Why Leverage Financials in your CMDB: 3 Real-Life Examples to Showcase Benefits

Before you invest in an IT Asset Management strategy, it’s important to consider the cost and value to determine its Return on Investment (ROI). The BIG question is - How do you objectively determine which Key Performance Indicators will deliver the best ROI?

The only way to determine the actual ROI is to have the actual costs (investment) and the return that is actually realized.? The simplest way to make sure those metrics are accurate is by synchronizing those costs with your ServiceNow CMDB - something we call “financially enabling” your CMDB.??

A Financially enabled CMDB can help you:

• Track the lifecycle of Assets and Services across the budgeted amount, the committed amount, the actual amount, and the out-year services costs.???
• Capture the asset relationship back to projects, investment strategies, and identify their impact on both customers and the business.?
• Unlock visibility into key performance indicators (KPIs) that were previously too difficult to manage, monitor, and realize.?

To help translate these actions into benefits, here are some real-life examples.?

Example 1: Identify Hotspots for Inventory Shrinkage

A large retailer was regularly drop-shipping equipment to new store locations. Their previous process was to capture asset information after it had been installed and discovered.??

Unfortunately, it didn’t always happen that way – sometimes, assets were never discovered.? They were never sure why but the effort to track them down never seemed painful enough to find out what the problem was. As a result, these items were lost forever because the ‘true start’ of the asset lifecycle was never captured.??

Eventually, their leadership determined the issue was serious enough to address. They had 2 options:

• Create a team that could investigate what was going wrong.???
• Leverage their ServiceNow platform to capture their asset information as it was purchased and before it was received.???

Because they felt this would be an ongoing concern, they decided an ongoing solution would be the better option. They quickly understood that they would need to capture the full lifecycle of physical and financial information in a centralized location that showed who requested it, when it was ordered, what purchase order was used, when and where it was received, when it was invoiced, and when was it paid and all of the associated costs.?

By having a comprehensive process for tracking the full lifecycle, some additional benefits were realized:?

• It quantified the volume and cost of assets that were NEVER discovered because they ‘fell off the truck’ before being installed.??
• Some contractors had less ‘shrinkage’ than others, so they used this as a tie-breaker when bids were similar.
• Delivery times could be optimized, so inventory wasn’t sitting around (sometimes for up to 9 months) - and reduced the window for potential “shrinkage.”

Of course, this didn’t make inventory magically appear. But it did help managers know where to look for issues. With that increased visibility, hundreds of thousands of dollars in IT spend stopped ‘shrinking’.????

Example 2: Intelligently Optimize Inventory Levels

A large publishing company had a seasonal demand and followed a system of purchasing assets and services based on recent information. This year, they wanted to fine-tune their IT spend for the upcoming holiday season. However, they were in a dilemma. If they continue that same trajectory for infrastructure into Q1, they would have excess inventory and need to cancel/postpone future orders until they burn down their inventory.?

In a similar vein, because they hire most of their employees in Q1, if they placed Q1 purchases for new employees as an uplift to Q4 orders, they would be woefully short, and several employees would have limited productivity. In the past, they would pay a premium to expedite orders.? By feeding Discovery information (first time found) and Hiring forecasts - based on Year over Year trends - back into the purchasing process, they set up brackets that take into account seasonality and/or anomalies. Their procurement triggers were optimized, so inventories are not gathering dust or affecting productivity.? Even better, they were able to work with their vendors to set up a 12-month volume purchase agreement based on intelligent forecasting to get better discounts. So, they were able to achieve tighter inventory levels (lowering overhead) and realize a volume-based discount.???

Example 3: Achieve Better Visibility into Missing Inventory?

A large real estate developer was using external contractors as they entered new markets. For security reasons, they issued laptops.? When the contractor’s job was finished, they would send the laptop back to the IT department for reimaging. Because one of the KPIs for the IT department was how quickly they could reimage a laptop and ship it to the next location, that’s what they focused on. Unfortunately, each time they did this, the previous software licenses were deleted. This was okay for centrally managed licenses. But, several of them - such as Visio and Adobe licenses - it was not. And once re-imaged, there was no way to ‘Discover’ them.?

But once the company leveraged a Financial Data Model on top of their CMDB, they found the above discrepancies immediately.? After connecting the “Purchased” licenses with the “Discovered” licenses, they found that some laptops had up to 5 copies of Visio assigned to them. They immediately stopped all Visio purchases for about 18 months, and those savings went right back into the IT Budget.??

With a Financial Data Model, key decision-makers can not only look at volume requirements but also when and where they can get the best discounts. Given the number of other variables being managed, having an objective perspective on inventory management is often a welcome relief.??

Final Thoughts

The above examples highlight what happens to Companies that don’t have comprehensive visibility – they end up overspending precious IT dollars. With a small effort, ServiceNow customers can achieve some of? THE BEST ROI – not just from ServiceNow, but across any IT processes they are doing. And they’re one step closer to running IT like a business.? ?