Using software to manage assets

As organizations move to comply with Bill 198 and Sarbanes-Oxley, asset management is appearing at the top of corporate agendas. From an IT perspective, addressing this issue can involve a surprisingly wide range of tasks — especially if those assets generate a substantial portion of the company’s revenue

By Jacob Stoller

When asset management becomes a priority, the knee-jerk response is “let’s go buy a software package.” Shoppers will find an abundance of products out there, replete with assurances that the software is Sarbanes-Oxley compliant, is compatible with everything in your environment, and covers the entire gamut of asset management functionality. Many of these packages can be downloaded from the web for a free trial.

Typically, the shoppers are IT people, and they often see the asset management problem from an IT perspective. So what many organizations wind up with is a stand-alone IT asset management package.

There is some logic here, in that IT assets are almost universal, and affect companies in virtually every sector of the economy. IT asset management is also the one area where stand-alone packages work pretty well; because IT assets are networked together, it is relatively easy to automatically track their location and condition. IT asset management projects can also quickly pay for themselves through the efficient tracking of software use and licenses.

For companies with substantial non-IT assets, however, life starts to get complicated. First of all, there’s the issue of data collection. When asset information can’t be polled automatically, it needs to be collected in other ways. Even for something simple like a piece of furniture, the collection task can be substantial. “It’s the full circle,” explains Brad Dempsey, president of Open Solutions Inc., a Newmarket-based software company. “When I purchase an asset, who did I purchase it from? What did I pay for it? When did I receive it? What was the waybill I received it on? All the way through to the disposal of that asset, and how do I write off the balance?”

Efficient assets

Requiring too much manual data entry is the surest way to kill an asset management project. Therefore, a rule of thumb is to ensure that manual processes only have to be done once. “If I’m going to generate a purchase order anyway, and pay for something,” says Dempsey, “well, that purchase order had better keep track of that asset, and help me locate it. I’ve already done the work, I’ve already done the data entry. Let it flow through the system.”

Significant assets tend to interact with many aspects of the business. In addition to being used, assets get rented out, transported, driven, maintained, repaired, or rebuilt. Their documented condition can be germane to a profitability analysis, a takeover bid, or a lawsuit. The asset management job isn’t complete until all these interactions are accounted for. Needless to say, the task may be far beyond what a stand-alone package can do.

Dempsey explains, “For example, if I’m looking at my income statements on a branch by branch basis, or department basis, I want to be able to look at the assets within those groups as well and look at the efficiency of assets used, and compare them across my organization. If I have one branch that is far better at using assets than another, I’ll want to find out why.”

Work order control

When assets generate a substantial portion of the company’s revenue, such as in the manufacturing, utility, transportation, or property management sectors, managing assets is a key success factor. Needless to say, many of these organizations have a substantial software infrastructure in place to manage these assets. However, you won’t see asset management software packages here. The chore of tracking assets goes under the acronym CMMS, short for Computerized Maintenance Management Systems.

The shift in terminology here is due to maintenance being the primary cost. “The two terms, maintenance and asset management — if you refer to both of those as nouns — are equivalent,” explains David Berger, a Toronto-based consultant with Western Management Consultants, and a noted expert on performance management in industrial settings.

According to Berger, there are four original types of CMMSs. “One of the most popular is plant assets, which are equipment,” explains Berger. “This is obviously a manufacturing operation; all the production equipment would be classified as that.” Here, software is used to manage preventive maintenance, and document repairs and replaced parts, and to track the overall use and condition of the asset.

CMMSs track everything that is done to an asset during its lifecycle. “The basic functionality is work order control,” explains Berger, citing a familiar example. “When you go into an auto shop, they fill out a work order. Any work order gets assigned to an asset. Then it goes to scheduling, where you match the backlog of work to be done with the appropriate schedule of work to be done.”

Merging specializations

A key aspect of plant assets is that service interruptions can result in huge losses. According to Berger, this is frequently overlooked by asset managers. “If you’ve got a horrible maintenance record, and there’s a safety issue, or there’s an environmental spill, there’s all sorts of impact. The biggest one for a manufacturing plant is loss of production. That’s huge. That’s 10 times as much if not more of the actual maintenance cost. CMMSs will track that.”

Facilities management is the second major functionality category for CMMSs. “This is for property managers, office buildings,” explains Berger. “Any office-related job would have assets that are facilities related.”

Facilities management is more than changing light bulbs and painting window frames. CMMS systems are often consulted when things go wrong and, as in the plant scenario, impact can be a major issue. “Remember that business with the elevator that crashed?” recalls Berger. “Somebody’s going to be looking at the maintenance records. Someone will go and say, what happened? What preventive maintenance was done on it? What emergencies came up before? What’s the equipment history of that piece of equipment? What was done when by whom? What sort of training — skill levels of the people that did the work? Those kinds of questions will be asked. And the CMMS has all that information documented.”

The remaining two categories in the classic CMMS pie, as Berger explains, are fleet management — “cranes, trucks, anything with a motor and a bunch of wheels,” and infrastructure or linear assets — “roadways, bridges, pipelines, things that sort of extend forever and yet you have to break them into pieces to refer to that asset.”

While isolated packages encompassing these four areas still exist in many environments, consolidation and modern software technology are tending to merge all of these functionalities together. Some vendors are now using a new acronym —­ enterprise asset management (EAM). “There’s very little specialization anymore,” explains Berger, “because the vendors are looking for new markets, they’re bringing in the functionality of all four. So now you don’t really have to search for a separate fleet maintenance package for your fleet, or a separate plant maintenance or facilities maintenance package. It’s all built into the same vendor, everyone’s got it.”

Organizations with substantial revenue-generating assets won’t usually have the luxury of building an asset management system from the ground up. As with so many other IT projects, the biggest chore in asset management is likely to be consolidating existing data into a single view. This is usually accomplished within the scope of broader information management initiatives.

Jacob Stoller (jacob@stollerstrategies.com) is an independent writer and researcher based in Toronto.  

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