Asset Management – Save Money and Improve Productivity

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 entitlement 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 productivity
Increased non-compliance issues (i.e., SOx)
Decreased Customer Satisfaction
Lower Return-on-Investment (ROI) on capital investments
Decreased network/business performance
Increased 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 Asset Management Process

Merely “chasing data” is a poor substitute for a formal asset management program and can be a daunting, expensive and extremely unrewarding task. In order to realize the full benefits of an asset management program, the first order of business is to move a paradigm shift away from the large, reactive and generally ineffective mass clean-up projects that typically accomplish little or nothing; and focus, rather, on the implementation of a set of prescribed, proactive processes that are eminently collaborative with the customer, partner or service provider. Something more is needed; and that something more is a formal asset management process.

The asset management tool that is ultimately chosen for use by the organization should be one that meets its specific – and sometimes, unique – needs. This is clearly a case where “one size does not fit all”. Whether the situation calls for merely an improvement made to an existing tool, a revised or re-engineered process, or a completely new approach, each organization’s needs must be carefully evaluated and assessed, and a customized solution must be designed and implemented to achieve the best results.

Some organizations may already have the requisite internal skills and experience to build an asset management solution on their own, while others will need to seek out professionals that have significant experience in the design and development of the specific types of processes and applications that will be required, ranging from data extraction, to data assimilation, to associated systems development and implementation. Although many solutions may look good on paper initially, the “devil is in the details”, and the details will play a critical role in the prospects for a successful implementation.

Whether designed internally or through an independent systems integrator, the implementation will need to focus on the specific aspects of analysis, development and reporting to ensure for the delivery of a complete solution and implementation. Many businesses mistakenly believe that they can build an effective asset management tool virtually “out of the box”. However, while the concept is easily enough understood, the unique complexities of each organization’s IT environment are such that in almost all cases, outside assistance will be needed.

To address the myriad complexities that define individual business organizations, we have developed our own asset management process, known as PETRO. Encompassing five key areas of focus, PETRO, utilizing a Six Sigma approach, can serve as the foundation for the design and implementation of an effective end-to-end asset management solution. The five key components include:

P – Pre-Inventory: Review and Prep of Baseline – Review and validation of company assets, spares, inventory, installed base records and required reference data; establishment of a framework for conducting the inventory, network audit or data extraction; establishment of a baseline for making comparisons.
E – Extraction: Customer Network Data Acquisition – Acquisition of data from physical inventories, automated network discovery tools or database record extracts in various formats.
T – Translation: Mapping of Data – Interpret, map and restate data from acquisition format to a format that may be matched to the Company’s baseline data.
R – Reconciliation: Matching, Reconciling and Editing – Validate the inventory/extraction results to the baseline; matching and validation of inventory/extraction results to the Company’s record baseline, and the generation of associated user reports.
O – Original Assimilation: Transform, Integrate and Load – Process of assimilating data into corporate systems; conversion of reconciled data into identifiable data elements with attributes and values consistent with Company data requirements and definitions; integration of transformed data into unique, consolidated, identifiable data instances meeting the business data requirements; loading of transformed, integrated source data into the Company’s records.
The first pass of the PETRO process establishes a “clean” records baseline that must be maintained over time. Since the success of any asset management solution in the long-term is directly related to the quality of the ongoing data maintenance program employed, the respective process and system interfaces must be designed to support the ongoing updates and assimilation of data to the Company databases through the specific touch points where asset data is updated or changed. In other words, the quality of data must not only be ensured throughout the entire process, but the ability of the solution to maintain data quality over time, and through all individual touch points, must also be protected.

Ongoing Asset Management Process at the Touch Points

An ongoing asset management solution (also known as Move, Add, Change, Delete -MACD-process is a streamlined version of PETRO that concentrates on ongoing control processes. It is a repeatable, consistent process, mutually owned by the managers of the touch points (either inside or outside the organization) and the master database of record. It should ensure the quality of the data updates through timely and efficient processing of update (delta) records.

In situations where data is passed between different organizations, extra care should be taken to develop a collaborative process that is transparent and ensures the quality of the data updates. The depth and complexity of the PETRO process should be proportional to the volume and frequency of the updates as well as the cleanliness of the data at the touch points. The processes can range from Customer Self-Service for small manageable accounts to Fully Collaborative for large accounts with heavy volumes and frequent data quality issues.

Key Components of the Ongoing Asset Management Process

The key drivers of the MACD process consist of the following four components:

A Comprehensive Data Extraction, Translation and Reconciliation Process – Development of both the processes and the standards for collecting data updates (electronic or manual). – Performance of an automated, or semi-automated, process to validate, translate and reconcile the results. – Creation of a MACD Data Manager to store and track interim records during the ongoing PETRO processes – Development of automated status reports throughout the process transparent to all MACD touch points – Coordinating data updates at the touch points and/or outside (customer) locations.
Process, Policy and Procedure Development – Conducting the required MACD asset management process analyses and evaluations at all touch points. – Designing and developing processes and capabilities to support PETRO implementation. – Defining the policy and procedures required in the asset management process for both the near- and long-term.
Requirements/Systems Development – Developing all functional and systems requirements; coordinating and engaging IT in the development of an automated system to analyze, extract, translate, reconcile and assimilate Company data. – Development of working models and systems, as needed, to support the asset management process.
Data Maintenance – Development of processes to support the asset management process for long-term implementation, including ongoing data maintenance and integrity. – Development of meaningful Asset Performance Monitoring and Control processes.
Mr. DeSiena is President of Consulting Services at Bardess Group, Ltd., a Management Consulting firm specializing in data revitalization, business process design, and information technology for services-related businesses. He is currently a board member of the Society for Information Management in New Jersey.

He is an experienced management consultant with over 20 years of professional experience assisting Fortune 500 clients in resolving business issues related to the Triangle Relationship between business data, processes and systems functions for services and sales organizations. More specifically, he has directed engagements in services marketing and delivery, business planning, data revitalization, data migration, process design and reengineering among others. He has shared his experience and insights in presentations before numerous senior client and association groups.

Mr. DeSiena’s industry exposure includes data networking, telecommunications, manufacturing, pharmaceuticals, financial services, utilities, travel and entertainment among others. He has corporate management experience in major companies such as American Express, Chase, Bristol Meyers-Squibb, Coopers & Lybrand (PWC), Deloitte Touche, and Pan Am. Mr. DeSiena is a graduate of the Stern School of Business at NYU with an MBA in Finance. He received his B.A. in Mathematics and Economics from the State University of New York at Stony Brook graduating Magna Cum Laude with Phi Beta Kappa honors.

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