1. 12/11/20151 Part 8 Managing IT Assets

2. 12/11/20152 Introduction Today we will examine: –IT asset management –IT lifecycle –Benefits of good IT asset management

3. 12/11/20153 Objectives At the conclusion of this lesson, the student should be able to: –Describe the necessity for IT asst management –Recall and describe the asset management concerns in each stage of the IT lifecycle –Explain the benefits of good IT asset management

4. 12/11/20154 IT Assets All information technology assets of the enterprise –Computers Mainframe / mid-range / personal Software and applications –Peripherals –Networking infrastructure –Network attached devices –Possibly communications and handheld devices

5. 12/11/20155 IT Asset Management “The point at which finance and IT meet” Three Legs of IT Asset Management –The management and tracking of software and hardware assets –The management of service-level agreements (SLAs), software licenses and other service contracts –The accounting component, including the calculation and depreciation of taxes

6. 12/11/20156 Necessity for IT Asset Management Determine return on investment in IT Avoid unnecessary purchases Reduce costs –IDC reports IT firms with good asset management practices save 15% on IT staffing costs Legal requirements –Software license compliance –Taxes

7. 12/11/20157 IT Asset Management is Financial Asset management primarily a financial activity Some theories say that due to this, asset management system should avoid tracking operational and other data about the asset –Concentrate the financial aspects Others see it as effective tool for both operational and financial use –(I’m in this camp)

8. 12/11/20158 Tools for Asset Management Billion dollar industry Thousands of tools available All computer based –May be integrated with corporate asset management or standalone May include tagging standards or systems, both physical and electronic

9. 12/11/20159 Asset Management Lifecycle Consistent lifecycle model for IT Assets Adapted from Windley, Phillip J, Managing IT Assets; Office of the Governor, State of Utah 2002

10. 12/11/201510 Procurement Phase Asset enters the asset management system –Upon Receipt –Begins to be managed Asset management system receives data –All applicable information on the new asset –Includes software licensing/SLA’s, etc. Receiving organization acknowledges receipt –Confirms the asset in the asset management system –Authorizes release of payment

11. 12/11/201511 Deployment Phase Asset management system updated –location –responsible party in the organization –configuration –vendor –warranty –any other data that will be useful in managing the asset

12. 12/11/201512 Deployment Phase Location –May be physical location –May be link to other asset containing the asset being deployed i.e. software or memory may be tied to a physical system and would be located wherever that system is located –Critical information for asset tracking

13. 12/11/201513 Usage Phase Not simply static Should be periodically updated by operational software that measures asset usage –Ensures valuable assets not being used can be redeployed Installed software must be tracked

14. 12/11/201514 Upgrade Phase During product lifecyle, at least one upgrade cycle can be expected, i.e. –Software version changed –New hard drive added –Additional memory added Configuration information for asset must be updated accordingly

15. 12/11/201515 Decommissioning Phase May still be useful in organization –May be redeployed, i.e. Linux server File/print server Process control Otherwise system should have some salvage value –Asset management system should track until salvage completed or item is recycled

16. 12/11/201516 Benefits: Inventory Control Important input into general ledger system for depreciation calculations Helps prevent theft of organizational assets

17. 12/11/201517 Benefits: Total Cost of Ownership TCO: A measure of all aspects of owning and operating an asset System reduces TCO by: –Eliminating costs from Duplication of assets Wasting of assets by not using them after purchase –Reducing Effort required to track assets Risk of software license non-compliance –Facilitating better asset operations –Tracking warranty information Avoids paying for covered repairs

18. 12/11/201518 Benefits: Software License Compliance Major task of any IT organization is tracking software licenses & ensuring proper allocation & use Failure to comply = financial risk & legal liability Becomes time sink as IT organization focuses compliance instead of adding value to the mission of the organization

19. 12/11/201519 Benefits: Operational Monitoring/Control Many organizations administer systems using operational monitoring and control systems Asset management systems can form the basis for the operational system –Supply vital information to operational system when asset deployed or remove it when asset decommissioned

20. 12/11/201520 Benefits: Decision Support Support decisions about IT resource deployment –IT assets often deployed with little understanding of how they will be used –In many cases not used as originally intended I.e. computer may be deployed and rarely used or may be deployed and overused. When data from asset management system combined with operational data adverse usage patterns can be easily seen & resources reallocated to better add value

