January 26, 1998 A Close Ey e On IT Dollars Tracking hardware and software assets can be expensive; but not tracking them can cost you even more By Caryn Gillooly oftware that tracks costs associated with hardware and software is expensive-but not using it can cost a lot more. That's what KPMG Peat Marwick LLP discovered last year. The consulting firm had no corporatewide asset-management system in place. As a result, it was paying property taxes on PCs it didn't even own. "Things were frequently lost or stolen, but there was no way to get them off the books," says Dean Parker, director of administration for Peat Marwick's mid-Atlantic region. Without financial asset-tracking, the company also paid to repair mac hines still under warranty and upgrade old equipment when it would have been more cost-effective to replace it, Parker says. Like many companies, Peat Marwick conducted an annual inventory of its IT assets. But because that inventory wasn't connected to the company's financial applications, its tax bill didn't reflect stolen or lost equipment, and repairs and upgrades weren't carefully monitored. Now Peat Marwick is using NetBalance's IT Ledger asset-tracking software for a more complete analysis of costs. Such software goes well beyond simple physical inventories. Several packages now available track all costs associated with an IT asset, including licensing fees, maintenance costs, depreciation, even disposal costs. With this information, users can track their spending, tie IT asset-management into accounting and other financial applications, and make accurate budget projections. By tracking the costs of IT assets throughout their life cycles, companies can also get a quicker return on investment a nd reduce total cost of ownership. "We used to do just asset tracking," says John Cease, an account executive in the IT group at Central & South West Services in Dallas. "We knew where something was and who was using it. But our philosophy has changed. Now we're looking to save money, and to do that, we need to know the cost of ownership of each asset from cradle to grave." So Cease's company is installing MainControl's ValueWise software to track the assets associated with its more than 8,000 workstations and nearly 300 servers, Cease says. "Now we'll know what all our costs are, and that will help us save money," he says. Gas Pains Baltimore Gas & Electric went through a similar transition. Before the utility put in asset-management software, it used tags and bar coding to track more than 5,000 PCs, and auto-discovery tools to track other hardware and software, says Bill Smith, director of IT planning and competency management. But the process was flawed. "The auto-discovery inf ormation didn't always relate to our other records," Smith admits. "We needed to be able to capture information, then make associations between things. We needed to know where the equipment was and keep an ongoing record over time as activity occurred relating to that equipment." Baltimore Gas & Electric combined products from NetBalance and Janus Technologies. Janus' Argis is a combination repository and overall operational tool that tracks all assets, their costs, and associated contracts. NetBalance's IT Ledger provides the analysis. "This lets us look at all the costs associated with a particular piece or category of equipment," Smith says. "Or we can break down our costs from the perspective of installation, maintenance, or disposal. We use it to analyze our total cost of ownership." Such IT investment management is becoming more of a necessity, says Alison Palmer, an analyst at the Hurwitz Group, a consulting firm in Newton, Mass. "Hardware and software are only 35% of IT costs," she says. "The rest is maintenance. Customers need to track assets from the day they're requisitioned to the day they're disposed of." These management products don't come cheap, however. NetBalance's IT Ledger, for example, starts at $40,000 for a license capable of monitoring up to 1,000 desktops. IT Ledger server components require Windows NT Server. The repository can reside in any Oracle or SQL Server database. Capabilities vary widely among products that track life-cycle costs of IT assets. For example, Janus' Argis, like Asset Software International's AssetPro and Apsylog's Asset Manager, is a repository that stores asset-management information other applications collect. Argis helps customers manage relationships between assets, tracking and managing contracts and costs over the life cycle of an asset, and it can be integrated with traditional inventory and asset-management products from Microsoft and Tally Systems so that the information they collect is included in the repository. Janus agreed last month to license and integrate Tangram Enterprise Solutions' Asset Insight asset-tracking product. Meanwhile, Amdahl's A+Qualiparc and MainControl's ValueWise combine asset-management software with a company's enterprise-management products. The goal: to offer an inclusive package that ties into other applications such as help desks. And NetBalance's IT Ledger analyzes information collected from other products to give customers a financial picture of their IT investments. "We can determine all kinds of costs," says Raj Ananthanpillai, president and CEO of NetBalance, in Gaithersburg, Md. "We take information from the general-ledger or fixed-asset systems, add that to the traditional inventory systems, then supplement it with ongoing cost data. This gives you true life-cycle costs," he says. "We can determine downtime. We can even determine opportunity losses. If 1-800-FLOWERS can't take orders for two hours, that's an opportunity cost, and we can determine that." Problem-Solver Peat Marwick us ed IT Ledger to solve its asset-management problems. After years of trying to implement a corporatewide asset-management scheme, the lack of control got unbearable, Parker says. "We didn't have any control over all the things coming in the front door and going out the back," Parker adds. "It was frustrating every year when we did our manual inventory." The problems were distinctly financial, he adds, so the company didn't consider asset-management packages that simply track assets or feed information to the corporate help desk. Working at the local level, Peat Marwick's Washington offices tested IT Ledger, and now has about 2,200 users on IT Ledger. Parker says he plans to add the mid-Atlantic region and hopes to use that information as the basis for a corporate standard. Though Parker can't quantify the savings, he says, "Just the fact that we're not paying personal property tax on things we don't own is a great start." Back to News in Review Send Us Your Feedback Top of the Page

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