WHITE PAPER July 2011 Organizing IT Asset Management Today Malcolm Ryder Sr. Architect / Virtualization and Service Automation (VSA) David Messineo Sr. Architect / Service and Portfolio Management (SPM)
Table of Contents EXECUTIVE SUMMARY 3 SECTION 1: 4 Organizing assets Re-organizing management The new value chain SECTION 2: 6 Aligning assets to business Operations management Assets as resources SECTION 3: 10 Business impacts Value on demand Management transparency SECTION 4: 12 Conclusions SECTION 5: 13 References SECTION 6: 13 About the Authors 2
Executive Summary Challenge Seen as assets, IT hardware and software items become important to the business because they represent assurance that underlying systems for business processes will be available to the company on demand. The options for obtaining this on-demand availability have undergone dramatic evolution and expansion, but making sense of more options calls for increased understanding of their relative pros and cons. Without that understanding, it is both more likely that confusion about underlying systems will occur, and less likely that management of assets will have strong alignment to the actual performance needs of the business s processes. Opportunity The high level top-down understanding of assets that is now required will feature a familiar point of view that asset management has the primary goal of assuring support for business processes; but it will stress that the interest in assets is primarily in their being the materiel of environments that are required for processing. Where the business had previously asked for a direct look at the assets and then asked what could be done with them, now the business looks at the environments and asks what assets in the environment do I need to manage myself? IT Asset Management (ITAM) establishes the full traceability of investment in assets to the value of their utilization impacts, providing managers with the needed decision support. Benefits To reach high performance, business processes need an environment of configured resources having appropriate capacity and availability. ITAM standardizes the recognition of asset impacts in several related contexts that make the view of capacity and resource availability easier to obtain, the responsibility of maintaining the view easier to properly distribute, and the true types of its effectiveness more readily measurable. 3
Section 1: Organizing assets Re-organizing management The need to manage assets is based in the role that the business must actually play to assure business processing success. Most generally, the role is to be a consumer or a provider. A given company will identify and judiciously blend its roles across different environments that it needs for supporting business processes. Being judicious, it will first decide what the responsibilities are of the roles, and then determine if the related competencies for management are best accessed in-house or not. It has been determined in the past by industry analysts that the complexity of management itself can cause nearly two thirds of operational costs associated with assets; now, reducing management complexity is imperative for reaching the timely responsiveness to change that the business requires of IT. Adopting the responsibilities of the consumer and provider roles is driven, as always, by the objectives of the business. Today, the two major objectives of the business pose interesting challenges. On the one hand, agility, meaning rapidly responding effectively to changing business needs, is the top priority; but it is challenged by the desire to have the necessary related expertise always at hand. Thus, change confronts staffing. On the other hand, IT organizations have the second top priority of being able to afford the delivery of infrastructure and support for the business needs; but IT is usually being asked as well to cut costs. The new value chain To understand the strategy for resolving the two challenges of rapid change and affordable delivery, it is necessary to clarify terminology and management functions. Supply, Delivery and Provision are not synonyms but instead are key terms that distinguish criteria used to decide what roles to take on. Under Supply, IT and business executives need to come to agreement about where and when to source the needed environments. Under Delivery, competencies in implementation, accessibility, and sustainability (service levels) are essential. And under Provision, aligning demand to quality and demand to performance is a continual responsibility. These three general factors largely prefigure the likelihood that the company running the business can make asset management support the business well. And again, the key business challenges are agility and affordability. In a 2011 Global CIO Survey of 209 IT executives, InformationWeek Analytics cited the top issue among surveyed leaders as IT isn t implementing fast enough to meet business goals. This challenge of agility is especially complicated by the perennial but time-consuming objective of improving processes. 4
Meanwhile, the number two worry among those surveyed was that IT budgets are insufficient to meet goals, further complicated by the persistent mandate to cut costs. Said differently, process improvement is actually flexibility and speed of deployment, while cost is actually efficiency of resource utilization. To develop an effective stance against these paradoxical issues, Smart Enterprise Magazine advises the approach of abstracting applications and infrastructure from their current physical dependencies. Physical dependencies specifically point to the architectures that subscribe assets into systems making up processing environments. And for the business, abstraction specifically means that prescribed functions and outputs must be defined benefits that are experienced primarily through access to provided managed environments, not necessarily experienced through attachment to certain local facilities. The important formula for value is that process improvement now means agility, while business cost really means affordability. Said differently, process improvement is actually flexibility and speed of deployment, while cost is actually efficiency of resource utilization. The primary resource is environments. The current evolutionary phase of IT environments for business features a combination of two dominating forms of abstraction: the internet, and systems virtualization. In effect, each form has the same importance compared to previous phases: the ability to place and access functionality and outputs dynamically, from anywhere to almost anywhere else, on demand. Together they make up the foundation of cloud computing. Cloud computing Cloud computing is defined in Wikipedia as a paradigm of computing in which dynamically scalable and often virtualized resources are provided as a service over the Internet. It relates to multiple aspects of IT services including Infrastructureas-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS). IaaS leverages virtualization technologies and their automation capabilities to provide a highly scalable IT infrastructure (i.e. servers and networks) that allow the organization dynamic capacity and flexible pay-per-use pricing that help reduce capital expenses on infrastructure and outsource some of the IT services for a lower cost. IaaS relies on virtualization technologies to achieve the low cost of management and economy of scale through automation. Nimrod Vax, Product Management Security Management, CA Technologies 5