21. 12/11/201521 Benefits: Zero-day Employee Provisioning New employees should have everything necessary to start work and be productive in place Includes computer properly set-up & configured with right software, access to appropriate data, a phone, & other devices When employees leave, equipment should move to decommissioning phase –Available for redeployment

22. 12/11/201522 Benefits: Standardization and Compliance Non-standard equipment/software cost money Non-standard IT infrastructure requires more employees to manage –Employees may less productive as they are less likely to be experts at managing non-standard assets Time is wasted when people are required to use and understand non-conforming data and systems System can tell an organization the level of compliance with standards

23. 12/11/201523 Benefits: More Informed Purchasing When combined with operational data, asset management system can help in evaluation of past purchasing decisions & assist in better future purchasing decisions System can track vendors & provide data about how one vendor performs relative to another in key areas such as delivery, support, etc.

24. 12/11/201524 Benefits: Business Resumption Support If assets lost through disaster or theft or damage, system can help business resume operations more quickly By knowing what assets are in use and how they are configured, the system contains data vital to disaster recovery

25. 12/11/201525 Conclusion Failure of asset management may result in –Wasting time and resources managing inventory –Purchasing unnecessary equipment and software –Unnecessary effort in maintaining license compliance for software

26. 12/11/201526 Conclusion With functional asset management, we can: –Reduce the total cost of ownership for IT infrastructure –Provide a solid foundation for operational systems necessary to keep infrastructure operating efficiently

27. 12/11/201527 By shifting to more up-to-date computer hardware, Organization were able to provide more computing power for their operations. To select the right computers, management needed to understand : How much computer processing capacity its business processes required? How to evaluate the price and performance of various types of computers? The financial and business rationale for hardware technology investments. Issues in Management Hardware Assets ( Management Challenges )

28. 12/11/201528 Management also had to plan for future processing requirements and understand : How the computer worked with related storage, input/output, and communications technology. Selecting appropriate computer hardware raises the following management challenges:

29. 12/11/201529 1.The centralization versus decentralization debate. A long-standing issue among information system managers and CEOs has been the question of how much to centralize or distribute computing resources. Should processing power and data be distributed to departments and divisions, or should they be concentrated at a single location using a large central computer? Client/server computing facilitates decentralization, but network computers and mainframes support a centralized model. Which is the best for the organization? Each organization will have a different answer based on its own needs. Managers need to make sure that the computing model they select is compatible with organizational goals.

30. 12/11/201530 2. Making wise technology purchasing decisions. Computer hardware technology advances much more rapidly than other assets of the firm. Soon after having made an investment in hardware technology, managers find the completed system is obsolete and too expensive, given the power and lower cost of new technology. In this environment it is very difficult to keep one’s own systems up to date. A considerable amount of time must be spent anticipating and planning for technological change.

31. 12/11/201531 Successful use of information systems to support an organization’s business goals requires an understanding of computer processing power and the capabilities of hardware devices. The role of hardware technology in the organization’s information technology infrastructure, managers can make sure that their firms have the processing capability they need to accomplish the work of the firm and to meet future business challenges.

32. 12/11/201532 Managing Hardware Assets Managers need to balance the cost of acquiring hardware resources with the need to provide a responsive and reliable platform for delivering information systems applications. We now describe the most important issues in managing hardware technology assets: 1.Understanding the new technology requirements for electronic commerce and the digital firm. 2.Determining the total cost of ownership (TCO) of technology assets. 3.Identifying technology trends impacting the organization’s information technology infrastructure.

33. 12/11/201533 The Strategic Role of Storage Technology in the Digital Firm Although electronic commerce and electronic business may be reducing the role of paper, data of all types (such as purchase orders, invoices, requisitions, and work orders) must be stored electronically and available whenever needed. Customers and suppliers doing business electronically want to place their orders, check their accounts, and do their research at any hour of the day or night, and they demand 24-hour availability. For business to occur 24 hours a day anywhere in our electronic world, all possibly relevant data must be stored for on-line access, and all these data must be backed up.

34. 12/11/201534 Hardware Technology Requirements for Electronic Commerce and the Digital Firm Electronic commerce and electronic business are placing heavy new demands on hardware technology because organizations are replacing so many manual and paper- based processes with electronic ones. Companies are processing and storing vast quantities of data for data- intensive applications, such as video or graphics, as well as for electronic commerce. Much larger processing and storage resources are required to handle the surge in digital transactions flowing between different parts of firms and between firms and their customers and suppliers.

