Manager will identify vendors through either a formal or informal Request for Information (RFI).  By communicating through email or otherwise, the more accurate the information provided to the vendor will expedite the process.

 

Asset Evaluation – If asset compatibility is an issue, then the Technical Personnel might conduct benchmark tests to test network configuration, performance values, and impact on other systems.

 

Request Cost Estimates – The Vendor Manager will submit a Request for Bid (RFB), Request for Proposal (RFP), or Request for Quote (RFQ) to selected vendors.  Information from the vendor about specific assets will arm the Financial Manager with information necessary to calculate Total Cost of Ownership (TCO).

 

Asset Purchase Approval/Denial – The approval process may be easy, or complicated depending on the asset requested, and the costs involved with the asset. The end result, regardless of complexity, will either be approved or denied at this juncture.

 

Vendor Negotiations – The terms and conditions, maintenance, support and price are negotiated with one or more vendors to obtain best value.  A vendor is awarded the contract if negotiations were successful; if not, the asset request will be rejected.

 

Issue a Purchase Order – If approved and a vendor is selected, a purchase order will be issued to the vendor.  Approval information sent to Asset Identification.

 

Asset Approval/Denial via Redeployment – It has been determined that the asset request can be satisfied by means of redeployment. Final approval is proposed.  The asset request will be approved or denied at this juncture.

 

Asset Approval/Denial Non-Redeployment – The asset request is a standard asset, but not available in an organization’s inventory for redeployment.  The approval process permits the purchase from an outside source.  Vendor processes take place.  Asset is approved or denied at this juncture.

 

Request Rejected – If the request is denied, the specific reason for rejection is either the TCO is too great, or the calculated ROI will be insufficient.  The requestor is notified of the rejection in writing.

 

Place Order for Asset – If the request for a standard asset is approved, sourcing is well established, and the process can take place with little human intervention; it is a standard well established process.  The requestor and Financial are notified of the approval.  Asset Identification is notified automatically with request approval.

 

There are a few more “if then go to” steps that can be added to the Acquisition Workflow, but you should now understand the basic flow of events during an asset acquisition.

 

Disposal Considerations

A question to ponder: When is the best time to start planning for disposal considerations?  The best answer is before the asset is ordered.  We know that every asset will inevitably need disposal action at the end of its lifecycle.  Planning on how long an asset will be utilized needs to be considered before the asset is purchased.

 

Part of the Acquisition Process needs to address when and how disposal issues will be dealt with.  Disposal planning during the Acquisition Process will allow a better overall estimation of the costs, and will determine approximately when replacement assets will be needed.

 

Disposal considerations are just another piece of information that is part of the puzzle that comprises the Acquisition Management Process, and as described in the article, there are many factors to consider during the acquisition of assets.

 

Conclusions

This article, though quite lengthy, has achieved the goal that I had intended, and that is to show the importance of an effective Acquisition Management Process, the people involved, and the benefits to the organization.

 

Experiencing the detrimental effects of a recessive economy just amplifies the importance of saving money, and one of the smartest moves in that direction is to closely examine your Acquisition Process.

 

Assets will need to be acquired, regardless.  The smart move is to derive maximum benefit and savings from that action by designing and incorporating an effective Acquisition Process that will not only save budgetary funds, it will also provide compliance risk mitigation.

 

Similar to most other aspects within IT Asset Management, proper forethought and planning is a proactive measure that will enhance the overall ITAM Program.

 

 

Barbara Rembiesa – IAITAM/ Are You Receiving Economic Stimulus for Your ITAM Program? – The Answer Is Most Likely NO, But You Could!

 

Prior to the economic downturn, IT Asset Managers had a difficult job in achieving buy-in from their executives for the ITAM Program. The economy has changed but the need to gain buy-in apparently has not. The economic downturn though has created one noticeable change for the IT Asset Manager; executives are now looking for solutions in every business unit. This is the time for IT Asset Managers to truly shine – quantify and show savings for the organization.

 

Over the course of the next few months, this column will focus on each Key Process Area within an IT Asset Management Program and how to turn it into an economic stimulus package for your organization. We will focus on one Quick Success Project (QSP) for each Key Process Area within the ITAM Program that will bring success to your ITAM program yielding immediate ROI for the organization. These QSPs are taken directly from IAITAM’s Best Practice Library.

