IT Asset Provenance Matters

The Secret to Achieving Perfect IT Asset Visibility

In today's fast-paced and complex business environment, IT asset visibility is critically important for global organizations. If you don't know what you own, where you own it, and its provenance, almost everything you need to do downstream becomes harder. Managing security, demand planning, load balancing, tax & depreciation, and more becomes much more inefficient. Your procurement process will also struggle to deliver quality coverage in support of your stakeholders if you don't have an accurate technical asset topography snapshot at any given moment. If your organization values future flexibility and optionality, you really have no choice but to get a handle on asset visibility.

Many people in our industry view shadow inventory as assets that have been procured through processes that are not part of the pre-designed corporate ingestion apparatus, resulting in entities that are “unknown” to the enterprise, but in my view that doesn’t capture everything. Shadow inventory also includes those assets that are “known” to one stakeholder group but “unknown” to another that common business sense would dictate “should” know they exist. The tax & finance group needs to see everything a company owns, as do sourcing, infrastructure, and project management. If one or more of these functions knows something the others do not, “Houston, we have a problem.” Having a central source of asset truth is simply essential for effectively managing in a multinational globalized economy.

Decentralized Systems and the Rise of Shadow Inventory

How does shadow inventory occur? The problem typically stems from a firm’s inability to land the right technology in a geography when it’s needed. Most large enterprises have not designed their InfraOps processes in such a way that takes into consideration the practical challenges of supporting a global IT infrastructure platform. Many MNCs have hundreds upon hundreds of vendors, each with their own processes and protocols. Mapping these inputs into a decentralized sourcing methodology is practically impossible.

There are very few industries that bulk buy and material handle their input commodities in a decentralized fashion. There is the obvious economic drawback involved in not consolidating your purchasing power. But equally problematic is that you must replicate your operational, administrative, and compliance work in each of the markets that you are procuring in. This creates more nooks and crannies for waste to hide in than an English muffin. How are you supposed to create protocols and administrative systems to support your stakeholders from a sourcing perspective if you need to manage the variability that you find in balkanized procurement models?

But the lack of a centralized system doesn’t mean that technology purchases grind to a halt. Stakeholders will always default to just getting the gear they need when and where they need it over following internal processes and protocols if those systems and tools don't allow them to navigate their work in such a way that is practical and realistic. If your internal supply chain and its supporting systems have not been designed from the ground up to support InfraOps professionals, you will soon lose sight of your technical environment. A decentralized approach leads to inefficiencies in procurement processes, resulting in overspending and duplicate purchases, rendering ERPs and DCIMs useless, and kicking off the inevitable visibility and data degradation.

The problems don’t stop there. As we leave Zero Interest Rate Policy (ZIRP) cushiness for a more normal business environment inclusive of all the normal capitalistic pressures, asset efficiency becomes critically important. Underutilized hardware and redundant assets are not only not productive, but they are depreciating quickly while consuming valuable data center resources in the form of space and power. This inefficiency can result in the paradoxical situation of increased operational costs as overall data center performance declines. And this says nothing of needing assets and not knowing that you already have them or can pull from an underutilized site.

In fact, the ripple effects of shadow inventory on organizational efficiency are astonishing once you begin to tally them up:

1. Security Risks: Untracked and unmanaged hardware can pose significant security liabilities. If unauthorized, obsolete, or unprotected by the latest software updates and the asset remains connected to the network, it can create vulnerabilities that cybercriminals will exploit.

2. Wasted Resources: Shadow inventory ties up financial resources that could be allocated more efficiently elsewhere in the organization. Funds spent on unnecessary hardware could be invested in equipment or other projects that deliver a better ROI.

3. Compliance Issues: Multinational corporations often have to adhere to various regulatory and compliance standards. Shadow inventory’s lack of documentation, maintenance, or visibility during audits as required by industry or government regulations can result in compliance violations.

4. Scalability Challenges: When IT hardware is not centrally managed, it becomes challenging to scale the data center infrastructure efficiently, making adding or decommissioning hardware an unnecessarily complex and time-consuming process and leading to delays in responding to business needs.

5. Difficulty in Disaster Recovery: In the event of a disaster or system failure, having an accurate inventory of IT assets is critical for disaster recovery planning. Shadow inventory can complicate these efforts and hinder the organization's ability to recover quickly.

For any enterprise that has the complexity of an “average'' multinational business, it is paramount that you rethink your IT asset consumption and internal supply chain models to aim at achieving perfect commodity visibility globally. By industrializing your process and protocols and layering in automation and organization-wide synchronization, you can shift OPEX from low-leverage work to high-value outputs and move InfraOps professionals out of the cost center shadow and into the profit-driving light. Designing smart triggering rules and operational algorithms can free up the time and attention of your highly compensated experts to do what your business does for your client – and free up your budget so you can invest in cutting-edge practices and technologies.

