SMEs: Optimising IT assets

A full lifecycle management approach to hardware can help small businesses extract the greatest value from their IT purchases.

Most organisations are sitting on IT equipment that is not supporting the business optimally, yet the received wisdom is to sweat the assets to gain as much perceived lifetime value from them as possible.

This is particularly pertinent for small and medium-sized enterprises (SMEs), where the need to do more with less is an ongoing challenge as they struggle to remain competitive, and in some cases even survive, during the economic downturn.

However, IT assets have inherent value which can change significantly through each asset’s lifecycle – whether through its hard resale value or its scrap value. By applying a full IT lifecycle management (ITLM) approach to the complete IT platform, a business-optimised platform can be created – one where business value overrides the embedded concept of sweating assets.

Why ITLM is relevant to modern businesses

During the good times, the positive cash flows and reasonable margins of many businesses, large and small, can hide a multitude of economic sins. For example, strong margins can mask the fact that those margins could be so much better if the business processes were more efficient – but business managers are not that worried if the profit and loss sheets look okay.

The problem is magnified when times aren’t so good – margins get squeezed and business becomes more inwardly focused on what were previously perceived as minor problems turning into major issues. Projects get pushed back, expenditure is halted, and departments are told to do more with less and to sweat their existing assets as much as they can.

For IT departments, this can become a major issue. Organic growth with the need to maintain stability, along with the economic downturn, has meant that many organisations now have ageing equipment in place that is no longer optimally supporting the business.

However, many businesses are becoming more IT savvy and are aware that utilisation rates of hardware in the datacentre are not where they need to be. Therefore, they feel a duty to push back hard on IT – stating that with excess resources available in servers, storage and networking equipment, they do not see why there should be any further investment in new equipment.

IT managers, however, know that datacentres have to change. New technical architectures are coming through that will require major changes to the hardware underpinning existing systems

Virtualisation and the use of cloud services can meet future business requirements, but will not provide the overall benefits expected if they are to be implemented only on existing equipment.

A dichotomy arises – how can the IT department provide a platform that keeps up to date with the requirements of a changing technology landscape, yet also ensure that it meets the demands of the business by ensuring that the best value for money solution is chosen?

This is where IT lifecycle management (ITLM) comes into play.

Actively managing an IT platform enables an organisation to be flexibly and effectively supported by continuous replacement of IT assets as the balance between their business value and intrinsic residual value is managed to ensure that an optimum platform is in place at all times.

Organisations that try to sweat IT assets by extending their useful life will find that the business support provided by ageing equipment falls away rapidly to the point where IT becomes a constraint to the business. In contrast, those that attempt to always be at the leading edge by replacing equipment too often will find that IT costs will be too high for the business value provided. Finding the sweet spot is what ITLM is all about.

The idea behind ITLM is that all assets are looked at in the round. The costs of acquisition, operation, maintenance and disposal are all measured in conjunction with the cost to the business of a sub-optimal asset being in place. The value of the asset over its life is also monitored, and the best time to replace an item can be identified and managed to ensure that the business is optimally supported on an ever-changing platform that is maintained for all the right reasons – ensuring that IT is there to support the business, to reflect and respond to the changing market conditions, and to provide the flexibility that an organisation demands.

The ITLM journey

Few organisations will be at the same point in their ITLM journey. To help them understand where they are on this journey, Quocirca has created an eight-step ITLM process that matches with a six-level maturity model.

The start of any ITLM assessment has to be with a full asset discovery. Once a full assessment of the IT estate has been carried out, there is a need for the business and IT to be advised on what their options are. In many cases, this will not be a single leap from where they are now to a “Nirvana” state, but a set of incremental improvements set against the firm’s own risk profile and spend capabilities.

Once the business has agreed a direction forward, the new equipment needs to be procured. For an organisation trying to carry out ITLM for itself, this will mean dealing with existing suppliers under existing contracts. Where an external ITLM management company is involved, they may have greater scale in their procurement deals, being able to source equipment at lower cost, which can be passed on to their customers. Also, an external ITLM management company should have greater visibility of what is happening in the market, so should be able to advise whether it is better to wait for a new technology or product that is just around the corner, and also where a single supplier or a multi-supplier approach makes sense.

The value of old equipment

Even old IT equipment has some level of value – whether it is as working equipment, as spares, or even in the precious and rare metals held within the equipment. The key is to be able to optimise the value that can be gained from these assets while managing the security and performance of the total IT platform.

With many organisations now having more than 80% of their data in electronic format, the value of that data to the organisation cannot be underestimated. The intellectual property of the organisation is tied up in some of this data – yet not all data needs to be managed at the highest level of security. Being able to match different data types with an agreed corporate risk profile enables IT asset values to be optimised by managing how storage devices are dealt with at the point of decommissioning and disposal.

When an organisation wants to ensure that any item of equipment is disposed of securely, specific skills are needed. For example, it may be possible to use special storage media algorithms to erase data to a point where it is not economic for anyone to recover it. However, it has to be borne in mind that there is no such thing as completely secure erasure – with enough time and money, data can still be recovered from a disk using forensic techniques.

For certain types of data, however, fully secure erasure may not be needed, but just enough to meet the risk profile of the business for the particular type of data involved. In this case, the storage media can be reused, adding to the overall value of the equipment under consideration.

Where the data type is regarded as requiring complete secure disposal, then the physical means of doing so has to be looked at. Again, while hitting a magnetic disk with a hammer will break the platters, storage forensics have now reached the level where data can be recovered even from these. A good ITLM management company should offer a full range of disposal options, particularly for storage devices, or for small devices with built-in storage.

Outsourcing ITLM

Although IT lifecycle management can be carried out by an organisation itself, Quocirca recommends using external experts as trusted partners.

Good ITLM partners can source better deals on hardware and software licensing as they negotiate on behalf of multiple clients, they fully understand all the legal aspects around asset disposal (such as the UK’s WEEE and COSHH legislation), and will have the wherewithal to ensure that data assets are dealt with in line with the organisation’s corporate risk profile.

Such third parties will also have existing agreements for extracting the utmost value from old assets, through recycling, stripping for spares, or by selling on the residue of secure disposal (asset destruction) for the recovery of precious and rare metals.

Clive Longbotton is a director at analyst Quocirca

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