 

Visibility is the key to any project and gaining buy-in through a QSP is no exception.  I have often told students to quantify their projects.  Start by getting a picture of a tally thermometer similar to what they use in fund raisers and put it out for all that walk by to see, or write up an article on the savings in the organizations newsletter, ITAK or post on the organization’s intranet site. The point is to display the savings out into view for the whole organization to see. But remember, the job of an IT Asset Manager is to bring the best value to the organization and this may not be represented solely by a dollar value, so post both hard and soft dollar savings such as saved man-hours or saved budget dollars because of redeployed equipment costs.

 

This month’s column will feature the Acquisition Management Key Process Area and how redeployment can save your organization measurable, bottom line dollars.

 

What is Acquisition Management?

Acquisition Management is the gatekeeper for the application of all IT asset management strategies determined by your organization, including policies, standards and IT life-cycle processes.  An effective IT acquisition process empowers the rest of your IT Asset Management Program by applying process, determining pathways for exceptions and generating the initial records for the IT assets before acquisition is even complete.

 

Quick Success Project for Acquisition

A QSP is defined as a short term and/or low cost solution in order to optimize the value of the ITAM Program to the organization.

 

Acquisition has many potential quick success projects and I am only going to focus this article on one. This column will concentrate on Defining the Redeployment Process. A Redeployment Process will enable your organization to reuse assets that are already in the environment, save money by not having to purchase new assets, and save valuable man hours for your IMAC team.

 

What is the Redeployment Process? 

The process by definition is the act of reutilizing existing equipment and software for the purpose of eliminating over purchases and efficient use of current inventory, while maximizing return on investment. The Redeployment Process is defined and communicated to all parties involved with a standard set of requirements allowing the expedition of the redeployment process while minimizing risk and maximizing Return on Investment (ROI).

 

This process may be difficult to execute within environments where each business unit controls their own IT budgets. No one is overly willing to just give up something that they feel came out of their budget regardless of actual or perceived value to the organization.  Situations such as this have a tendency to cause hoarding of equipment. As was stated earlier, an asset is something that provides value to the organization. Assets that are withheld, not in use, and not made available for redeployment to other business units are nothing more than inventory items, decreasing the asset’s ROI and increasing their total cost of ownership (TCO) to the organization. Simply put; assets that are on the shelf or sitting un-used in an office, are still incurring costs to the organization.  Redeployment is one sensible solution to this problem.

Let’s look at some impacts, benefits, and outcomes of redeployment to both the ITAM Program and the organization.

 

  • Redeployment allows for development of a centralized inventory pool
  • It maximizes the use of software licenses
  • It eliminates unnecessary over purchasing
  • It creates a checks and balances which allows for redeployment options to be maximized
  • It establishes the need for a centralized inventory management process
  • Enables the organization to maintain an accurate inventory, while eliminating ownership issues and equipment hoarding
  • Minimizes turn around times on IT equipment requests
  • Reduces steps in the overall acquisition process and allows requestor to receive product quicker
  • Reduces disposal costs
  • Temporary reduction of disposal cost allows you to proactively budget for disposals
  • Enables proper harvesting of software licenses
  • Mitigates risk and software compliance issues
  • IT assets are placed in a controlled storage and warehousing environment
  • All assets can be accounted for including non deployed inventory
  • Maximizes use of leased equipment
  • Redeployment allows for a higher return on investment (ROI)

 

Software licenses can be a huge expense for organizations. The downsizing of organizations will enable reuse of many existing software licenses. Creating a software pool now, will also enable you to be prepared for when the economy turns around and those resources are again needed. Also, be aware of ongoing maintenance and support costs of these unused licenses.  You don’t want shelfware costing the organization money.

 

This economy has forced everyone to eliminate unnecessary purchases. Redeployment of assets will eliminate unnecessary over purchasing by reutilizing what is already in the environment unilaterally.

 

Employee cutbacks and mergers provide opportunities for IT asset redeployment. The IT Asset Manager must look at all opportunities that arise within their organization to save money, resources, and mitigate risk.

 

The redeployment process will enable your organization to take advantage of the down economy by taking a serious look at what assets actually need to be purchased and which can be redeployed.

