What does Don Barry of IBM mean by “life-cycle” in the context of this case?

Figure 3.1

open collaboration that allowed him and his team to understand the problem, design the solution, and then execute the plan. “Julian and I worked extremely closely together, and from there our partnership cascaded down to the other members of the team,” Warrington says. “But I need to be very clear about that: in the beginning, the knowledge and expertise were clearly with them—they were teaching and we were learning.” The problem, Warrington says, is that in the increasingly strategic world of IT asset management, “the toolset itself meets only 30 percent of the overall need: on top of that, you need to build the processes, understand the costs, come up with standards, develop interfaces with other major vendors, and much more—we simply didn’t have all the skills necessary to cover that total lifecycle. But PS’Soft did have those skills, both in-house and through their contacts.” In addition, says Warrington, PS’Soft and BDNA had the global experiences necessary to help AstraZeneca get its arms around its global sprawl of IT gear, which was essential so the company could (1) begin to gain greater leverage in purchasing negotiations, and (2) be able to fairly, but aggressively, hold its own during audits by software vendors. “In so many countries where we operate, the tradition has been that budgets are managed locally, making it impossible to see the global aggregate in detail,” Warrington says. “We simply did not have the ability to get a global view. The old tools we used gave us something of a snapshot, but didn’t let us have enough insight to be able to manage the situation. At the same time, the IT vendors are getting very aggressive with audits, and without offering a specific number I can tell you that millions and millions of dollars are at stake—and before our engagement with PS’Soft, no matter how hard we tried with the old toolset, we were just not able to achieve those potential cost savings from vendors.” Over time, Warrington says, AstraZeneca gained that necessary level of control and knowledge: “Now Astra- Zeneca is in a position to enter negotiations from a position of strength, confidence, and knowledge.” And that achievement has given the company a new perspective on the realm of IT asset management. Warrington says, “Too many companies just look on IT asset management as nothing more than bean counting, versus looking deeper and understanding the ROI and ROA that can be achieved. “But we learned first hand that there is a huge opportunity to get control over what you have, to satisfy even the most rigorous audit, and to negotiate better contracts. And that’s a lot more than bean counting,” says Warrington. IT organizations in diversified companies—particularly those grown through acquisition—wage a seemingly endless battle against unnecessary IT diversity and related costs. Conceived, planned, and executed in 18 months, UnitedHealth Group’s (UHG) Hercules program proves

that the complexity can be conquered, while protecting or improving IT’s service levels. By creating a standard desktop configuration and consistent management processes, Hercules reduced total cost of ownership to $76 per month per desktop, from more than $240. In 2004, with the CEO’s support, Alistair Jacques, then SVP of UHG-IT, launched Hercules, focusing it on standardizing and streamlining the processes behind desktop management: procurement, configuration, installation, life cycle, and asset management. In addition to this focus on process, two techniques stand out as key to the program’s success. Working with finance, IT developed a chargeback model that imposes a premium on nonstandardized desktop configurations: $170 per month versus $45 per month for a standard configuration. This value price encourages business managers to choose the more efficient infrastructure. UHG also reduced costly on-site support by reorganizing it: A central IT team manages high-level support activities, completing 95 percent remotely, while select, on-site end users (often non-IT administrative staff trained by IT) provide basic support to colleagues. UHG-IT treated desktop management as a business process challenge rather than a technology issue. This approach freed them to use tactics like non-IT staff for desktop support and value pricing. To date, UHG has converted 75,000 out of 90,000 devices to the new standards, delivering $42 million in annual savings. UHG can now manage nearly four times the number of end users with the same number of IT personnel as in 2004, all while actually improving—not diminishing—service levels. IT now deploys 99.4 percent of releases, updates, and patches in three hours, instead of 65 percent in three weeks. Indeed, companies that blow off asset management do so at their own peril. At the same time, 99 percent of companies that her organization comes across don’t have a proper asset management process in place, according to Elisabeth Vanderveldt, vice president of business development at Montreal-based IT services and consulting firm Conamex International Software Corp. That’s a staggering number, considering the value that life-cycle management can bring to an organization. And it’s indicative of the widespread lack of respect for this important aspect of IT operations. The ideal time to start considering an asset management program is before the business and its IT infrastructure is even up and running, but the common scenario is that corporations look to asset management after they’ve encountered a problem running the infrastructure. Businesses’ mentality about asset management is evolving, however. Companies used to consider only reliability, availability, and overall equipment effectiveness in the equation. But now, he said, there is recognition of factors like continuing pressures on cost and green technology. “It really requires a mature organization to understand what’s going to be needed to assess and execute a life-cycle management strategy,” says Don Barry, associate partner in global business services in the supply chain operations and asset management solutions at IBM. Why is a life-cycle management program important? For one thing, it puts IT in much better control of its assets, and this can have a number of benefits. “IT can make really intelligent decisions around what they should get rid of, and they might even find they have more money in the budget and they can start taking a look at newer technology and see if they can bring it in-house. Without that big picture, they just end up spending more and more money than had they been proactive,” says Vanderveldt. Life-cycle management also has value as a risk management tool, and it aids in the disaster recovery process as well, she adds. “It’s also beneficial for those moments that are just completely out of your control, like mergers. acquisitions and uncontrolled corporate growth, either organic or inorganic,” says Darin Stahl, an analyst at London, Ontario based Info-Tech Research Group. “IT leaders without this tool set are now charged with pulling all this information together on short notice. That could be diminished considerably in terms of turnaround time and effort for IT guys if they have a holistic asset management program in place.”

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1. What are the companies mentioned in the case trying to control, or manage, through these projects? What is the problem? And how did they get there? 1. An important metric in this area considered by companies is the Total Cost of Ownership (TCO) of their IT assets. Go online and research what TCO is and how it is related to IT asset management. How are companies using TCO to manage their IT investments? Prepare a presentation to share your research with the rest of your class.
2. What are the business benefits of implementing strong IT asset management programs? In what ways have the companies discussed in the case benefited? Provide several examples. 2. What does Don Barry of IBM mean by “life-cycle” in the context of this case? How would this life-cycle management work when it comes to IT assets? Break into small groups with your classmates and create a working definition of life-cycle management and how it works as you understand it from the case.
3. One of the companies in the case, UnitedHealth Group, tackled the issue by imposing standardization and “charging” those stepping outside standard models. How should they balance the need to standardize with being able to provide business units with the technologies best suited to their specific needs? Justify your answer.  

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