This environmental evolution moves the traditional cause of asset value to a different mode of management. That is, management must still cause value to grow, but in a different way. Traditionally, and logically, IT assets have value because they are used as resources; and in operations, effective utilization tracks linearly to the recognized value of the assets. Accordingly, the most conventional measurement of effective value is the asset s measurable impact on processing success, which is usually reflected as the return on the investment in the asset. Before now, businesses were engaged in direct management of the assets, trying to evaluate their cost versus their lifespans. But now the appropriate business perspective is to manage access to appropriate managed environments whether internal or external, and the assets in a selected environment may not even belong to the access managers. More specifically, in light of business, a company s most critical internal management is of access to environments, more than internal management of the environments themselves. From this high level point of view, Smart Enterprise further identifies two key goals for IT management: turn existing investments into private clouds; and coordinate new approaches of delivering business function and outputs, from external applications and services. Section 2: Aligning assets to business Operations management The clear message to IT is that managing assets now becomes even more explicitly about the logic behind deciding what to own, borrow, keep exclusively, or share. Each decision constrains IT in composing availability of the environments needed by the business processing. Under those constraints, it is imperative to arrange for that availability on the best possible terms. Those terms may need to be negotiated. As seen more and more frequently, business will then focus on availability of environments through services, instead of through systems. The practice of Asset Management will organize for supporting availability on demand, and this will actually rely on a chain of related operations that is familiar but is adapted to the current times. In this operational chain, there are four major links. On-Demand Supply focuses on a pool of computing resources, attending to scale, location, version and duration of capacity. The Deployment Lifecycle (delivery) will attend to managing the incorporation of resources into prescribed utilizations, committing and decommissioning them for defined services. Service level agreements drive the generation of infrastructure, and coordinating the infrastructures creates environments. 6
On Demand Provision focuses on access to environments, and on delivery or removal of environments, containing services for use by business processes. Performance Monitoring will attend to assessing the impacts of the environments on the processes, in three major areas: business adaptability, employee productivity, and revenue. For the company that is running the business, the major question is about what aspects of those operational links it should take on internally, either as the consumer or as the provider. In either stance, since the related operations will be internal, the decisions will dictate the need for certain internal competencies; and there may be cross-role or multi-role positions as well. These related competencies will form the practice of managing the assets. The following illustration shows the business landscape in which these operations are adopted and managed internally, In the illustration, there is a consumer side to both supply and demand, as well as a provider side to both supply and demand. Boxed items in the illustration are all areas subject to direct management. Figure A Identifying and leveraging required competencies. 7
Top to bottom in this model: Business activity with IT is seen simply, in terms of three general issues: what is used, how it is used, and who can use it. Consumers and providers share mainly the concern for how things are used, and enter into relationships with each other because of that. In terms of responsibilities, the three general issues map directly to conventional points of view in managing IT assets, points which must now apply to understanding how services derive from their environments. Competencies in managing property, resources, and systems respectively power corresponding forms of operational policy and metrics namely, the trio of entitlement, performance and environment which today is most commonly discussed as the business alignment of IT. But the main beneficiaries, which are business processes, don t see things that way. Instead, impacts are what the processes see. The relevance of the top down viewpoints depends on how they explain probable impacts on processes. Those explanations are what support proactive decisions to push things in certain directions. The resulting strategy is defined in terms of the portfolio and architecture that prescribes the intended role and status of assets as business process resources. The strategy-driven portfolio and architecture directly associates to the two basic ways that resources have meaning to a business process, namely value (what kind of difference they make) and quality (how consistently they make the expected difference). Those areas of impact are in fact the two faces of Risk to the business process that is, risk that the process will not be able to perform as necessary. Expressed as parameters of value and quality, the support requirements of a business process define an immediate context for evaluating assets. In that context, assets should be selected as resources composing the environments in which processes find suitable services. For the company running the business, a primary goal today is to create and sustain the opportunity for the business to change with the markets as needed and leverage them successfully. Understood as seen above, asset management must attend to how business orientated strategy should be articulated both in the consumer mode and in the provider mode of resourcing. Any given company or organization will need to take ownership of the different areas illustrated, as a way to operationalize its management effort. The business model of the company can distinguish and drive the key operational responsibilities to embrace. Maturity, affordability, or other decisive characteristics of the related competencies for operations may be better available in one organization than in another. 8
