When companies invest in IT asset management tools, the primary reasons are to keep systems available and service levels high, according to industry sources. But another concern is beginning to surface in asset management discussions."In the age of Sarbanes-Oxley (SOX), one of the major issues is the auditability of your assets, and that includes IT assets," says Craig Macdonald, vice president of product marketing at Peregrine Systems Inc., a San Diego-based IT asset management and IT service management company.
According to recent research, Peregrine found 70% of companies across industries are in the "chaos" stage of IT asset management, meaning they have no solid understanding of what they have or where it is located.
In addition, Macdonald notes, SOX requires companies to be in compliance with all their contractual agreements. "And a lot of companies struggle with making sure they're in compliance with their software agreements," he says.
Fireman's Fund Insurance Co. has thousands of agreements with outside vendors, including those with software companies-and most of those agreements were negotiated before the company implemented a contract management system last year.
"We had multiple contracts with the same external providers," says Robert Neuhard, director of contracts at the Novato, Calif.-based insurance company. "So we had no way to get our hands around them. And, even if we could get our hands around them, we needed a way to manage all the data we were going to collect."
Now, using a contract management system from Redwood City, Calif.-based Nextance, Fireman's Fund easily tracks its licenses and agreements with suppliers, according to Neuhard.
"Software has so many unique restrictions about where you can move it or if you're allowed to use it in a disaster recovery environment, a production environment or a testing environment," he says. "We're tracking those nuances now."
When Peregrine customers use software usage tools to find out if they are in compliance with contracts, they often find they're not, says Macdonald. "But more often than that, they discover that they have massively over-purchased their software licenses," he says.
In fact, this is a common problem. When companies with no IT asset management program in place begin using tools and processes, they typically save up to 30% in management costs per asset in the first year, says Patricia Adams, principal analyst, at Stamford, Conn.-based Gartner Inc.
The savings decline over the next four years to 10% to 15%, she says. But there's no question that IT asset management can reduce IT costs.
"If your company purchased 1,000 licenses of Visio, you want to make sure those 1,000 licenses are installed and being used," she says. "You may only need 400 licenses. Asset management helps companies gain visibility into how their hardware and software are being used."
