IT Asset Management, IT Outsourcing and Operational Effectiveness:
The Development of a Model for IT Asset Management

Newcastle University Business School, 2006

IT Outsourcing   Due to an increased emphasis on IT enabled capabilities, organisations have been found to be at a critical stage in the management of IT resources. Challenges in IT management exist in three areas:   Strategic alignment of IT with business strategy Management and facilitation of distributed IT infrastructures Maintenance and support of these IT infrastructures.   The understanding that information, rather than information systems, contribute to gaining competitive advantage has increasingly positioned IT as commodity services. Focusing on their core competencies, while buying non-core services from external markets, organisations increasingly have looked at IT service providers to fulfil their IT requirements.   Consequently IT outsourcing emerged as a key method of managing aspects of IT. From as early as 1963, when EDS provided data processing services for customers such as Frito-Lay and Blue Cross & Blue Shield, this practice has created a global IT outsourcing industry.

Competitive Advantage   Much has been written about the use of IT in organisations and its relation to gains in competitive advantage. Information systems have been described as competitive weapons and IT has been expected to change not only the way organisations compete against each other, but also the competitive landscape they operate in.   In the 1980s, an economic imperative for the use of information technology was found that was associated with then unstable economic conditions. Organisations, inspired by success stories, sought competitive advantage from investments in IT, while at the same time experiencing an under-utilisation of IT as a problem for IT systems managers and business managers.   Here, a lack of communication between IT and the business, resistance to change, inability to measure gained benefits and even senior management’s ignorance have been blamed to have overlooked opportunities to gain competitive advantage. Although a relationship between the use of IT in organisations and achievements in competitive advantage is evident, apparently competitive advantage does not stem from the investment in IT as such.   Rather, it has been argued that the management of these resources allowed organisations to gain sustainable competitive advantage. Prior empirical research showed expectations and objectives of the management of IT as a resource evolving around key areas. These areas included managing the flexibility of IT infrastructures that was gained through decentralisation and end-user computing on one hand, and maintaining effectiveness and productivity in IT infrastructures supporting business processes on the other.

IT Asset Management   The use of IT to support or enable organisational processes has not only become current practice, but also ‘strategic’. Following years of constantly increasing IT budgets, organisations expect returns on investment in IT similar to other investments and they focus on the capabilities enabled through or based on IT.   This approach to IT has resulted in a number of initiatives including reinforced IT resource management, also referred to as ‘IT asset management’. The subject of IT asset management has been observed as an area of focus - and sometimes of concern - in IT management during the last couple of years.   Although IT asset management is frequently referred to in the context of IT and IT service management, practitioners in the IT outsourcing industry do not seem to share a common understanding, terminology and theory. As a key contribution, this work undertook a review of literature related to IT asset management and developed a descriptive model for its constituents.   The research work focused on organisations within the IT outsourcing industry and was subsequently extended to organisations providing consultancy and technology services with respect to IT asset management to this industry. Based on the findings from research, this work presents a model for IT asset management in the context of IT outsourcing.   With this key contribution, finally the relationship between the management of IT resources, that is IT asset management, and IT outsourcing providers achieving operational effectiveness that contributes to competitive advantage is conceptualised.

Keywords: IT Asset Management, Management Information Systems (MIS), IT Outsourcing, IS Capabilities, Competitive Advantage, Operational Effectiveness.

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