Unveiling the Secret to Perfect IT Asset Visibility

When it comes to tracking and managing IT assets on the move, we currently think in terms of choke points. But choke points equal transit friction, and the more transit friction you have, the higher the complexity, cost, and operational effort to maintain acceptable levels of chaos. The present-day solution is to design the infrastructure supply chain in such a way to minimize the number of choke points.

But once you embrace the simple but significant change of moving into a centralized procurement model for all technical hardware, you can envelop your inventory with a high-quality filtering process. I think of this as equivalent to a cell membrane. As commodities move seamlessly from being outside the cell to inside the cell, they become a part of the organization.

Tackling Resistance to Centralized IT Management

There is a natural fear of change when debating a foundational shift like moving your internal supply chain from being decentralized to centralized. This fear is compounded by the lack of compelling, experience-backed cases out there – not to mention the fact that it’s far more profitable for the channel if their clients (you) stay in a decentralized sourcing model (this is one of the reasons I am putting so much effort into this newsletter).

To see that this shift is not only possible but not really that scary, you need a high level of knowledge and experience with the channel, commodity economics, IT supply chain management and design, enterprise contract experience, and more. It's a unique set of skills and experience that must come together for a business to find these patterns and make the best system design choices.

Most enterprises have software tools that are supposed to manage and maintain operational clarity in this space, but we all know this is not the case. Seventy percent of ERP rollouts are self-described failures. One of the main reasons for this is that the tools themselves are not designed to aid stakeholders in doing their jobs better and more efficiently. In fact, it's mostly the opposite. While I am not suggesting you ditch your expensive systems (which is neither politically tenable nor makes any sense), what I am advocating for is redesigning them in such a way that you can make them perform the way your people need them to.

Take for example your DCIM tool. In theory you have centralized all IT sourcing, but there are still more opportunities for systems design that decrease work effort by automating inputs, movements, and ultimately creating accurate snapshotting of our technical environments. Getting there will be the focus of future articles, from the first step of auditing your technical environments so that you can start from a place of accuracy to maintaining visibility without massive audit efforts. But let me end today’s newsletter by pointing to the benefits of recruiting stakeholders to move your organization to a place where it embraces Centralized IT Management.

The Gains from Perfect IT Asset Visibility

Once you achieve the kind of control and visibility over your IT assets that I'm advocating for, you can view your global infrastructure topography as a network of interconnected cells that seamlessly communicate with one another. This introduces operational flexibility at a foundational level. If you need to shift assets, it's no longer a big deal because you now know what you have, where you have it, and have processes to pass them from one cell to another effortlessly. In other words, you don't need to scramble to load balance or build your end-of-life disposition program. You instead have a provenance record at the asset level that allows your hardware exportation and importation logistics to be industrialized at scale.

Because you have centralized and are now enjoying the fiscal efficiencies of doing so, you can afford to stay one or two quarters ahead of demand. Holding inventories for all your base technologies takes the pressure off. Just-in-time procurement is fine, but moving some of your cost savings into staged buying for complex environments is a luxury. This acts as a free insurance policy against unknown disruptions, as we learned with COVID. Achieving perfect IT asset visibility and centralization creates a competitive advantage by providing operational flexibility, fiscal efficiency, and a buffer against disruptions.

The first-order effect of achieving perfect IT asset visibility is that demand planning becomes data-informed. Knowing what you have bought, where it is, and what its current provenance state is doesn’t just help procurement collaborate with other internal departments and external clients. As your IT topography moves, grows, shrinks, shifts, and adjusts, you start to get a feel for a very important and foundational aspect of your business. This then leads to second-order effects that impact how you buy, when you buy, from whom you buy, and other procurement behaviors. You can find patterns and exploit them to further your overall business goals.

The benefits don’t just end there. Maintaining a uniform and compliant technical environment that ties into good engineering systems makes global patching less of a chore. When you have perfect IT asset visibility, you can ensure that all hardware is up-to-date and compliant with the latest security updates, reducing vulnerabilities and enhancing overall security.

And then there are the regulatory and compliance benefits. Foreign governments care a lot about understanding what you are bringing into their country when it comes to enterprise technologies. Many of these commodities are regulated for a plethora of reasons, including encryption, wireless communication, electrical grid and security requirements, and so on. The requirements dovetail into changing data protection laws resulting in new infrastructure needs. By having a clear and accurate record of all IT assets, you can ensure compliance with regulatory requirements, avoid fines, and maintain good standing with regulatory bodies. Increasing your IT asset visibility has a domino effect that helps tackle challenges like these.

Driving Success with Perfect IT Asset Visibility

Achieving perfect IT asset visibility is not just a technical challenge but a strategic necessity for global organizations. It ensures operational efficiency, cost reduction, enhanced security, regulatory compliance, and the flexibility to adapt to changing business needs. By centralizing IT asset management and fostering a culture of transparency and accountability, organizations can unlock significant business opportunities and maintain a competitive edge.

I encourage IT leaders and professionals to assess their current asset management practices and consider moving to the systemic centralized strategy outlined here for improving visibility. By doing so, you can create a more efficient, secure, and adaptable IT infrastructure that supports your business goals and drives long-term success.