 

 

Paul Paray, Willis HRH/ Are you Covered? – Why Insurance Should be a Part of Your SAM Program

 

Being a crucial component of any IT asset management program, a properly run software asset management (SAM) program provides significant value to a company.  Indeed, according to Gartner Group, “organizations can realize cost savings of between 5 percent and 35 percent [from their IT budget] by implementing focused software asset management practices.  “1It goes without saying, in the midst of a down economy; the ability to trim expenses becomes a critical survival strategy for just about any IT department head.  This article focuses on four reasons why your SAM program would get a critical boost if your company purchased an insurance policy that reimburses it for infringement claims based on the use of unlicensed corporate software.  In other words, this article outlines why buying software infringement insurance benefits your company’s bottom line and indirectly your job security.

 

  1. A Funding Mechanism for Audit and Settlement

The first major benefit of an insurance product that covers software copyright infringement is that it provides an independent funding mechanism for the defense of a software audit and payment of a settlement.  As it stands, the audit and settlement can possibly fall into the IT, compliance, legal, risk management, or “general corporate” budgets.  It is easy to argue that funding should come from the IT budget because the IT department is tasked with making sure corporate IT is properly run.  It is only fair that they pick up the tab.  Compliance and legal involvement is necessary when facing software audits, compliance due diligence, or entering into a software licensing deal.  Therefore, it should not be surprising if the costs incurred during a software audit and settlement were to come out of the compliance or legal department budgets.   On the other hand, an IT asset management program can be part of the company’s overall corporate risk management program because it allows companies to anticipate and plan for future risk and expenses.   Accordingly, the risk management department could very well pick up the freight.

 

Trade associations like the Business Software Alliance (BSA) and the Software and Information Industry Association (SIIA) or any large software publisher seeking licensing fees will not wait while budget questions are sorted out.  And, if a SIIA, BSA, or software publisher audit is at hand, the amount needed to fund a settlement payment and attorneys’ fees may easily exceed seven figures.  Indeed, according to the online BSA Defense Fine Calculator, an audit that uncovers the unlicensed use of just 1,000 Adobe® Acrobat® Professional programs will yield a demand of over $1.3 million.  Law firms such as Donahue Gallagher & Woods, which brags on its website that it has recovered over $170 million from software copyright violators, will vigorously litigate software disputes without regard to how a defense is funded.  On the flip side, having an aggressive law firm defend your interests – and one that is being paid directly by an insurance company – allows legal decisions to be made solely on the basis of the best defense strategy and not how funding may impact the budget of any particular corporate department.

 

  1. A Protective Measure While New Compliance Processes are Being Instituted

According to an article written six years ago by Holland & Hart attorney, Daniel Glivar, “software piracy generally is the unintended result of one or more of the following circumstances:  (1) software previously purchased by a company for one workstation routinely was copied onto new computers and servers purchased by the company without purchasing new licenses or additional “seats” for such software; (2) the person or department responsible for software purchases and/or installation did not retain the license agreements, purchase orders, invoices, or receipts proving that the company purchased such software; and/or (3) software or computer purchase receipts do not specify the type of software purchased or the number of permitted users of such software.”  Is Your Company Committing Software Piracy?, American Bar Association Intellectual Property Newsletter (Spring 2002).

 

Little has changed in six years.  Indeed, according to attorney Robert Scott of Scott & Scott, LLP, a Dallas law firm that has defended hundreds of software licensing audits, BSA and SIIA often claim that a company is liable simply because it cannot produce the required dated proof of purchase for those copies of software installed on its network.  “Some Software Police Tactics are Questionable”, accessed 16 January 2009The irony in this is that the employee who failed to obtain adequate proof of purchase may be the same person who was terminated because of his or her lack of diligence regarding software licensing.  On the heels of being terminated, such employee may next choose to turn on the former employer and contact BSA or SIIA in order to obtain a financial reward for information regarding the former employer’s use of unlicensed software.  In fact, during an audit, SIIA or BSA will routinely choose not to identify the source of its information – which, according to Messrs. Glivar and Scott, is almost always obtained from an online form or a confidential hotline that allows for anonymous tips.   Software copyright penalties may end up being based on software titles that a company legally owns and has properly acquired – it just does not have the proof.

