“Without a new approach, CIOs and their management teams can struggle to pay off life cycle technology debts left by failed or superseded digital technology initiatives,” said Stewart Buchanan, research director at Gartner. This is where the IT asset manager steps in. They can help CIOs select the most sustainable digital business initiatives, which will attract enough funding to cover their full contract or asset life cycle costs.
“Digital business implies an evolving financial relationship between an organisation and its end users, one that involves a new IT business model that will be fraught with risk until new governance processes mature to guarantee adequate life cycle funding,” said Buchanan, “So IT organisations cannot afford to be exposed to additional digital business costs that cannot be covered by traditional IT budgets, which are already under pressure.”
To help IT asset managers best manage these challenges, here is Gartner’s IT asset management engagement plan:
1. Establish an early role in digital business initiatives to ensure that all the costs of scaling successful projects can be covered
Acting in an advisory role on every technology procurement and risk management assessment will make CIOs more influential than running a few digital business initiatives at their own financial risk. They should aim to become digital risk mitigators, leading a team that everyone in the business wants to consult for help and advice on digital business initiatives.
IT asset managers can help business leaders learn from their mistakes, even if the business initiatives prove successful, which can prove even more dangerous than a failed one. After all, software licensing costs to process and stored data from the Internet of Things could grow exponentially. A dramatic upturn in unforeseen demand can prove even more expensive to satisfy at short notice. Supply costs rise, unless negotiated as part of the initial deal. Worst of all, there may not be enough money in the allocated budget to meet demand.
2. Manage life-cycles to ensure that digital business costs are funded beyond the initial investment
Despite being expected to promote digital technology by business users, experienced IT managers are selective because they have a more realistic understanding of the long-term costs, risks and benefits of technology.
IT asset managers can help their CIO select digital business initiatives that will attract enough funding to cover their full contract or asset life cycle costs. Financial sustainability does not depend on the initial return on a digital business initiative. It depends on the organisation’s willingness to continue spending for as long as contractual commitments or business dependencies persist.
3. Share financial risks with business sponsors and external providers to ensure they are committed to paying
CIOs need to develop new funding methods before they can hope to access the digital technology elements in every business budget. IT spending on digital technology is at risk because business users are often better negotiators than the IT service managers who depend on them for funding. Direct engagement with suppliers ensures that the business sponsors behind each digital technology initiative will cover their costs.
IT asset managers understand where long-term business costs are being created, costs that cannot be covered by short-term cost recovery. A frequent problem arises when business users want a monthly consumption price without a long-term commitment to pay for specialist assets, which would take the IT organisation or an external service provider many years to amortise. Another common example is where short-term services create data that must be retained forever, or at least for many years (sometimes indefinitely in the event of a litigation hold).
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