Asset management is a systematic process of cost-effectively operating, maintaining and upgrading physical and information technology (IT) assets. It combines engineering and mathematical analyses with sound business practice and economic theory. According to Asset-Management-Software.org, asset-management systems are goal-driven and include components for data collection, strategy evaluation, program selection and feedback. Most importantly, they allow an electrical contractor to define how to acquire, use and dispose of assets in such a way that the company earns the maximum profit from each asset, from inventory in the warehouse or job site to computers, servers and office furniture.
“Asset management consists of tracking permanent items, such as hardware, software, tools and equipment. It differs from inventory management, which tracks specific items in an inventory that are consumed or sold,” said Jenny Ray, product manager for System ID Warehouse, Plano, Texas.
The procedures for tracking, depreciating and accounting for both fixed and mobile assets include being able to physically locate assets, to account for their costs for disposal or replacement value purposes, and to inventory assets.
In a service industry such as electrical construction, management of assets on a job site can be a special challenge. Because assets are spread out, higher ratio of theft occurs, and weather conditions determine asset labeling and tracking types.
“Managing assets means defining ownership, including budgetary, departmental or employee and determining the location of assets and who is responsible for them,” said Ben McCullom, worldwide vice president of sales and marketing, InControl Technology Inc., San Diego.
Increasingly powerful computer systems have made the practice of asset management possible and put sophisticated analytical tools at the contractor’s fingertips, allowing a business to control costs and increase profitability.
Importance of asset management
Having an asset-management system enables an electrical contractor to know exactly what it has, who has each asset and where each asset is. It is only by clearly identifying existing technology and assets that contractors can determine their overall cost and effectiveness and better plan future replacement.
“An asset-management plan also helps the contractor keep up with regularly scheduled maintenance and to maximize equipment usage and to maintain software licenses to avoid fines for noncompliance,” Ray said.
In addition, a well-defined and executed plan makes accounting audits and tax returns more accurate because the contractor knows the actual cost of items on-hand.
“Some asset-management software even allows the company to track equipment and asset depreciation,” Ray said.
An asset-management plan could be a written document that presents, in a clear, easily understood way, the overall long-term vision, operating philosophy and general direction to be used in managing the company’s assets. The first steps in building such a plan, according to Ray, are to evaluate the company’s current tracking system; determine major issues to be addressed, such as inventory, maintenance or asset loss; and determine a budget for software implementation and projected payback.
“If the company is already tracking assets in a simple spreadsheet, implementation can be as easy as labeling the assets, installing software and importing the data,” she said.
However, if the company isn’t tracking assets at all, she advises beginning by tracking high-dollar items or those items that have the highest replacement value.
“Once assets are inventoried and a database of information is established, the contractor can track them efficiently over time,” said Suzanne Pedone, president of Inventory Management Solutions, Clearwater, Fla.
Depending on the size of the company, it is important to have a person or department dedicated to managing assets, according to Paul Chaben, director of business development for Asset Management Resources, a division of TEKsystems Inc., Southfield, Mich. “This enables the company to ensure that the integrity of the data in the system is maintained in the event of asset acquisition, disposal, move or upgrade.”
The same requirements apply to building a plan for managing a company’s IT assets, according to McCullom.
“The IT staff can employ existing commercially available software solutions that will enable the contractor to effectively manage the IT asset environment,” he said.
If the contractor prefers, it can hire an outside consultant to manage its IT assets, or it can use Software as a Service (SaaS) as a way of deploying IT asset inventory and solutions. SaaS is a model of software deployment where an application is hosted as a service provided through the Internet. By eliminating the need to install and run the asset-management application on the contractor’s own computer, SaaS alleviates the burden of software maintenance, ongoing operation and support. The SaaS software vendor may host the application on its own server or this function may be handled by a third-party application service provider.
What to look for
According to Ray, one of the most important, and most overlooked, features of an asset-management software system is mobility, especially for contractors.
“A system should offer mobile bar code scanners and computers to enable field personnel to scan assets and synchronize that information with the database to ensure that all assets are accounted for,” she said.
A good system will offer multiple ways for the contractor to track items, such as by job site, department or serial number, as well as a method to check assets in or out to employees or projects.
“Contractors should also choose a system that enables them to track software licenses and maintenance, warranty or service contracts to ensure they are up-to-date,” Ray said.
Pedone advises electrical contractors to look for a system that is customizable to their specific needs, user-friendly, easy to implement and easy to learn.
“Mobile capabilities allow the contractor to conduct periodic checks of the status of its assets and swift, accurate accounting. The right asset-management system eliminates the time wasted trying to physically track down assets, and theft is reduced dramatically,” Ray said.
Reporting features also are an important factor in choosing an asset-management system.
“Reports generated by the system should allow the contractor to configure the information to fit its needs,” McCullom said.
The contractor also should ensure the system can be integrated easily into the existing IT infrastructure and software, including systems for purchasing, accounting, human resources, service management, etc.
“Look for a provider that has a good track record and experience in asset management and the ability to transfer that knowledge to the electrical construction industry,” McCullom said.
The foundation of asset management is the baseline data, according to Chaben.
“To get the most out of its investment, the contractor should choose a system that can establish a fixed-asset inventory and reconciliation that properly reflects actual assets. You can’t improve what you can’t measure,” he said.
BREMER, a freelance writer based in Solomons, Md., contributes frequently to ELECTRICAL CONTRACTOR. She can be reached at 410.394.6966 or email@example.com.