 

While the company is inching towards compliance by fixing the mistakes of the terminated employee, it is obviously very vulnerable.  Making sure you have insurance in place prior to the start of the critical time period of investigation/audit/settlement will provide corporate peace of mind by transferring significant potential liability to an insurance company.   If given the option, a company will almost always take the initiative to ensure compliance with software licensing requirements.  The fact remains, however, until potential process failings can be fully resolved, insurance will always remain the best possible backstop.

 

  1. Access to Seasoned Counsel and Audit Consultants Willing to Zealously Advocate on Your Behalf

After choosing not to give credit for valid software because there is no dated proof of purchase, software compliance organizations will also generally apply a “penalty” multiple of 1.5 to 3 times the full retail price for a software title.  Such hard tactics often go unchallenged given that smaller companies do not have the resources to fight and larger companies do not want to taint their publisher relationships.  Given the global recession, you can expect these hard tactics to continue in 2009.  In addition, during 2009 there will likely be an increase in enforcement by software publishers because they will be seeking to offset a drop in corporate software procurement.

 

An insurance company will treat the software compliance penalties sought by BSA, SIIA and software publishers just like any other negotiable settlement offers.  Only settlements that are fair and equitable to the insured will be accepted.  The benefit in having access to a litigation-savvy insurance company with experienced legal counsel is something that cannot be underestimated.  For example, the IAITAM IT Asset Insurance Program has access to seasoned litigation counsel, Scott & Scott, to resolve software copyright claims brought against those who have purchased the IAITAM Software Protection Insurance Agreement.   When it comes to resolving software licensing disputes, having the right legal counsel and experts in place will always remain the first major step in getting a prompt and fair resolution.

 

  1. The Negligence of Employees is Typically Mitigated with Liability Insurance

When software licensing problems turn up, they are usually not the result of intentionally bad conduct but more a function of negligence.  It is not difficult for honest mistakes to be made when the provisioning of desktops is combined with self-audits, maintenance, and long-term procurement initiatives.  More to the point, an employee may not even realize the open source product that was just downloaded is provided under a valid copyright license.  In the same way Errors and Omissions and General Liability insurance covers the negligence of employees, software infringement insurance picks up claims based on negligence involving corporate software licensing.  This does not mean the company gets a free pass when it comes to doing the right thing or that an employee’s activities are performed in a vacuum.  It remains crucial that employees understand what is expected of them. Not surprisingly, in most every SAM program, the policies and procedures for utilizing corporate software are conveyed to employees via a combination of corporate communications and training.  In today’s economy, it has just become an important additional “best practice” to have the right specialty insurance in place before licensing mistakes are made.

 

 

Jenny Schuchert, Independent Consultant – Get to the Point – Exercising Your Communication Skills

 

Communication is a large part of any job and IT Asset Management is no exception.  IT assets are important to almost everyone in an organization, requiring IT Asset Managers to have a broad repertoire of communication skills.  Communication is required to define, manage, enforce, cajole, educate and problem solve across hierarchy levels, departments and locations.  Communication is paramount to overall success.

 

Business professionals like IT Asset Managers typically have natural ability, training and experience as the basis of their communication skills.  However, continuing education, webinars and professional conferences rarely focus on it as a topic.  The simple explanation is that everyone thinks that they communicate well.  They understand how to run a meeting, give a presentation and develop a communication plan for a project.  It is a rare individual that analyzes their communication skills, tries new techniques, or is open to revisiting the basics as a refresher.

 

Communication Errors are Easy to Make

I had a couple of great reminders earlier in my career to awaken my own interest in continued analysis and improvement of communication skills.  As a technical support manager at a software company, I gave frequent presentations to a variety of technical audiences.  I became known as “Bullet Queen” because my slides were filled with bulleted lists.  There was plenty of information on each slide, but some of the audience never seemed to get the message.  I wasn’t reaching visual learners who learn best from graphics, resulting in dislike for the new system that I was rolling out.  With a few changes to my slides to include different approaches to the presentation of information, fear and doubt about the new system disappeared.

