The IT Budget's Black Hole: Smart Ways to Control Asset Spending

How IT Asset Accounting Impacts Finances

IT asset accounting isn't just about hardware; it's a process demanding attention and precision. Companies often lose control over assets due to a lack of clear information about equipment availability and whereabouts, problems with inventory, or disorganized data on licenses and purchases. In this section, we'll explore why IT asset accounting can spin out of control and the subsequent financial toll it takes on the business.

Lack of Accurate Data on Asset Availability and Location

Companies often struggle with precise knowledge of their assets — what they have, how many, and where. This lack of clarity impacts everything from costly equipment to essential consumables. No one wants to encounter a situation where a large office runs out of printer cartridges, and it suddenly turns out there are none in stock either. This forces emergency cash purchases for the next few months to bridge the gap until a proper procurement cycle. It's even worse if the stock of laptops or computers for equipping workplaces runs out.

Unmanaged Software Asset Accounting

The issue is especially pronounced when it comes to software assets, notably licenses, which are a major cost driver. Because these require considerable investment, organizations must carefully manage how they buy, stock, and spend on them. Yet, information is rarely centralized; it's dispersed across emails, separate files, and order histories, and confirming actual software deployment often involves manual checks or automated discovery systems. As a result, companies don't see the full picture, leading to either an excess of unused, purchased licenses or unaddressed software needs. Both scenarios significantly impair the company's financial performance.

Inventory Problems

The inventory process for IT hardware and software is frequently either skipped or carried out laboriously by hand. Infrequent physical checks may then show that equipment has vanished, with no paper trail to indicate who took it or the timing of its disappearance, posing clear security threats needing management.

Grave consequences for the business can follow, including the risk of non-compliance leading to financial penalties (e.g., for operating unlicensed software). Further financial strain comes from underusing existing stock while buying unneeded new equipment, or from purchasing technically mismatched items that then require costly compatibility fixes.

Complexities in Geographically Distributed Companies

Geographically distributed companies have not only offices in large cities but also small subdivisions. This is especially relevant for industrial companies: besides offices in business centers, they own numerous facilities in remote locations. Tracking assets is simpler in urban centers than at far-flung locations. Getting a quick read on remote stock often means constant calls or travel for specialists, and swift delivery of replacement parts for broken equipment is a common struggle. For these distributed organizations, the goal is to implement a streamlined approach where a central authority has real-time visibility into all units. This person needs to know what's required for seamless operations, where to get it, and how fast it can arrive.

ITAM: A Solution to Control Budgets and Assets

ITAM (IT Asset Management) is a system for accounting and managing IT assets: equipment, licenses, contracts, and everything related to IT infrastructure. ITAM brings order to asset accounting by replacing countless spreadsheets, scattered files, and paper-based records. With a single, unified database, businesses can monitor asset locations and conditions, manage licenses, and keep a close watch on expenditures. Such a solution also captures every change, simplifies inventory tasks, and, thanks to information transparency, lessens the likelihood of asset misplacement or underutilization.

Modern organizations need a tool that actively helps manage assets, not just store data. A well-designed ITAM system should, at its core, provide:

Centralized Accounting and a Unified Database

Implementing an IT asset management system helps create a single point of access, a unified database for asset accounting and information. This provides a complete picture of available equipment and the varying needs across different departments. Having one central information source enables rapid, centralized reporting on assets by territorial subdivisions, license/contract end dates, repair statuses, acquisition timelines, and upcoming purchase requirements.

It's important to understand that for a unified database to work correctly, processes must be properly configured and structured information entered. For instance, when someone gets a new piece of equipment, it should go into the ITAM system right away — not just before an audit at the end of the month. When you get your processes set up just right and have a well-trained staff, you end up with transparent data. And with that clear data, figuring out what you need to buy and keeping track of your stock at various locations becomes a whole lot simpler.