Assets are subject to the operations mainly through those competencies. In particular, under pressure for agility, governance through asset strategy aligns asset supply and demand. Assets as resources Creating resources from assets is both a consumer and provider concern, and both sides contribute to the strategic posture of processing environments. Today, the three emergent environments are all cloud formations but their distinction is in whether they are bounded operationally within the company s sites, external to the sites, or some of both. Respectively, those three environment formations would be private (internal), public (external/commercial), or hybrid. Assets are items whose business value is being explicitly managed in terms of legal, financial, and security ramifications in their possession for utilization in operations. To assure consistency in how the concept of assets is applied across these formations, the following definition is at work: Assets are items whose business value is being explicitly managed in terms of legal, financial, and security ramifications in their possession for utilization in operations. This definition, which includes a variety of conditions, helps to explain how it is that certain responsibilities for managing assets may be preferable to, or more appropriate for, some parties more than others. It also helps to explain how so many different types of items may be, conditionally, assets. Finally, it helps to describe how the value of an asset may suddenly change: simply re-assign an asset from one operational function to a different one. The resourcefulness of the asset is a close indicator of its potential value, and asset reassignments hinge more on agreements or permissions than on anything else, although the actual generated value depends on the impacts produced with their involvement. Asset resourcefulness, which we can more simply call versatility, is a contributor to operational flexibility, but that flexibility is not automatically beneficial; the flexibility must offer support appropriate to the requirements of the target business process. Unfortunately, these flexible or resourceful assets have typically had that nature due to being overengineered or being customizable. In turn, at any given point in time they have been less cost-efficient and more complex to maintain. Possessing operationally versatile assets has definitely been an important tactic to pursue. But a parallel and increasingly preferable tactic is to have flexibility in entitlements to different types of existing assets, or have flexibility in the delivery of appropriate new assets. All of those techniques of versatility and flexibility are common in asset management as practiced heretofore. Along with cascading assets through repurposing, flexibility has been a target of leasing, time-sharing, outsourcing, and other means. Virtualization and cloud computing have dramatically innovated those approaches. Now, with all approaches, their importance is in helping providers get their consumers to achieve relief from dependencies that work against agility and affordability in business processing. In all approaches, there must be management of the means, the motive, and the opportunities. Translated to asset management, the question is, by whom is robust engineering and diverse accessibility most likely to be needed, and most likely to be provided? 9
Section 3: Business impacts Value on demand A major example of the desired progress is virtualization of environments. The role of virtualization has emerged hugely, at the midway point between systems engineering and provisioning. Virtualization has been turning IT teams into service administrators, who use virtualization to address requests for functional capacity with fulfillments having notably great reductions in the construction, costs, and complexity of deployments. In all three reductions construction, cost and complexity the risk of delays are also reduced. Consequently, standards and approvals are more likely to be obtained and pre-applied in the delivery, smoothing the way for provision on demand. Configurations of involved assets, the acceptability of operational expense levels, and the compatibility of resources to target environments are all benefits of virtualization under the influence of standards and approvals. The practical representation of the needed standards is most often a service definition, which can be comprehensive enough to include the terms of entitlement, of performance and of component systems. A good service definition allows the service to be presented to a potential consumer as an offering having the combination of utility and warranty that the IT Infrastructure Library (ITIL) defines as customer value. As a best practice, these offerings are published in, and ordered through, service catalogs. When virtualization is involved, fulfillments of service orders can be more highly automated, which further increases the efficiency and consistency of provisioning. In short, managing assets to conform to service needs is, as always, one of the main objectives under the goal of satisfying the business. The target benefit is to accomplish service fulfillment effectively, on demand. Service definitions give a provider a specified guide to how assets should make a difference. The consumer invests in the service provision, and the provider invests in the assets. 10
