The Asset Test

The statistics are not reassuring. According to software vendor ASI, the average cost of a corporate PC over its lifecycle is in excess of #26,000, 20 per cent of which is the purchase price. The rest is taken up by the hidden costs of managing the PC, including upgrades, licensing, helpdesk and training.

Market research firm Gartner Group has found that the cost of software alone could balloon by 25 per cent per PC over three years, with seven per cent of such software unused and forgotten.

Over-licensing alone can account for as much as 40 per cent of a firm's annual IT budget.

Gartner claims that the five-year cost of owning a corporate PC running Windows 95 is about #21,000, against #25,500 for a box running Windows 3.1. But a recent survey by AST reveals that 40 per cent of big businesses have not migrated to Windows 95 and the majority of those which have run it on fewer than one in five machines. Reasons given by organisations were the cost in man-hours of upgrading PCs and the fact that many machines were simply incapable of running the software.

Gartner states this is because organisations lack the foresight to upgrade their machines. They'd need at least a 486 processor (preferably Pentium), 12Mb to 16Mb of memory and 500Mb of hard disk to run Windows 95.

According to the IT industry, asset management is a skill that must be acquired by any organisation aiming to survive and prosper in an increasingly competitive market. The dawning of the millennium alone poses huge problems: if organisations want to tackle the 2000 issue successfully they cannot hope to do so without knowing the exact quantity and quality of their hardware and software.

But IT consultants agree that as little as 12 months ago, the vast majority of organisations in the UK were keeping their heads buried in the sand when it came to recognising the need for tracking the cost of their IT assets. The unexpected proliferation of PCs, combined with lax corporate policies allowing departments to make their own IT purchases without consulting other departments, and a lack of over-all corporate control over IT expenditure and assets, had turned asset management into a nightmare scenario few corporations are prepared to venture into.

Not even generally quoted projections of savings of #1 million per 1,000 PCs for companies that tackled the hidden and excessive cost of their IT through asset management were able to drive home the message.

A year on, observers say that thanks to the incessant publicity given to the issue by the Gartner Group and software houses such as ASI, F Print and Prometric, the business world has finally woken up to the potentially dire commercial consequences of ignoring asset management.

With businesses beginning to address the problem before it is too late, observers agree the issue of asset management is a potential goldmine for those prepared to meet the challenge. But vendors and analysts agree that the resellers taking advantage of this lucrative emerging market are few and far between.

John Hargreaves, a director of F Print, says the first crucial hurdle of asset management has been overcome. 'The user community has become acutely aware of the cost of IT ownership and wants to address it.'

Bobbie Ttooulis, marketing manager at Prometrics, agrees. 'The demand for action from companies is now there. But if you had talked about the cost of ownership a year ago, organisations wouldn't even have had it on their agenda. Now it is one of the top items, along with the Internet, that companies are trying to get to grips with.'

Organisations grappling with the problem of asset management are starting to turn to outside sources of help. But many observers argue that the help does not begin and finish with a neatly packaged selection of software tools to enable a client to count the number of PCs sitting on employees' desks. The secret of successful asset management lies as much in people management and consultancy skills as in the right software.

Resellers that recognise this and are willing to add value to their software services will be the ones to succeed, according to Clive Longbottom, European programme director of workgroup computing strategies at Meta Group. 'Resellers must tell companies that want to tackle asset management that it's a big step to put it in place so they can't do it themselves,' he says. 'They need to say that the reseller will put all the tools and agents in place and provide a server, which only needs to be a desktop PC running something like NT.'

Magnus Hall, MD of ASI Europe, says organisations have to be made aware of the vast savings that can be made. He says: 'For the implementation of a simple asset management system we're looking at between #100,000 and #200,000. The Gartner Group says that with such a system a company can save up to 28 per cent of its annual IT budget. ASI thinks the figure is at least 15 per cent. If you take an organisation like Barclays, for example, with an annual IT budget of #1.3 billion, that's a lot of savings.'

Hall believes the market will be so big that any reseller or Var not including comprehensive asset management in its corporate services package will get left behind.

The reseller channel is helped by the arrival of software tools that enable any independent operator to undertake asset management for any organisation. Longbottom says that 12 months ago this would not have been possible.