Integration with Accounting Systems

ITAM systems can be linked with accounting software using integration tools, enabling smooth interaction between them. This means payment information can be automatically transferred to ITAM and connected to the proper organization and whoever's in charge of the budget there. So, whenever you're working on financial tasks in your accounting software, you can instantly view the associated procurement, repair, or upkeep expenses right in the ITAM system.

Automation of Procurement Planning Processes

Planning what your team needs often means dealing with Excel sheets or chasing down email requests. In an ITAM system, this process can be automated: a responsible employee can select necessary items from a catalog on a self-service portal, specify quantities, and add explanations and documents. Such an automated request then immediately proceeds directly to a specialist who can process and approve it directly within the system.

The power of seeing your budget caps, what you intend to buy, and if you're on track financially, all within a single system, is a huge work simplifier. It eliminates the hassle of piecing together data from various systems, email threads, and Excel sheets. This frees you up to plan faster, get things approved more swiftly, and tackle your work tasks more efficiently.

Integration with an ITSM System

ITAM can be integrated with an ITSM system, which is typically used to handle employee requests for new equipment, replacements, or repairs. When a request is made via a portal, mobile app, or chatbot, it transforms into a Service Desk request, and ITAM automatically creates related tasks for repair, issuance, or return of equipment to stock.

When it comes to managing IT services effectively, many companies rely on ITSM (IT Service Management). This approach provides a clear set of processes for supporting, running, and developing IT services. What ITSM really does is help you control how your IT systems operate, manage any issues (incidents) that pop up, oversee changes, and keep track of configurations, all aimed at ensuring your services are always up and running.

While ITAM and ITSM each have their own specific focus in management, they share a common purpose: to ensure IT resources are used efficiently and to optimize costs for delivering IT services. ITSM is primarily concerned with the Configuration Items (CIs) — the components that constitute IT services. In contrast, ITAM manages the accounting, operation, and overall cost of the assets that form the underlying infrastructure. By integrating these two, businesses gain the insights needed to make better-informed choices and reduce what they spend on IT support.

When ITAM and ITSM work together by sharing data, it helps ensure everything stays accurate. ITAM sends over details about what's on hand, its current state, and who's responsible for each item. Then, ITSM provides feedback on how these items are being used to deliver IT services. What's more, combining data — such as an asset's total cost of ownership, its depreciation period, and ongoing maintenance expenses — provides a much clearer picture of overall expenses and allows for an analysis of their impact on service value. When an IT service configuration changes, ITSM can send data to ITAM to automatically check how this will affect asset accounting, stock, or procurement planning.

Security Control and Access Restriction

Security within the SimpleOne ITAM system relies on an Access Control List (ACL) mechanism. Basically, these are rules that make sure only the right people see important information, based on their job role. So, for instance, the finance director or an accountant can see financial details, but someone just checking on their own equipment won't.

The system also helps manage approvals. For certain events — like moving equipment across different locations or organizations, or if a planned purchase goes over a specific budget — extra approval steps can be automatically set up. This might involve getting a green light from the finance director or a security head. This ensures that key processes tied to spending or updating asset information are always checked by the designated people, in line with how the organization operates.

How It Works: An Example with SimpleOne ITAM

Asset management is not just about controlling a list of equipment; it's a comprehensive process that helps maintain order and optimize costs. It's crucial to figure out what IT equipment your various services really depend on, what devices you're currently using, which ones are due for an upgrade or replacement, and where you might be able to shift things around instead of making new purchases. This is precisely what SimpleOne ITAM is designed to handle. It organizes all your data, automates the management of your approved item lists (nomenclature) and your assets throughout their entire lifespan, and takes the headache out of managing contracts and warranties. Let's dive into how this plays out in practice.

Nomenclature and Planning

In SimpleOne, the "Nomenclature" is essentially a central list — like a detailed directory — of all the equipment models your company uses everywhere. It doesn't matter if it's a new model just coming in or an older one you've been using; they're all listed. When it's time to register an actual physical asset in the system, you base it on one of these models, which already has details like the supplier and manufacturer. Every asset recorded in SimpleOne ITAM is always linked to a particular model in this nomenclature.

