IT procurement and ITAM: A blossoming relationship in asset management that you can’t afford to ignore

As we wrote in a recent Spend Matters brand studio article, more and more procurement teams are having to think like and understand IT if they want to have a comprehensive view of the business, especially given the array of technology on offer to them today. Aligning procurement more with IT asset management (ITAM) also offers an opportunity to drive cost savings and rethink the organization’s true technology needs versus wants.

If you are tasked with running a procurement technology selection process, Spend Matters has tangible guidance and templates to swiftly yield your best-fit solution provider.

We’ll be sharing more views on procurement/IT alignment, but today, Harinder Bansal from Motability Operations Ltd shares his perception with us as Head of IT Procurement.

“Over the course of the last decade,” he says, “the discipline of IT Asset Management has been slowly rising out of the shadows. It was once the back-office team known for ‘counting computers,’ but has pulled itself out of the basement and up to the more senior levels of the business. In fact, according to research by the ITAM Review in 2018, 37% of ITAM practitioners were already reporting directly to the C-suite, and according to Martin Thompson, founder of the ITAM Forum, a non-profit organization that champions the ITAM industry, this trend is continuing to grow.”

So what is ITAM, and what does it have to do with procurement?

“IT Asset Management is the discipline which seeks to maximize the value of IT within an organization. It manages all facets of IT spend, including software, hardware and IT services (incorporating cloud, SaaS, managed services etc.). Now, we might think that ITAM is treading on Procurement’s toes, but as Head of IT Procurement at my organization, with IT just one of the many spend categories I’m responsible for, I can see that the two are mutually complementary. But it does make me wonder: what makes IT so special that it needs its own department to manage its spending; should we fear ITAM, or is this the start of a brilliant partnership?”

Can ITAM help us not to fear the software audit?

“Most companies embark on their first ITAM project in response to receiving an Audit Letter from one of their major software publishers (the likes of Microsoft, Oracle and IBM). A software audit involves the software publisher, or a third-party appointed by them, coming in to determine if the organization has sufficient licenses for all of the software that it uses. Given the complexities of software licensing agreements and the way in which enterprise software can so easily be installed, the vendor is hoping to find a significant shortfall in licensing. The upshot for the organization is a large and unexpected software bill at the end of the audit. As someone who works in IT Procurement, a ‘large and unexpected bill’ is not something we ever want to see. What’s more, with 46% of organizations reporting an increase in audit requests during the pandemic (according to research by The ITAM Review), now is not the time to lower your guard.

“Most organizations would never choose to run unlicensed software, but for any number of reasons, they often find themselves using more software than they have licenses for. IT Procurement does not have the expertise to understand all the nuances of software licensing, but ITAM does; it maintains accurate records of the organization’s software license entitlement and deployments so that audits can be managed effectively and not result in unexpected software costs.”

Is this the beginning of a beautiful friendship?

“ITAM clearly makes a compelling business case for itself when it comes to compliance, but the cost savings it can deliver on a long-term basis further help to justify its existence and bolster its position as a friend of IT Procurement. When it comes to the purchase of IT assets, there is a natural synergy between ITAM and IT Procurement, with ITAM simply picking up where IT Procurement stopped.

“As an example, where our role in IT Procurement is primarily concerned with the cost of IT at the point of purchase, ITAM is more concerned with managing the cost of IT beyond the initial purchase and throughout its lifecycle. When it comes to software spending for example, ITAM can help an organization to re-use existing software licenses before purchasing new ones, or to retire unused software altogether. ITAM maintains up-to-date records of an organization’s software license entitlements (i.e. how many copies of Windows, Office, Oracle etc. it has). This helps to ensure the organization uses all the licenses it already has before it buys any more (e.g. re-using the license of someone who has left the company). If IT Procurement doesn’t work with ITAM it may find itself buying software the company already has!

“ITAM can also recommend best-fit licensing for the organization’s needs or take advantage of different licensing schemes or vendor incentives based on a deeper understanding of how the organization uses software. When it comes to hardware, ITAM has a role to play in re-using and re-purposing assets to maximize their usable value – all of these deliver significant value to IT Procurement and the organization at large.”

Martin Thompson, founder of the ITAM Forum, points out that ITAM has a particularly unique role in assisting IT Procurement after the Covid-19 pandemic. “The bulk of the purchasing decisions made at the start of the pandemic were technology-related to support home working (Zoom licenses, Office 365, laptops, etc.). ITAM can help IT Procurement to identify where supplier risks might lie, and also where under-utilization of these investments could warrant returns/downscaling in the future. This could be a very powerful partnership at a time when firms need all the cost savings they can get.”

Ultimately, the synergies between IT Procurement and ITAM can be significant. They have a strong bond in protecting the organization from unnecessary costs, albeit approaching the issue from different, but complementary, angles.

“If you don’t know who is responsible for ITAM in your organization,” says Harinder, “you should make it your priority to introduce yourself. And if you look and still can’t find them, you may just find out that it’s you!”