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As budgets tighten, pressures increase to improve bottom lines, and organizations try to leverage complex systems and tools to improve business operations, technology remains a necessary ongoing expense. At the same time, the regulatory environment across industries has become more stringent. Requirements for more transparent and efficient financial reporting processes demand that CIOs better manage enterprise risks and improve performance. Attend this session and learn techniques for responding to the mandate to do more with less in today’s volatile economic environment of slow growth and increasingly stubborn profits. We’ll show you how IT financial management is naturally synergistic with the IT asset management (ITAM) discipline, and how a mature ITAM program can give IT leaders the correct asset and cost data they need to correctly budget, account for, and allocate costs for the business.
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0 ©2010 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice
Bridging the gap between IT and the business through enhanced IT financial understanding and transparency
Michael Adams Director, IT Advisory, KPMG LLP
Marcus MurphSenior Manager, IT Advisory, KPMG LLP
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
Introduction and Summary
As IT leaders address the challenges of balancing financial management with meeting the growing
needs of its customers, they need to have a framework available that allows them to quantify the
services they provide and ensure that the investments made in providing those services are optimized
for value:
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Changes in the Business
Environment
New market/regional
expansion
Mergers, acquisitions,
divestitures
Information security
Increased Business
Expectations
Better performance
Greater availability
Increased service quality
New Business Initiatives
Expansion of current
services
Shorter time to market
Increased Business
Expectations
Budget reductions
Need to reduce operating
costs
There Is No Choice – Managing Infrastructure Investment Is an Imperative
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
The Benefits of ITFM
IT Financial Management (ITFM) requires leaders to embrace multiple disciplines that are vital to
maximizing the return on investment in IT resources. This ensures that business requirements are
satisfied at the lowest possible cost, or in other words, to deliver IT services as efficiently as possible.
2
What are the goals/benefits of ITFM?
• Effective use of budget dollars and cost
optimization
• Financial visibility for all that IT offers throughout
the lifecycle of an asset
• Making the right project and service choices
• Informing the business about the cost of IT
services
• Ability to chargeback or showback IT services
• Control over ongoing IT investments
• Credibility for IT as a strategic business partner
and contributor
Mitigate Risk
Optimize the
IT Investment
Promote Operational
Efficiency and Agility
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
The ITIL View of ITFM
In ITIL v3, ITFM is a function described in the
strategy phase of the IT service lifecycle. Its aim
is “to provide the business and IT with the
quantification, in financial terms, of the value of IT
services, the value of the assets underlying the
provision of those services and the qualification
of operational forecasting”.
ITFM Goals from ITIL are:
• Reliably budgeting and accounting for the
cost of each IT service
• Determining the value of each IT service
• Periodically forecasting the cost of each IT
service
IT Accounting
Budgeting
Chargeback
3
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
CIO BI
Dashboard
IT
Management
Reporting
Audit,
Compliance
and Control Reporting
Services (Customer / End User)
Devices Connectivity and Collaboration
• Computing Devices• Communication Devices• Security Devices
• Personal Collaboration• Group Collaboration• Connectivity
Applications
• Applications and Servers
Direct
• Services• Support
Charging/Billing (Customer/End User)
Connectivity and Collaboration
Applications DirectDevices
Cost Mapping, Assignment and Allocations
Billing
4
IT Projects
Sourcing and Labor
Assets
IT Finance Goals, Objectives, Capabilities
Cost Mapping, Assignment and Allocations of
Financial Systems of Record
Assets, Projects, Sourcing/Labor, etc.
The Textbook Oversimplifies IT Financial Management
• ITFM is more than a Service
Management process Area
• ITFM is primarily a Finance and
Accounting discipline – not an IT
discipline
• ITFM assumes that our finance
stakeholders and clients fully
Understand IT Costs and their
Drivers
• ITFM frameworks do not
appropriately address the
Resources and Skill Sets required
• ITFM does not stress the need for IT
Financial Analytics
• ITFM does not sufficiently care for
the unique challenges and
importance of IT Asset
Management (ITAM)
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL 5
End-to-End IT Financial Management
Typ
es
of
IT F
ina
nc
ial M
an
ag
em
en
t
Labor
Hardware
Software
Facilities
Project and
Port. Mgmt
Asset Mgmt
Sourcing
Primary IT Cost Pools
Wages and Salaries
Benefits
Contractors
Outsourced and Off-
shored Labor
Systems/Storage
Network HW
HW Maintenance
Physical Space
Utilities
Telecom. Expense
Miscellaneous
SW Licenses
SW Maintenance
Agreements
ITFM is a multi-
dimensional process
spanning multiple
disciplines and unique
complicated costs
pools
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
ITFM
PPM
ITAM
ITSMStrategic Initiatives
Governance
Resource Allocation
Service Catalog
Support
MAC‟s
Demand Mgmt.