With this approach, you can structure all equipment models across your organization, get a clear count of how many you have, assess whether you need to consolidate them, and then analyze and optimize your overall equipment landscape. The nomenclature acts as your planning tool for asset needs — you turn to this database to specify exactly which models of printers or laptops you require.

The nomenclature also allows you to check current stock levels and determine if existing supplies can meet new demands. And procurement is planned based on this same nomenclature. The procurement list features the same nomenclature models that users indicated in their needs requests.

Nomenclature in SimpleOne ITAM is also tied to the classes and models of your configuration items. Within the nomenclature, you can establish different rules. A good example is setting up the connection between an actual asset and its configuration item — which is any piece of your IT infrastructure involved in providing services. Ultimately, nomenclature acts as a central directory that ensures work unification and structures asset accounting.

Asset Lifecycle Management

The system includes standard, pre-configured processes for asset management. For instance, it provides an out-of-the-box procedure for collecting requirements, where a request is generated for essential equipment linked to a designated financial responsibility center. This identified need can then be addressed through several routes: by analyzing and reserving items from existing stock, or by planning new purchases.

A separate out-of-the-box process for managing purchases is provided and is scheduled for release in the upcoming months. Following a purchase, an asset record is registered in the system with various accounting parameters along with details about the owner, the Materially Responsible Person (MRP), and its location. Subsequent changes throughout an asset's lifecycle are managed via specialized system processes or tasks. These cover events such as issuance, return to stock, repair, upgrades (e.g., memory enhancement), inventory, location changes (including inter-city moves), MRP updates, warehouse transfers, and write-offs. Post-write-off, there are several disposition options, including disposal, charitable donation, or sale to employees.

The tasks within the system incorporate mechanisms designed for error prevention. For example, if an asset issuance process is active, the system prevents concurrent actions like relocating or writing off that same asset. These tasks also include a mechanism for correctly implementing changes across many records. This is particularly useful for mass operations, such as an entire office move that involves updating the warehouse location for a large volume of assets. Instead of manual, record-by-record modification, such operations are automated, complete with status updates and the attachment of all necessary documentation.

Inventory

To kick off an inventory, a dedicated task is generated in the system. This task captures the essential information and outlines the specific assets that will be part of this count, allowing for detailed categorization as required. If your process calls for it, you can also designate an official inventory commission — a group of employees empowered to verify the final count and confirm that the entire inventory procedure was followed correctly and without any issues.

Verifying asset availability can be done in two primary ways:

• The performer forms a list of inventory numbers found during the check. For this, they can use any phone app or scanner capable of reading barcodes and exporting the data to Excel.
• Aggregation of inventory numbers occurs automatically, and information about them enters the system through a designated access point.

Once the system processes the data from the collected inventory numbers, it presents a results summary via a widget. This highlights items that weren't located, any identified discrepancies, new items that have been found, and anything previously listed as missing that has now surfaced. The inventory process can be repeated as needed, and there's also an option to print a detailed inventory results sheet, formatted to meet your organization's specific needs.

Control of Contracts and Warranties

To help you manage contracts effectively, SimpleOne ITAM includes a built-in process for tracking all your commitments and important dates. The system features a 'Contracts' section that comes pre-loaded with five common contract types, though you’re free to create new ones to fit your specific needs. Each contract follows a clear journey: it begins as a draft, moves through approvals, and then becomes an active agreement. Key information, such as details about the supplier and customer, along with the contract's start and end dates, is all neatly recorded on its individual contract card.

Every asset you track in the system has its full story linked to various contracts — whether it's the purchase agreement, warranty details, or non-warranty service plans. The system's reporting tools allow for flexible contract reporting, offering various ways to slice the data. For instance, reports can be generated based on when service or warranty contracts are due to expire.

Keeping a close watch on when contracts and license agreements for your software assets expire is really crucial. The good news is, the system already helps you do this, and it’s set to become even easier to manage in the near future.