Management transparency Organizations that take on the role of provider may be both within the company and external to it, dividing up responsibilities according to their relative abilities to meet the demand for dynamic sourcing, resourcing and service performance levels. These abilities will be constrained by such risk factors as sunk costs, non-compliance, change control, and competition. The constraints should be decisive in determining the organization s probability of success with different aspects of the provider role. Meanwhile, it is apparent that providers must manage suppliers in order to achieve control of those risk factors. Connecting supply management to service definitions creates a foundation for provisioning. Discovering how much supply can be covered by external parties frees up internal people and management time. Those internal gains can then be used on improving remaining delivery, including discovering and developing innovations that take the business beyond its current limits of operational competitiveness. In hybrid operations, internal and external delivery organizations will collaborate within the definition of services, pursuing greater asset availability and economies of scale. Also, organizations today may use and provide cloud and traditional services together. This is a situation in which an eventual migration of responsibilities for assets can be proposed, including an actual migration of ownership to whichever organization is the more capable or convenient for the business process. In accordance with how the management parties divide up roles and responsibilities, the distribution of assets will be a primary concern of the parties, because it preconditions whatever resourcefulness assets may have. As a result, the terms on which assets are intended to succeed as resources quickly extend from plans including contracts, to actuals including discovered current configurations and locations in service. Through automation of the operational processes conducted by the management roles, information about the status of assets is more continually available, and the lifecycle of an identified asset becomes a measurable trajectory to targeted impact within the business landscape. These trajectories can then be compared with each other and over time, in order to make better decisions about what assets now need to be on hand to use. 11
Section 4: Conclusions Agility is operational. Agility is about organizing operations to exploit flexibility in both deployment and scalability, so as to achieve appropriate operational integrity on time for the necessary business process. For agility, operations must adjust appropriately, on demand and within context; otherwise there is low value in the operations. But flexibility comes from having choices, and choices can lead to complexity that is counterproductive, by making management more difficult without adding enough net value or quality. This poor outcome is the showstopper that puts true agility out of reach of operations. The goal of Asset Management is now to bring assets under the objectives of flexible deployment and flexible scalability, without harming value or quality as needed in the target business process. From that perspective: Business will focus on availability of environments through services, instead of through systems. IT will compose or orchestrate availability of the environments needed by the business processing. In operations, asset management will organize supply and support delivery, for creating availability on demand. In doing this, asset management includes entitlements, resources and environments, making business-level decisions to address the business requirements. IT environments for business processing continue to evolve for greater agility. Prominently, virtualization and cloud computing are both essentially about deployment and scalability made available as environments on demand. Accordingly, asset management should immediately re-evaluate the status of assets as resources in these environments. Providing environments and/or their resources is a more appropriate activity for some organizations to do than for others. Key factors are: Applying management competencies Lowering opportunity costs Avoiding reinventing the wheel with proprietary support organizations Through examining and selecting roles as consumers or providers across traditional, virtual, and cloud environments, organizations identify the requirements that create the basis for, and scope of, their ownership and control of assets. Based on those perspectives and positions, IT Asset Management is pursued in a streamlined mode sustaining the connection of asset investments to the performance of the business. 12
Section 5: References Eliyahu Goldratt; The Goal, 1984 John Zachman, A Framework for Information Systems Architecture, IBM Systems Journal, 1987 Paul A. Strassman, Introduction to ROM Analysis: Linking Management Productivity and Information Technology, 1996 Dixit, A.; R. Pindyck, Investment Under Uncertainty. Princeton: Princeton University Press, 1994 Section 6: About the authors Malcolm Ryder is an ITSM practitioner and strategist with over 20 years of experience designing enterprise IT service management software solutions, and delivering solutions consultatively to individual companies and commercially to the US and UK marketplace. He is currently a Senior Architect at CA Technologies, where he establishes requirements and blueprints for integrated ITSM and ITAM implementations, working directly with customers. David Messineo is an ITSM Practitioner with more than 20 years of experience developing and deploying enterprise-level software solutions focused on IT management. He is currently a Senior Architect and Researcher at CA Technologies where he is responsible for implementing a holistic performance measurement framework across the CA Technologies solution portfolio. David holds both an ITIL Service Manager and escm Certification. 13
Connect with CA Technologies at ca.com Agility Made Possible: The CA Technologies Advantage CA Technologies (NASDAQ: CA) provides IT management solutions that help customers manage and secure complex IT environments to support agile business services. Organizations leverage CA Technologies software and SaaS solutions to accelerate innovation, transform infrastructure and secure data and identities, from the data center to the cloud. CA Technologies is committed to ensuring our customers achieve their desired outcomes and expected business value through the use of our technology. To learn more about our customer success programs, visit ca.com/customer-success. For more information about CA Technologies go to ca.com. ITIL is a Registered Trademark and a Registered Community Trademark of the Office of Government Commerce, and is registered in the U.S. Patent and Trademark Office. Copyright 2011 CA. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. This document is for your informational purposes only. CA assumes no responsibility for the accuracy or completeness of the information. To the extent permitted by applicable law, CA provides this document as is without warranty of any kind, including, without limitation, any implied warranties of merchantability, fitness for a particular purpose, or noninfringement. In no event will CA be liable for any loss or damage, direct or indirect, from the use of this document, including, without limitation, lost profits, business interruption, goodwill, or lost data, even if CA is expressly advised in advance of the possibility of such damages. acs1484_0711