As the current pandemic affects organizations globally, widespread scrutiny on public spending has increased. Heightened pressure is being felt across all public institutions as central and local government is being forced to tighten the purse strings. There has never been a more important time for public sector organizations to reassess their IT asset management (ITAM), to understand their current licenses and areas where spending can be reduced, to ensure control of cost and risk.
In Part 1 of our ‘IT Asset Management for the Public Sector’ series, we outline the reasons why creating a strategic ITAM framework is vital, citing three key areas to consider.
Why creating a strategic ITAM framework is essential
The risk landscape is changing. Covid-19 has created a scenario in which organizations have been forced to undergo transformations. Many have been reactively buying technology to drive operational continuity, for collaborative and security purposes, and due to enforced changes, such as working from home. As a result, the procurement of various technology and solutions has been done at pace and new risks are subsequently emerging.
While there is usually governance put in place around the procurement of software and cloud licensing to avoid unnecessary risk, how these licenses or subscriptions are managed in the future is often not considered. In the public service especially, trying to plan for lifecycle costs during rapid change using governance best practices becomes harder. This is because organizations will not have complete clarity on the forward operating plan for the technology, especially when use cases may be considered transient or temporary, for instance when people are working from home.
The way money is being spent has also changed.
There has been a major shift in organizations migrating to subscription-based cost models as cloud consumption increases. This move from capital expenditure and central funding to more revenue-based expenditure has a major impact on public sector finance management. Taking into consideration the complexity for accounting for ongoing purchases and costs across multiple departments, and suddenly cost governance becomes harder to achieve.
Budget holders are also looking for best value and are increasingly making their own spend decisions. The complexity of operational cost management for cloud assets only widens as purchases and licenses diversify from central management. Cloud cost dynamics and management can be difficult to understand and manage at the best of times but adding decentralised spend, it becomes more difficult to forecast, manage and account for. The net impact is overspending, which no public sector organization can now afford.
Visibility is a problem.
A big challenge that many public sector organizations face in their efforts to manage increasing costs is when they do not have central visibility of current software and cloud usage. For example, not knowing how to right-size consumption of cloud and related licenses has a major impact on being able to understand onward costs. Furthermore, changes to the scalability of consumption means that on-going cost impacts cannot be easily forecast into the future.
The scale and the uncertainty of consumption-led costs creates financial risk that will be felt at the most senior levels of the organization. Being unable to provide reliable cost forecasts has risk implications in financial forecasting and budget management.
To avoid the above challenges and risks, it’s vital that public sector organizations have a solid ITAM framework in place.
Keep an eye out for Part 2 of ‘IT Asset Management for the Public Sector’ where we look at the five steps that public sector organizations should take in order to implement a strategic objectives ITAM framework.
To learn more, visit our dedicated ITAM Process & Policy Advisory Service or listen to our webinar ‘IT Asset Management for the Public Sector’
About the Author
Chris Gough, Chief Strategy Officer, Livingstone Group
Chris has worked in the IT Industry for over 20 years, starting as a consultant he then took on more senior practice management roles, focusing on networking, security, data centre and unified communications and in recent years specialising in data centre optimisation and particularly in software licensing. Having worked with large enterprise organisations, Chris understands the challenges faced in data centre licensing and the lack of expertise in the marketplace.
Having founded the Derive Logic business until its acquisition by the Carlyle Group in April 2019, Chris is now on the senior executive board for the world’s largest independent IT Transformation Assurance and Software/Cloud Risk Management business, Livingstone Group.