35. 12/11/201535 For example : On-line banking has become very important at Chase Manhattan Bank, forcing Chase to change its check-handling method. Until recently, the bank stored its 12 million daily checks on microfilm and microfiche, which were not available on-line. Now Chase creates a digital image of each check that is stored on-line for 45 days, after which it is archived to a fast tape system. Customers can now view any recent check within one to two seconds. Each check requires about 40,000 bytes, so Chase needs more than 20 gigabytes to store checks at current levels in a business that is expanding fast. Electronic commerce and electronic business have put new strategic emphasis on technologies that can store vast quantities of transaction data and make them immediately available on-line.

36. 12/11/201536 Capacity Planning and Scalability Capacity Planning The process of predicting when a computer hardware system becomes saturated to ensure that adequate computing resources are available for work of different priorities, and that the firm has enough computing power for its current and future needs. scalability The ability of a computer, product, or system to expand to serve a larger number of users without breaking down.

37. 12/11/201537 Although capacity planning is performed by information system specialists, input from business managers is essential. Capacity planners try to establish an optimum level of service for current and future applications. Outages and delayed response times translate into lost customers and lost revenue. Business managers need to determine acceptable levels of computer response time and availability for the firm’s mission- critical systems to maintain the level of business performance they expect. New applications, mergers and acquisitions, and changes in business volume all impact computer work load and must be taken into account when planning hardware capacity.

38. 12/11/201538 Electronic commerce and electronic business both call for scalable IT infrastructures that have the capacity to grow with the business. Servers need to provide the processing power to keep electronic commerce up and running as Web site visitors and customers grow in number. Delivering large Web pages with graphics over the Internet or private intranets can create performance bottlenecks. There are several approaches to achieving scalability. One is to scale up, replacing, for example, a small server with a larger multiprocessor server or even a mainframe. Another approach is to scale out, which involves adding a large number of smaller servers. The choice of approach depends on the nature of the application or set of applications requiring upgraded hardware capacity.

39. 12/11/201539 Management Decision Problem Hardware Capacity Planning for Electronic Commerce Your company implemented its own electronic commerce site using its own hardware and software, and business is growing rapidly. The company Web site has not experienced any outages and customers are always able to have requests for information or purchase transactions processed very rapidly. Your information systems department has instituted a formal operations review program that continuously monitors key indicators of system usage that affect processing capacity and response time. The accompanying report illustrates two of those indicators: daily CPU usage and daily I/O usage for the system. I/O usage measures the number of times a disk has been read.

40. 12/11/201540 Your server supports primarily U.S. customers who access the Web site during the day and early in the evening. I/O usage should be kept below 70 percent if the CPU is very busy so that the CPU does not waste machine cycles looking for data. I/O usage is high between 1 a.m. and 6 a.m. because the firm backs up its data stored on disk when the CPU is not busy.

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42. 12/11/201542 1.Anticipated increases in your e-commerce business during the next year are expected to increase CPU usage and I/O usage by 20 percent between 1 p.m. and 9 p.m. and by 10 percent during the rest of the day. Does your company have enough processing capacity to handle this increased load? Explain your answer. 2. What would happen if your organization did not pay attention to capacity issues?

43. 12/11/201543 Managing Software Assets Software costs represent one of the largest information technology expenditures in most firms. Amounting to more than double the expenditures for computer hardware. Software represents another major technology asset. At many points in their careers, managers will be required to make important decisions concerning the selection, purchase, and utilization of their organization’s software assets. Following are some important software issues of which they should be aware.

44. 12/11/201544 Rent or Build Decisions: Using Application Service Providers Technology expenditures will increasingly focus on ways to use software to cut down on “people” costs as opposed to computer hardware costs by increasing the ease with which users can interact with the hardware and software. More organizations are using software packages, fourth-generation languages, and object-oriented tools because such software lowers “people” costs by reducing the need for custom-crafted software written by skilled computer programmers. Renting software and software services from other companies can lower some of these “people” costs even more.

45. 12/11/201545 Application Service Providers (ASPs) Chapter 5 described hardware capabilities for providing data and software programs to desktop computers over networks. It is clear that software will be increasingly delivered and used over networks. On-line application service providers (ASPs) are springing up to provide these software services over the Web and over private networks.

