IT Cost Optimization Strategy with ITAM 2.0
With socio-political changes, global pandemics, and increasing natural disasters, CIOs need to find innovative ways to manage and control costs, all while supporting organizational goals for the ongoing digital transformation in a sustainable way. Walking this tightrope requires striking a balance between short-term IT cost-cutting and long-term IT cost optimization. The answer that will tip the scales in your favor lies in using automated IT asset management that funds itself through a holistic approach.
Why IT cost reduction is not the way
To strike this balance between short-term IT cost reduction and long-term IT cost optimization, it is important to spotlight the difference. With cost reduction, you cut a company’s expenses in order to maximize profit and produce short-term savings. With cost optimization, you reduce costs while also optimizing your spending and business value.
Many companies still focus too much on cost reduction. Yet, in a 2021 report, Gartner states that only 43% of these companies achieve their cost reduction targets in the first year and only 11% manage to sustain that for the following three years. This is because short-term cost initiatives, such as hiring freezes or cutting training programs, do not pay off in the long run unless they are part of a broader strategy that aims to support a climate of continuous smart spending. And this is no different for IT. If you want to optimize your IT expenditures, you need to invest in a long-term IT strategy, even during disruptive times.
CIOs Must Balance Cost and Agility
Organizations that continue to invest strategically in IT during tough times and forge a strong CIO and CEO relationship are more likely to come out on top. Often, the potential benefit of long-term cost optimization justifies additional short-term investments in IT. Still, in communicating their cost optimization strategy effectively to C-suite executives, CIOs must demonstrate that a proactive approach will not jeopardize business continuity or innovation.
However, as the number of IT assets continues to explode, CIOs will need to find a balance between containing costs and providing the business with enough agility to innovate and compete. While agility will be mission-critical, it will lead to chaos if IT loses sight of the assets they have and the assets they are adding. Maintaining an overview of your IT Estate during a fast-tracked digital transformation process is key to optimizing costs. This is where ITAM comes in.
ITAM: All Assets, Any Use Case
The ITAM Forum suggests the cost-cutting benefits of ITAM must become a de facto business practice and discipline and can be leveraged in recession planning to help save jobs and maintain growth, reducing global IT spend by 5%, which equates to over $67.7 billion of potential savings from ITAM alone. A focus on minimizing asset-related investments and optimizing cloud spending can help alleviate immediate financial pressures. As a practical example, ensuring billed resources such as software licenses or cloud servers are being used and shutting them down if they are not used can eliminate unnecessary overhead, with no impact on business continuity.
But before you can eliminate waste and optimize your current infrastructure, you need to know what is there. Without visibility into the entire IT estate, you will not know how to make cost-cutting optimizations without disturbing business continuity. To put it simply: You need to know what you have, in order to manage it in a cost-effective way.
And while ITAM is often associated with a specific scenario such as license compliance, it is actually the foundation for a broad range of activities, including cloud migration, ITSM, cybersecurity, and more. In all of these use cases, knowing what software and hardware resources comprise the IT infrastructure is the essential starting point. Without that data, taking action around any IT use case is impossible.
The typical way of collecting data is per use case: IT needs to identify potential vulnerabilities to strengthen its cybersecurity posture, or there is an organization-wide software update that needs to be rolled out to all laptops, for example. Each time, a new ad-hoc inventory is collected, requiring dedicated resources. Although much of the data may overlap, not one of these scenario-specific inventories is complete, and when a new IT scenario comes up, the process begins again. Creating a usable IT inventory for every new scenario consumes a tremendous amount of time and effort on the part of IT, hurting the ROI of the specific project in case, or makes focusing on innovation or other revenue-generating activities difficult.
Would it not make more sense to begin with a single system of record that keeps an accurate, up-to-date inventory of all software and hardware assets that comprise the entire IT estate? In this model, all of the necessary data for any use case is available, accurate, and readily accessible. There is no duplication or rework needed, so IT can be much more efficient and cost-effective in responding to the needs of the business.
Take on ITAM Holistically
With a complete system of record for all of your IT assets — software, hardware, mobile devices, virtual machines, servers, and more — you gain visibility into your entire IT estate and have accurate, complete data to support multiple business scenarios. This holistic approach to ITAM leads to substantial cost savings while enabling IT teams to act more quickly and efficiently since the necessary data is already there. Learn more about our ITAM 2.0 Strategy.
With a dedicated ITAM system such as Lansweeper, organizations can leverage this holistic approach to create and maintain an always-accurate IT inventory, reducing costs, and empowering decision-makers to make informed tactical and strategic decisions for their organizations.
«Our approach is to build and maintain a single source of truth on the IT asset inventory. It is the baseline for recurring processes, projects of all kinds, and rapid action when needed. Creating a new inventory every time a new IT-specific use case is introduced is an enormous waste of time and resources.»
Maarten Saeys, CPO at Lansweeper
Make Your ITAM Self-funding
The reason why you should no longer talk about ITAM but should be talking about ITAM 2.0 becomes glaringly obvious when you look at how ITAM is maturing with organizations today. In a 2021 report, Deloitte indicated a severe lack of organizational progress in ITAM. 84% of organizations believe they do not have an effective ITAM in place. And 6 out of 10 organizations are yet to make their ITAM a self-funding program. The main hurdle? Ironically, 90% state that it is the rapidly changing business, regulatory, and technology environment that slows down their ITAM maturity. In other words: the disruption ITAM is meant to alleviate.
ITAM: The Foundation for Efficient IT Management
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Get the WhitepaperHow does one explain that? Well, the same report shows that this is due to traditional approaches to ITAM. More than often, ITAM is still used for the aforementioned short-term goal of cost reduction. Yet, if anything, the covid pandemic has shown that a holistic approach is the way to go. Your ITAM solution needs to tackle multiple disruptions at once and needs to be part of a long-term strategy where it aims to bring value across the entire organization. In other words, cost optimization is the top driver for ITAM, not cost reduction.
So, how do you make your ITAM self-funding? The first step would be to estimate the ROI of an ITAM solution. If your program’s run cost is more than the cost reductions it produces, you need to either change your strategy or choose a different supplier. You can determine the program’s effectiveness over time if you know what the annual ROI is. Our ROI tool calculates your annual ROI automatically in 4 steps based on several parameters of your IT estate. In just a few seconds, you will know if Lansweeper is the ITAM solution worth investing in.
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