CMDB
Application Mgmt.
Asset information
Costs
Ownership
Lifecycle Status
Assignment/Accountability
ERP
HR Data
Fixed Assets
Accounts Payable
Vendor Management
Procurement Data
6
Asset Management Is the Cornerstone of ITFM
There are multiple definitions of ITFM. KPMG firmly believes that ITFM is a cross-functional discipline
that is based on the foundational underpinnings of IT Service Management, Project and Portfolio
Management and IT Asset Management.
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
What Is Asset Management
IT Asset Management is the control point that fully integrates the processes, systems, people, tools
and data to effectively control and utilize assets throughout their lifecycle.
Technology
Lifecycle Processes
Organization/ People
ITAM
ITAM
Relationship Management
Inventory
Management
Tim
e
Service
Management
Financial
Management
Procurement
Management
Retirement
Management
Inventory
Management
7
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
Asset Management Is the Cornerstone of ITFM
IT Asset Management provides a method for managing the financial aspects related to technology
assets from the time an asset is received until it is retired. IT Asset Management works to ensure that
all assets including leased or purchased equipment and software licenses are known, controlled, and
that their cost is minimized.
The IT asset information captured by ITAM will help service managers to streamline IT governance
processes and provide cost-effective IT services across the company. The ITAM solution empowers
organizations to recognize economic benefits across these IT business drivers:
• Cost Reduction
• Controls Integration – Cost, Compliance, Financial and Security
• Organizational Governance and Data Normalization/Integrity
• Process Standardization
8
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
ITAM – Lifecycle Management Integration and Automation
ITAM provides a framework for managing the lifecycle of assets from initial request through retirement. The integration of
multiple systems and departments is required to effectively manage, control and utilize IT assets while optimizing the
investment in those assets
ITAM Repository As the Asset progresses through its lifecycle, the attributes (new or updated) associated with the asset are updated
within the ITAM Repository via integrations with other systems
Te
ch
no
log
ies
A
cti
vit
ies
P
ha
se
s
ERP/Financials Procurement A/P HR Fixed Assets
Configuration Management System
IT Order to Bill Systems/Provisioning
Discovery Tools
Change Management System
Initial Request
•Approval process
•Stock is checked for availability
•Create ITAM record
Redeployment
• Is asset re-configured?
• Does it replace existing assets?
• Update/create ITAM records
PO is Created
• Fields populated
• Assign Asset tag
• Update ITAM record
Asset is Received
• Fix barcode
• Assign asset status
• Change PO status to “received”
• Update ITAM record
Asset is Deployed
• Asset is installed and configured
• Owner/dept. assigned
• Support structure is assigned
• Update ITAM record
Asset Changes
• IMAC data
• Business unit changes
• ITAM record is updated
• Fixed Asset record is updated
Asset Retirement
• ITAM status is changed to „Retired‟
• Update FA Ledger
• Legal ownership is transferred
RetireRedeployUpdateDeployReceiveProcureInitial
Request
Asset Status Controls - (Provision)Asset Entry Controls - (Procurement) Asset Exit Controls - (Retire)
9
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
Asset Mgmt
ITAM – Integration with ERP
Integrating an IT Asset Management solution with an ERP system provides visibility to support accurate
budgeting, financial reporting and vendor management.
Procurement
Account Payable
Fixed Asset
Vendor Mgmt.
ERP
ERP Systems are not
designed to manage and
track the detailed
requirements of IT assets
Asset Request
Asset Disposition
(legal ownership)
Asset updates
ITAM manages the
demand/requests for assets
Repository of detailed,
operational information
Is their a linkage between
procurement and standard
technology catalogs
Provides updated location and
cost center information
Manages physical entry and
exit of assets
Financial data
Detailed data for forecasting
10
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
Asset Mgmt
ITAM – Integration with ITSM
IT Asset Management is an integral linkage to Service Management, and provides key functionality to
the Configuration Management Database
Incident
Problem
Change
Release
Configuration
Service Mgmt
Service Management tools
and processes are designed
primarily to manage assets
after they have been
deployed into an enterprise.
