by saschapohflepp

Article by Joseph DeSiena

Asset Management Is a Tool Every Business Can Use to Save Money and Improve Productivity

For most businesses, the efficient tracking of their installed base or in-service equipment, and the management of their spare parts inventories are key factors in determining the prospects for internal productivity and customer service profitability. However, many organizations do not yet utilize a comprehensive asset tracking and management process to ensure the availability of quality data that can be used to generate the business intelligence that can ultimately save them money and improve efficiency. This is unfortunate, because the tools are readily available – it is simply a matter of making it a priority.

What is Asset Management?

There are many definitions of “asset management”, although most deal primarily with financial considerations. Some are based on evolving maintenance management systems; some on the management of factory floor equipment configurations; and some for the purposes of monitoring network equipment or even railway car and container locations. However, regardless of what situation or application your business deals with, the core definition remains constant; asset management is “a systematic process for identifying, cataloging, monitoring, maintaining, operating, upgrading and replacing the physical assets of the business on a cost-effective basis”.

To be truly effective, the asset management process must be built upon a foundation of widely accepted accounting principles, and supported by the proper mix of sound business practices and financial acumen. It can provide management with an effective tool that can be used to derive better short- and long-term planning decisions. As such, it is something that every business should consider adopting – and embracing. After years of studying and supporting the Information Technology (IT) needs and requirements of clients in all major fields of business, we prefer to define asset management in a more dynamic way, encompassing each of the following four key components:

An enabler to generate and maintain critical management data for use internally by the company, as well as with its respective customers and suppliers (such as installed base or maintenance entitlement data).A comprehensive process to acquire, validate and assimilate data into corporate information systems.A flexible system allowing for either the manual acquisition and/or electronic capture and reconciliation of data.A program with accurate and intelligent reporting of critical business and operational information.

Asset management is not merely the identification and inventorying of IT and related equipment; it is the process of making the assets you own work most productively – and profitably – for the business. Further, it is not a system you can buy; but is, instead, a business discipline enabled by people, process, data and technology.

What are the Signs, Symptoms and Effects of Poor Asset Management?

Poor asset management leads to poor data quality – and poor data quality can negatively affect the business over time. In fact, experience shows that there are a number of common causes that can lead to poor asset management, including lack of business controls for managing and/or updating asset data; lack of ownership for asset data quality; and an out-of-balance investment in people, process, data and technology. In addition, some businesses may not consider asset management to be a critical function, focusing on audits only; while others may not consider asset data to be an important component of the business’s intellectual property.

The primary symptoms of poor asset management are also fairly ubiquitous, and may include anything from numerous compliance and security issues, to uncontrollable capital and/or expense budgets, excessive network downtime and poor performance, under- or over-utilized assets, incompatible software applications, increasing operational costs and headcount, and non-matching asset data derived from different organizations and/or business systems.

Moreover, poor ongoing asset management practices can impact a business by degrading customer service delivery, polluting the existing installed base of data and distracting sales resources with customer data issues For example, Service Delivery may be impaired by inaccurate depot sparing creating customer entilement issues, increasing escalations to upper management and lowering customer satisfaction. An uncertain installed base lengthens contract renewal cycle-time, limits revenue opportunities and inhibits technology refresh planning.

The result of poor asset management can ultimately be devastating to a business, often leading to one or more of the following negative impacts:

Increased Asset Total Cost of Ownership (TCO)Decreased workforce productivityIncreased non-compliance issues (i.e., SOx)Decreased Customer SatisfactionLower Return-on-Investment (ROI) on capital investmentsDecreased network/business performanceIncreased number of internal and external audits

The causes of poor asset management can be many; the symptoms pervasive; and the results devastating. However, the good news is that there are specific solutions available that can help any organization avoid these pitfalls.

The PETRO