Enterprise asset management: Taking stock of the cloud situation

In our last two features, we looked at the range of cloud-based services now available, and then focused on the implications of these cloud services for enterprise storage. With corporate IT provision being so much about managing hardware and license assets, the move towards the cloud has had a significant impact on keeping track of what your company has at its disposal, and ensuring you use your assets economically is key to keeping your costs low and your productivity high. This is where Enterprise Asset Management (EAM) comes in, which is the primary topic of this third and final feature in the series.

EAM strategy and systems

EAM has been around for decades and extends well beyond managing IT assets, encompassing everything a company will need to keep a handle on, from paperclips to data centre servers. It's worth noting right at the start of the process that EAM is not a law unto itself - it's part of your overall business strategy. The present and future direction of your company should directly inform your asset provision. This may seem obvious, but taking a longer term view than just what current users need will be particularly important if expansion, contraction, or redirection of your business is on the roadmap.

The British Standards Institute has even published a standard called PAS 55 that defines a 28-point checklist of good practices for general asset management, which is on its way to becoming a worldwide standard. But there are other applicable standards such as ISO 9000, ISO 14000, ISO 18000 and PAS 99. These deal with quality management, environmental management, RFID tagging of assets, and common management system specifications respectively. When looking for suppliers, it's worth keeping an eye out for compliance with these standards. Your overall business strategy should inform the Key Performance Indicators (KPIs) that you set for your asset strategy, and therefore the systems you use to manage it.

All of this brings us to the main tools corporations use for EAM. Since your main repository for tracking assets will be some form of specialised database, it should be no surprise that the leading vendors of traditional EAM systems are also leading suppliers of enterprise databases and the super-powerful hardware needed to run them. For example, Oracle has eAM, which is part of its E-Business Suite. It's primarily aimed at tracking traditional assets such as real estate and plant machinery, plus any spare parts required to keep these assets operational. It can also help you ensure you don't keep stock of obsolete parts, for example when you change your fleet of company vehicles to a new model.

Oracle's eAM is a traditional EAM tool for keeping track of parts to maintain your assets.

IBM's Maximo Asset Management is aimed at integrating the management of traditional IT, physical assets and what IBM calls "emerging smart assets". It allows mobile workers to manage work orders via mobile devices, use barcodes and RFID to track assets used, and communicate data both in real time or on a store-and-forward basis when a continuous connection to the server is not available. SAP's Plant Maintenance (PM), as its title suggests, is aimed primarily at asset maintenance. Infosys' Enterprise Asset Management services leverage the capabilities of suites like IBM Maximo, SAP PM and Oracle eAM together.

IBM's Maximo Asset Management integrates the management of traditional IT, physical assets and 'emerging smart assets'.

We have already covered the general case of IT asset management and looked at a selection of popular and powerful tools. But one company we didn't mention at the time was Flexera Software. Historically, Flexera Software was part of Macrovision (now Rovi Corporation), a company famed for its copyright management systems. So Flexera Software comes from a long history of content and software asset tracking, and is in fact the maker of the InstallShield installation packager. Flexera Software's FlexNet Publisher is a license manager that enables floating licenses, so you can buy a pool of licenses large enough for the greatest number of users likely to be using software at the same time, rather than a license for every single machine. It supports a wide range of Linux and Unix flavours as well as Windows and MacOS. The Embedded version even supports Android devices.

Flexera Software's FlexNET Publisher provides management of floating software licenses.

Asset management gets cloudy

You could, of course, have your asset management hosted in the cloud. AssetPoint's Tabware Express is a cloud-based enterprise asset management solution aimed primarily at maintenance management. The system runs on the NetSuite SuiteCloud Computing Platform. Instead of having to host the database and its connection to the outside world (if required) yourself, Tabware Express provides EAM services you can lease in the same way as the applications and storage discussed in the first two parts of this feature trilogy - (Part one: The Wisdom of clouds. Part Two: Data, data everywhere: Data in the cloud computing era).

Cloud-based software and services are, of course, by their very nature not running on a per-device basis. Cloud-based applications are generally tied to a user, who will provide login information to gain access. This is certainly true of Google Drive applications, which can be used on any system with a compatible browser and Internet connection. The situation with Office 365 is a little less clear. Whereas Office 2013 is permanently tied to the computer it is initially installed upon, and controversially can't even be transferred to a new computer when uninstalled, Office 365 can be installed on up to five devices. It therefore functions a little bit like a cloud application, because the device becomes less important, and the payment model is a subscription, so it behaves like an operating lease rather than a capital expenditure - something we will be discussing a little later in this feature.

IBM's SmartCloud Cost Management, part of its Tivoli software, provides analysis of how virtualised and physical IT assets fit together - bridging the gap between cloud-based and traditional IT assets. In particular, it shows very detailed metering of services as they are used, so costs can be tracked back against budgets. Reports on who is using which shared resources can be created, so departmental and project usage behaviour can be tracked. As with IBM's Maximo Asset Management, this works through a Cognos Business Intelligence-based Tivoli Common Reporting.

IBM SmartCloud provides granular accounting of how virtual and physical IT resources are used.

IBM's PureSystems can help you keep track of development server assets, too. Often, developing new services will entail provisioning a temporary web server, which can have the tendency to stay on the books long after the project is over. IBM's PureSystems let you provision a server with a time limit. This doesn't mean the server is deleted with all your data at the end of the time. The image will be archived. But it won't be live, and that means you won't be paying for services you aren't using. PureSystems also let you expand and contract your provisions much more dynamically, although you do need to buy into the whole ecosystem - hardware and software - to use PureSystems.

Using Tivoli's reporting tools, IBM SmartCloud can show which users, departments, and projects are using which resources.

We should also mention one more recent development that has significant bearing on EAM. Changes to Lease Accounting rules proposed by the Financial Accounting Standards Board in the US will have an impact on how leased capital assets are tracked financially, and these changes are being echoed throughout the world via the International Accounting Standards Board. Traditionally, capital asset leases have been accounted for separately from operating services that you lease. A company car is a type of capital lease, because with an additional payment you end up owning the vehicle at the end of the lease term, whereas with an operating lease - hiring a car, for example - you don't. A capital asset you lease depreciates over time, whereas an operating lease has no capital value to begin with. Capital leases are useful because they preserve cash flow, in the same way that you might remortgage your house to invest in a new business venture.

A fair amount of IT hardware will be obtained on a capital lease, and therefore depreciates over the period of its lease. This depreciation can then be offset against operating profits, along with the interest portion of the lease payment. With lease accounting, however, the lease payment becomes what is offset, and will generally be a fixed sum each year, in typical loan repayment fashion. This may seem like a nuance, but a traditional capital lease will generally mean the liability is higher at the beginning of the term than it is at the end, because the interest reduces as the loan is paid off. With the new lease accounting method it isn't. This seemingly subtle difference can affect your asset strategy considerably.

Conclusion

Like most IT services, asset management is transforming in the era of cloud systems, with the added complication of the new lease accounting rules. Not only are more assets becoming virtualised and cloud-based, particularly software, storage and server-side services, but the systems used to manage them are headed in that direction too. While some physical assets could never be virtualised in this way, the software and systems used to manage them will be, and the accounting methods mean they may also behave like virtual leased services from a financial perspective, too.

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