Fixed Assets Ledger
Standards for creating
CI‟s in CMDB
Updates and
Retirements
Asset availability
Asset updates
from IMAC‟s
ITAM provides a business
perspective and financial
view of assets
Assets are created via
request and procurement
ITAM provides normalized
data for the CMDB
Asset updates from IMAC‟s,
Auto-discovery/Inventory
Manages physical entry
and exit of assets
Request for Assets
IMAC = installs, moves, adds and changes
CMDB = configuration management database
11
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
Asset Mgmt
ITAM – Integration with PPM
IT Asset Management provides base costing and asset availability for PPM requirements
Projects
Resources
Demand
PPM
PPM requires asset and
organizational information in
order to manage services and
assets into standard services
or CI’s.
ERP – Procurement , FA
Availability of Assets
Purchase Requests
Asset updates
Asset Costs
Asset updates for
assignment, etc.
ITAM provides basic asset
information – what we have
and what is available
Vendor/contract management
requires updates to prepare
for new licensing requirements
New chargeback models must
be developed to support new
initiatives
ITAM provides request/
purchase function for new
assets (out of standard)
Request for Assets
Maintenance Contract
Updates
12
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
Software Assets Add Significant Complexity
Critical Elements for Software Asset Management
Hardware Inventory – Scope of servers/desktops where software
can be installed
Software title – Software title at version and license metric level
License metric – Method by which company is authorized to use
product (e.g., # of users, servers, tiers, concurrent, etc.)
Entitlements – # of licenses (by metric) company is permitted to
deploy (e.g., purchased)
Deployments – # of licenses (by metric) company has deployed
Contract Mgmt – Effective contract mgmt and ability to influence
vendor negotiations with respect to software licensing
Data Normalization – Consistent data/naming conventions across
vendor contracts, product catalog and discovery
Software Distribution – Control software distribution and support
with corporate policies/codes of conduct
Impacts on ITFM
Forecasting – Software is inherently complicated to forecast
because it is subject to frequent change (e.g., HW inventory)
Service Management – IT commonly allocates software costs to
services/business units due to the complexity
Rogue purchasing – Uncontrolled purchasing can result in un-
budgeted financial commitments
Trailing expenses – Forecasting efforts can easily under estimate
trailing maintenance expenses
Vendor Management – Changes to license metrics, terms and
pricing regularly impact forecast accuracy
Hardware
Inventory
Software
Entitlements
Software
Deployments
Reconciliation
13
Organizations that can Impact Your Software Positions
Procurement
Vendor Management
Asset Management
IT Operations
Customers
End Users
Deployment/Project
Management
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
ITFM
PPM
ITAM
ITSM
ERP
The IT Portfolio
Enables Assets
IT Assets are the
foundation for IT
service delivery
Assigning HW/SW to
Services
Tracking HW/SW
Assets to Projects
Common ITFM Challenges
Delivering projects on budget
Accurately forecasting asset expense trailers
Impact of portfolio capacity on the forecast
Managing benefits realization on the IT
portfolio (e.g., did we buy the assets
needed)
Common ITFM Challenges
Effectively linking SW/HW POs to projects
Project level status on asset orders
Complicated actual to estimate
reconciliations
Integration between project and asset tools
Common ITFM Challenges
Reporting IT costs to customers in a simple,
easy to follow manner
Providing transparency into IT service costs
Relating cost drivers to asset costs
Establishing meaningful benchmarks
Common ITFM Challenges
Effectively understanding the relationship
between IT assets and IT services
Defining the right granularity for assigning
asset costs to IT services
Relating ELA costs to IT services
14
Summary: ITAM Is Critical for Effective ITFM
Insight into the relationships with ITAM is a fundamental enabler to effective ITFM
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL 15
Perspectives on the Future of ITAM and ITFM
• The migration to cloud environments will necessitate change to:
ITFM and ITAM processes
IT organizational funding models
Customer perceptions of asset ownership
• Software vendors are beginning to view broader ITFM as an area of opportunity
• IT customers and F and A stakeholders continue to demand greater simplification of IT cost
reporting, and at the same time need more granular IT cost data (platforms, lease vs. buy,
transactions)
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
Speaker Contact Information
Michael Adams
Director
IT Advisory
KPMG LLP
Marcus Murph
Senior Manager
IT Advisory
KPMG LLP
16
© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. Printed in the USA. 12197COL
Questions?
17
Q&A
18 ©2010 Hewlett-Packard Development Company, L.P.
To learn more on this topic, and to connect with your peers after
the conference, visit the HP Software Solutions Community:
www.hp.com/go/swcommunity
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