ITAM vs ITSM – why they should be separate

These two functions often get confused or combined, but defining them clearly is essential to minimise financial risks, unnecessary costs, and to seize opportunities to add greater value to the business.

If we use the analogy of a restaurant, we could say that Information Technology Asset Management (ITAM) is the kitchen (back of house), while Information Technology Service Management (ITSM) is the dining area, (front of house).

While both must work synchronously to deliver an excellent dining experience, they are under separate management with different teams, tools and processes. It is clear who does what, while having clearly established interfaces.

This same level of distinction and multi-focus is not often seen between ITAM and ITSM. ITAM is usually confused as being part of ITSM, which can be a missed opportunity for the organisation overall.

At the root of the confusion is a common assumption that asset management is the same as configuration management, which is a central process of ITSM. This happens because ‘asset’ and ‘configuration item’ (CI) are often interchangeable and, therefore, ITAM is done as part of ITSM.

In fact, an asset (and ITAM) has two key differences to a CI (and ITSM):

1. ITSM is focused on service delivery and, therefore, only the operational phase of an asset’s lifecycle. Its configuration is to support the service, whereas ITAM spans the entire lifecycle of the asset. ITAM focuses on managing an asset’s financial, contractual and operational risks and implications.
2. ITSM focuses only on those assets that are also CI’s and are needed in support of a service, whereas ITAM would look at all assets over a certain amount.

ITSM is almost always under time-pressure to complete its tasks, as the tasks often have a direct immediate impact on the business. ITAM tasks can often be deferred without direct impact (unless there is a contractual deadline).

In addition, most organisations tend to use a Configuration Management Database (CMDB) as the ITAM tool, and over-populate it with asset data, leading to the confusion that assets and CIs are the same.

However, storing both in a CMDB can lead to a failure to meet the objectives of both functions. ITSM wants a limited set of quality data on the configuration of the essential assets for it to deliver its services. In contrast, ITAM wants a comprehensive inventory system to store every asset and their associated attributes that need management.

Having clearly defined functions is necessary because it means each function is better placed to offer deeper insights and value to the business.

In fact, as the task of effectively managing assets becomes more complex, developing ITAM as a separate function is increasingly necessary. In our experience, confusing the two functions has led to the following five common consequence

• ITSM is only normally focused on a small set of assets: This can lead to a skewed view of the total number of a particular piece of software deployed in the organisation, and consequently, a misguided view on licensing requirements for that piece of software.
  
  A similar scenario is, if licensing requirements are overlooked in the initial service design phase, once up and running, there can be assumptions that the organisation is compliant.
  
• ITSM is focused on the operational life of the asset: When an asset is no longer required for a service, attention on whether the asset has been properly decommissioned or retired can be lost. This can result in idle servers still running with the software left installed, which consume resources and licences. This problem may become worse as organisations embrace more cloud services.

• Conflicting KPIs driving diverging behaviours: KPIs for ITSM tend to be time related, while KPIs for ITAM are cost related, which can cause conflict. For example, ITSM aims to successfully resolve incidents in a timely manner and minimise the business impact. If this requires deploying software, ITSM will want to complete the task as soon as possible. Since software can often be deployed without a licence, it is easy to defer the ‘licence problem’ to a later date. Whereas, the focus of ITAM is to minimise future unexpected or unnecessary cost by ensuring that the software is correctly licensed before it is deployed.
  
  More strategically, ITSM may favour transactional purchasing in order to quickly resolve the request, while ITAM would consider the long-term costs and benefits of supporting more vendors or applications and the best sourcing options.
• To ITSM, ‘no news is good news’: If the end-user is not calling and server performance or network bandwidth is not deteriorating, then the service must be doing well in the eyes of ITSM. For ITAM, if a software has not been used, or servers are idle, these may be cues that certain assets can be clawed back, leading to greater rationalisation and optimisation on license negotiations.

Of course, like the restaurant example, the two functions must also be aligned and have clearly defined interfaces to ensure they are working in harmony. This is where organisations that invest in having an ITSM and ITAM operating model defined and implemented will find they are reaching the outcomes they have set out to achieve.

At KPMG we offer organisations support with ITAM/SAM and ITSM. We see them as separate but complementary services that work in alignment to service the business overall.

Our advisory services focus on helping organisations establish an effective ITAM/SAM or ITSM operating model that is aligned to the organisation’s business objectives, and uplifts capabilities so that teams can be self-sufficient.

Alternatively, we also offer a managed service for SAM – Software Asset Management as-a-Service (SAMaaS) – for organisations which just want SAM risks and opportunities managed.

With our SAMaaS, we set up a baseline of data on an organisation’s software licenses and usage, and provide ongoing oversight. We look for risks and help with risk mitigation strategies. Drawing on the data, we can assist with cost optimisation around licences, or to seize opportunities for improvement. We can also help SAM functions to embrace the data to offer much more strategic insights to the broader business.

A key starting point is to look at the overall IT operating model, and to separate ITAM/SAM from ITSM, so each function can focus on what it does best, while supporting each other, and the organisation.

You can learn about setting up a strategy for a SAM operating model, in The power of a Software Asset Management operating model.