46. 12/11/201546 An application service provider (ASP) is a business that delivers and manages applications and computer services from remote computer centers to multiple users via the Internet or a private network. Instead of buying and installing software programs, subscribing companies can rent the same functions from these services. Users would pay for the use of this software either on a subscription or per transaction basis

47. 12/11/201547 For example: Companies can pay $5 per month per user Plus ( a one-time start-up fee of $5,000) to rent travel and entertainment (T&E) expense reporting software from ExpensAble.com instead of buying and installing T&E programs on their computers. The ASP creates a single solution that can be rented, replacing all or part of a customer’s IT infastructure.

48. 12/11/201548 The ASP’s solution combines package software applications and all of the related hardware, system software, network, and other infrastructure services that the customer would have to purchase, integrate, and manage on its own. The ASP customer interacts with a single entity instead of an array of technologies and service vendors.

49. 12/11/201549 application service provider (ASP) Company providing software that can be rented by other companies over the Web or a private network The “timesharing” services of the 1970s, which ran applications for functions such as payroll on their computers for other companies, were an earlier version of this application hosting. But today’s ASPs run a wider array of applications than these earlier services and deliver many of the software services over the Web. At these Web-based services, servers perform the bulk of the processing and the only essential program needed by users is their Web browser

50. 12/11/201550 The following Table lists examples of ASPs. Large- and medium-size businesses are using these services for : enterprise systems, sales force automation, or financial management whereas small businesses are using them for functions such as : invoicing, tax calculations, electronic calendars, and accounting. Employease.com, described in the chapter opening vignette, is an ASP providing human resource software.

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52. 12/11/201552 Companies are turning to this “software utility” model as an alternative to developing their own software. Some companies will find it much easier to “rent” software from another firm and avoid : the expense and difficulty of installing, operating, and maintaining complex systems, such as enterprise resource planning (ERP). The ASP contracts guarantee a level of service and support to ensure that the software is available and working at all times

53. 12/11/201553 For example, Telecomputing ASA charges $349 per seat per month for a three- to five-year contract that includes a guarantee of a 99.7 percent service level. Today’s Internet-driven business environment is changing so rapidly that getting a system up and running in three months instead of six could make the difference between success and failure. Application service providers also enable small and medium-size companies to use applications that they otherwise could not afford

54. 12/11/201554 Companies considering the software utility model need to carefully assess application service provider costs and benefits, weighing all management, organizational, and technology issues. In some cases, the cost of renting software can add up to more than purchasing and maintaining the application in-house. Yet, there may be benefits to paying more for software through an ASP if this decision allows the company to focus on core business issues instead of technology challenges.

55. 12/11/201555 Software Maintenance After software has been created for the organization, it usually has to be modified over time to incorporate new information requirements. Because of the way software is currently designed, this maintenance process is very costly, time consuming, and challenging to manage. In most information systems departments more than 50 percent of staff time is spent maintaining the software for existing systems Exampl : At the end of the millennium, an unusually large maintenance problem called the Year 2000 Problem emerged. The Year 2000 Problem, sometimes referred to as the millennium bug or the Y2K problem,

56. 12/11/201556 Management Decision Problem Evaluating an Application Service Provider Your company has grown from 40 to 200 employees in the past two years. All of your human resources record keeping, such as processing hired and terminated employees, documenting promotions, and enrolling employees in medical and dental insurance plans used to be performed manually, but your two-person human resources department is swamped with paperwork. You are looking at two options to automate these functions. One is to purchase a client/server human resources package to run on the company’s midrange computer. The other is to use an application service provider that runs human resources software over the Web. The company’s human resource department has PCs with Web browser software and Internet access. Your information systems staff consists of two people

57. 12/11/201557 The human resources software package that best fits your needs costs: $9,500 to purchase. One information systems specialist with an annual salary of $65,000 would have to spend 4 hours per 40-hour work week supporting the program and applying upgrades as they became available. Upgrades cost $1,000 each and the vendor provides one upgrade every year after the first year the package is purchased.

58. 12/11/201558 The application service provider you have identified charges $1,500 to set up the system initially and $5 per month for each employee in the firm. You do not need to purchase any additional hardware to run the system and the vendor is responsible for supporting the system. 1. What are the costs of each option in the first year? 2. Which option is less expensive over a three-year period? 3. Which option would you select? Why? What factors would you use in making a decision? What are the risks of each approach?

59. 12/11/201559 Selecting Software for the Organization Although managers need not become programming specialists, they should be able to use clear criteria in selecting application and system software for the organization. The most important criteria are as follows. Appropriateness Efficiency Compatibility Support