'A year ago the tools were highly proprietary; if you used a particular brand of tool it only worked with the same brand of PC in an attempt to tie the user in with a single vendor,' says Longbottom. 'Now that has changed with firms like Prometrics and ASI because they are client-based and the choice of back-end tool is open. This makes life easier for the independent reseller to go out and make money on the back of it.'

Having the tools to do the job is obviously important, but it is only half the story. Technology accounts for 40 per cent of successful asset management, according to Hargreaves. The rest is down to people management, a skill that Vars must be able to offer clients.

'If a reseller sits down with a company and goes through what it could change for them it would be the start of a profitable long-term relationship for both sides, says Hargreaves. 'The resellers that have so far been successful in auditing are those that have realised it is something they can use to help an organisation reduce its spending in the long run.'

Damian Fessey, audit director at Axiom, a Nottingham-based audit solution specialist, agrees. 'You won't get the savings by just whipping a piece of software out of a box and saying this is asset management.'

But Ttooulis argues that by using the right software an organisation will be able to tackle the total cost of ownership of its desktops.

She says that it is useless to reduce a company's costs unless you can simultaneously increase the productivity of the PC and its user.

In order to do this, an organisation needs a software solution that enables it to assess not only how its technology and its users are performing, but also to suggest remedial action where faults are found.

'You need a tool that gathers information on a desktop basis in hard metrics and looks at how well the PC and its users are performing,' says Ttooulis. It has to pinpoint the problem and quantify the impact on the organisation in terms of lost productivity, which is the other part of the picture that people are so far missing.'

Whether the focus should be on the tools or on the consultancy part of the package, observers agreed that so far the UK reseller channel has, with a few exceptions, failed to grasp a golden opportunity.

Anne Cunningham, research director at Gartner Group, says the European channel is approximately 18 months behind Vars in the US, which are just starting to climb aboard the bandwagon. In the rest of Europe, the majority of US-based companies acknowledge the impending crisis and are taking practical steps to avert it.

Organisations are attempting to ascertain how much hardware they own and what software they have amassed for a various reasons. These include the need to upgrade technology, to achieve licence compliance, to manage volume purchase agreements with publishing houses or simply to take stock of assets and improve their financial housekeeping.

Resellers are riding on the back of this. Cunningham says: 'They are starting to offer asset management services including keeping track of hardware, managing volume purchase agreements for the client and articulating to the client what they can offer to enable them to manage their PC portfolio better, but it's still embryonic.'

According to Hall, the channel is not ignoring the issue. 'I would say that 100 per cent of them would contend that they have at least recognised the importance of the market, if only because they don't want to look stupid.'

Hargreaves agrees but says that the real problem lies in the fact that most resellers have no strategy in place to tackle the issue. He believes there needs to be a fundamental shift in channel philosophy so that resellers realise they have to offer more than just a set of tools.

'Many view asset management as a cost of sale rather than a potential profit-making value-add opportunity, which has created a flaw-line in a lot of resellers' approach to this. A lot of resellers and broad-based supply and service companies think they are obliged to start off with an audit for a customer, but only under a strict budget because that is what they tendered for.'

Fessey agrees the channel is not being flexible or imaginative enough.

'Vars are slow to catch on that they already have existing relationships with their clients so they know the IT infrastructure and where all the inefficiencies occur.

'They could lift the whole area of asset management off the client's shoulders on a commercial basis that will help both sides. But they're not doing it.'

Asset management offers an ideal opportunity for outsourcing. An organisation can off-load the responsibility to an independent reseller which has no vested interest in keeping costs high within the company. Opinions differ as to whether the bigger or the small Vars are ideally suited to the task.

Both Fessey and Cunningham view the larger operations as being in a strong position because they are more likely to be multiskilled and used to dealing with many-layered big corporations.

But Hargreaves would argue it is also an ideal opportunity for smaller Vars that could specialise in the required skills. He points out that there are already signs of larger resellers outsourcing asset management contracts to their smaller colleagues.

But time is short and most agree that the future looks bleak for those in the channel which choose not to adapt. Fessey says: 'Vars have to get their heads round the solutions part of the package. With the demise of the shrink-wrapped packaged software market, only those that can do this will survive.'

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