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How to teach your CFO about ITAM

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The relationship between IT asset management, finance and procurement is the subject of the upcoming Gartner summit (10-11 October in London) and builds on recent research into the growing importance and inter-relation of these three topics.  So with this in mind here are some thoughts from the upcoming summit that will help inform your CFO.

Where ITAM and Finance intersect

Any CFO is initially going to be interested in any activity with a financial impact.  IT asset management specifically influences the following financial issues;

  • Business outcomes such as the RoI for IT and business projects
  • Managing risk, both generally and especially in the disposal / disposition environment
  • Managing costs through more efficient IT asset usage – cost optimisation
  • Providing granularity and information down to cost centre levels to allow departments to be challenged, controlled and exceptions determined
  • Understanding total asset value as part of the underlying value of the company, depreciation cycles and supporting business decision making

To summarise, it is best to present to the CFO that IT Asset Management feeds into the company’s financial lifecycle (Figure 1 below); at the planning stage for capital budgeting; by executing the capital expenditure policies; by supporting the management of operating expenditure through reporting; by informing the strategists who look to optimise expenditure.  ITAM influences many activities within the organisation, from upfront procurement strategy right through to retirement processes.

Figure 1 - The Gartner Asset Lifecycle within the Activity Lifecycle

IT Asset Management data should be of interest to the CFO

In my own personal experience, I had a solid relationship with the IT Finance team and that relationship extended right up to the CFO who became a sponsor for one project that I ran, primarily because they saw a financial benefit.  So what IT information can you provide that would gain the interest of your CFO?

  • IT asset management has a close affinity with Configuration Management and so supports business continuity.  The CFO will be interested in productivity of the workforce.  IT asset management influences reducing downtime and improving availability
  • Providing proof of purchase and entitlement documentation for software vendor audits
  • Supporting procurement by informing on what is already owned, what is in use and what is actually needed (which may be at odds with the project manager’s timescales!!)
  • Hardware disposal activities – ensuring corporate liability is reduced, legislation adhered to and that, if corporate strategy is to make a return on disposed assets, that value is reported.
  • Interpreting and acting on management information on asset utilisation, which users have more than one asset, mobile device policy and even the outcomes of IT asset amnesties (I have recovered many unused assets in this way)

ITAM can identify risk that should be on the CFO radar

A recent conversation I had with a former CEO suggested that from their perspective, IT was not a primary focus as it only represented 3% of his organisation’s spend (Gartner IT Key Metrics suggests this could rise to 15%).  The percentage of spend does not reflect proportionately the risk and impact value of ITAM which is certainly a top priority for the CFO.

Figure 2 - Gartner survey on software license audits

The IT Asset Manager will have data relating to supplier dependency and the influx of consumer technology (often they are one of the first teams in IT to be aware of spend that may have occurred outside of corporate governance / knowledge of IT).  Similarly the IT Asset Manager will be acutely aware of potential for disruption to operational business activities through supplier dependence and also the opportunities that those suppliers can bring to efficiency and greater productivity.  The IT Asset Manager is also likely to be responsible for IT Asset Disposal processes and certainly in the US there are numerous examples of substantial fines for legislative breaches.  Then of course there is software licence auditing (Figure 2 above).

Summary

The Gartner ITAM 2011 survey (Figure 3 below) found that more than 40% of respondents already actively use ITAM to support financial activities of their organisation, from budgeting and compliance audits through to sourcing options analysis and driving operational efficiency.  But ITAM has a further reach into finance as it is part of the financial lifecycle of the organisation and can minimise risk exposure, these should all help you to gain the support of your CFO.

The Gartner 2012 ITAM Summit is in London at the Westminster Park Plaza on the 10th and 11th October.

Figure 3 - The use of ITAM in supporting finance initiatives

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Martin Chalkley

Martin is a specialist in optimising IT costs and IT Sourcing Strategy.  Martin has driven collaborative relationships with IT and Telco Vendors and is co-author of the IACCM course on Supplier Relationship Management.

Martin is the owner at Consultandomi Ltd, SRM Programme Manager at the IACCM and an Associate Consultant at Gartner.

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1 Response to " How to teach your CFO about ITAM "

  1. ASPAdvisory says:

    Love this topic, Martin. Very insightful.

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