Since August 2015, the news headlines have been dominated by the U.S. elections, refugee crisis, dropping oil prices, fluctuating government lending rates in Japan and US, and coverage of the global slowdown that is crossing geographies and industries. China has been leading the doom-and-gloom financial forecasts based on economic outlooks for 2016. The International Monetary Fund has revised down China’s forecasted growth to 6.3 percent, compared to previous years of unprecedented growth. A barrel of oil has declined from a high of over $100 to less than $35 per barrel, led by increased shale exploration in Canada and US. All of these global economic pressures are impacting certain industries and geographies more than others.
Despite the global pressures, Gartner forecasted in December 2015 that IT spend will increase .6 percent, with software and IT services leading the investment in 2016. Contrast this with a February 10, 2016 Wall Street Journal interview with Gartner Chief of Research where global IT spend in 2015 contracted by $217 billion. Regardless, of which side of the IT spend or save issue you are on, it is fair to say that there is a lot of disruption happening. Not every company is going to enjoy the thrill of an increased budget and will, in fact, experience pressures that will force them to become more efficient with their IT spend and assets. Efficiency goes beyond just purchasing new assets, but needs to take into account asset disposal, discontinuing software maintenance and renegotiating enterprise software license agreements. The challenge is to build agility into the IT asset management program that enables flexibility to dial up or dial down demand in response to business change.
If we look at this from an IT lifecycle approach, that covers the five main areas of the lifecycle — requisitioning, receiving, deployment and maintenance, retirement, and disposal, an organization needs to build ITAM agility into the requisitioning and disposal process. Let’s look at the impact on hardware. Client and server hardware has a distinct usable life, usually 2 to 5 years, depending upon device type, before performance and existing workloads are impacted. That hardware has a warranty associated with it and it is depreciating daily. When there is a large reduction in force, this results in a huge number of laptops, workstations and servers that are no longer needed. An organization might be tempted to hold on to those assets because they are expecting the market forces that led to the RIF to change within the next twelve months. This strategy needs to take into consideration where the asset is in its usable life. If the asset only has one year remaining, it should immediately be sold and any value that is available be recovered. Slightly used hardware, with only a year of use, needs to be evaluated whether or not it makes sense to fully retire it.
This evaluation needs to include how rapidly chip manufacturers are making enhancements. With increased power and cooling efficiencies coming out annually, an organization that is based in an area with high electricity costs, might decide that they should divest itself of that hardware.
To build agility into their ITAM strategy that prepares for the potential recovery by having contracts in place with vendors that can fulfill orders quickly. Alternately, they might consider leasing hardware to scale up demand and support resources.
There are other tips and tricks that organizations should consider when it comes to creating efficiencies that yield not only cost savings, but also plans for the future. Join LANDESK IT asset management evangelist, Patricia Adams, for a webinar that covers asset lifecycle planning for tough economic times. Using examples from the oil and gas industry, learn how to find savings in the IT budget, strategize for future procurement agility, and put IT asset lifecycle processes in place that will adapt to changing business environments. Register here