 

When I was promoted out of the technical ranks to a corporate level position, my brainstorming methodology for problem-solving didn’t work for the contracts management team.  With the technical team, I had successfully encouraged spouting ideas regardless of perceived value.   Some of the best solutions developed from a silly or unworkable comment because it inspired a different line of thinking.  When the meeting was over, everyone was part owner of the solution and not the remarks made during the session.

 

In contrast, the contracts management team treated every utterance as a position statement. Remarks were restricted to the individual’s conclusions on the best course of action or the problems with someone else’s position.  Brainstorming sessions were the wrong choice for solution development with this audience.  I substituted a point by point analysis approach of choices that were identified prior to the meeting.  This approach was productive, developing a cohesive and comprehensive solution.

 

Step 1:  A Fresh Look at Communication

If you are open to examining how you communicate, the very least result will be an increased awareness of your own communication styles and that of others.  Alternatively, you may uncover new things to try or break a bad habit that is limiting your success.

 

The best way to get started is to conduct a self-analysis during common work events to gain a fresh perspective on your own SOPs (standard operating procedures).   If you are unsure how to analyze communication effectively, consider first how you create an atmosphere of open communication in order to:

 

  • Build common ground
  • Gain buy-in
  • Inform
  • Educate
  • Allow and/or defuse dissension
  • Create agreement

 

These tasks are goals to be accomplished through communication.  You may wish to augment the list; the list above is based on the common requirements for a status meeting.  Grouping your personal analysis by event (such as status meeting, email, presentation, etc.) keeps the exercise focused and practical.  Evaluate your communication performance after an event or keep a past experience and audience in mind when you evaluate yourself.

 

Step 2:  Gather New Ideas

Coming up with new strategies to enhance our communication is easy.  Everyone has their favorite piece of advice to share.  Here is a list of some of the remarks I have read about communication during meetings:

 

  • Run the conversation, don’t just let it happen
  • Send out an agenda in advance that looks like a mission statement
  • If you ask for ideas, don’t say no to all of them or the ideas will stop
  • Keep communication on topic
  • Be aware of what is not communicated
  • Restatement can be a great way to keep control over emotional or complex topics

 

In addition to anecdotal advice, many good ideas can be found in business or communication books.  For instance, Made to Stick: Why Some Ideas Survive and Others Die by Chip Heath and Dan Heath is a book full of ideas about effective communication.  According to the authors, ideas “stick” based on the key principles of simplicity, unexpectedness, concreteness, credibility, emotions and stories.   Adapting story-telling techniques to the work setting is a common theme in communications and business literature and is a good source of new ideas.  For instance, I have adapted the way I present in  webinars to follow the outline of a story, insuring a flow of information that follows the listener’s expectations.

 

In the book A Whole New Mind:  Why Right Brainers Will Rule the Future, Daniel Pink addresses the changes of our digital age, placing emphasis on design for communicating the story.  I feel justified in removing bullets from my slides and exercising the right brain to develop charts and other graphical representations!

 

Step 3:  Put them into Action

Depending on the results of your own analysis, use your project planning skills to develop a communication improvement plan.  The plan may be as simple as a list of new techniques to try, reorganization of how information is presented, or attempting new communication tactics for a specific situation.  However, if the delivery of ideas through speech or writing are below your desired ability, it may be necessary to take classes or join a speech organization such as Toastmasters International.  I highly recommend Toastmasters as an easily accessible option if you wish to increase your ability to give speeches, improve your listening capabilities, and assume a leadership role.  A Toastmasters International Club was instrumental in helping me win my first promotion into a management position and I use the skills I learned there every day.

 

There is no substitute for practice. A presenter who gives a speech once per year is not going to be comfortable at the podium.  Without practice, old habits return and your efforts to improve will be lost.  Also, busy professional people can easily become immersed in the message and not how they are delivering that message.  Think of the project that failed due to lack of communication.  I’m sure hundreds of emails were sent out which went unread.

 

As a final note, consider the amount of energy you put into communication.  Put yourself in the audience and think about the speakers that you have enjoyed.  Is it the information in the presentation or the energy with which they presented that really made the difference?  In a meeting, have you found the energy level catching?   Generating enthusiasm for a project can be the difference between failure and success.  Communicating effectively includes sharing yourself with the audience, especially enthusiasm and the enjoyment of working together.

About Dan Ingouf

Dan Ingouf is the Content Development Specialist for IAITAM.