Asset management is not just for IT any more.
Find out why and how asset management can help the whole organisation.
Read about the technology that helps the enterprise track equipment and space.
Learn how the CIO can help the company and raise IS's profile at the same time.
The tools developed to track IT assets are now being used company-wide. And during tough economic times, those are the best tools to have.
You'd think it would be pretty difficult to lose sight of something as large as an earth excavator. But tracking the whereabouts of the heavy machinery across 14 US states had become a cumbersome process for Houston-based Tellepsen Services (TEPSCO). So the construction management services company turned to a Web-based system that now allows the company to quickly and easily locate its equipment and monitor usage - saving both money and time. "It's not for the theft issue, but because we're concerned about asset utilisation," says Tadd Tellepsen, IT director of the family-owned company. "We've been tracking it manually, but we're planning to become decentralised so that people closest to the equipment can hop on the Internet and input information. We want to make sure [equipment] is not sitting idle and be able to figure out if we can schedule it somewhere else."
When TEPSCO fully implements the new tracking system, Tellepsen says he expects to realise savings of about $US250,000 annually. The savings will come in several areas of improved efficiency, including no longer wasting money on renting equipment that could be more quickly deployed from other construction sites. Using asset management tools that have been honed in IS, TEPSCO construction managers will simply log on to the Web site to do status checks on where equipment is located at any given time.
Whether it's construction trucks, hospital equipment or even building space, asset management is not just for tracking IT resources any longer. Although some industry observers say asset management software was originally developed for financial departments to track depreciating assets, the Y2K problem focused the tools squarely in the IT realm, because IT needed to know everything it had and what would be affected by the date conversion. As a result, IT became the watchdog for its assets and began tracking hardware and software leases and maintenance agreements.
But today the tools have evolved into ways to manage other corporate assets throughout their life cycle - and again IT is leading the way. With companies under constant pressure to reduce costs and improve productivity, the ability to figure out what you own, where it is and whether it's being used is a process of growing importance to enterprises. Using the principles of asset management beyond IT can help companies avoid redundancies in procurement and track resources like lease deadlines more efficiently.
And this is an area where CIOs have an opportunity to shine. An asset management system is still a tool used primarily by IT organisations. But by being an evangelist for asset management - preaching the cost- and time-saving benefits - the shrewd CIO can help his business and get some brownie points in the executive office. In addition, Web-based asset management start-ups are helping companies recoup some of their investment in resources by auctioning off equipment that is no longer needed or that has reached the end of its life cycle (see "Going, Going, Gone").
"What's really interesting today is that companies are moving in the direction of: Now that we have this information [on assets], what can we do with it to get the best value?'," notes Tim Minahan, research director of e-business at the Aberdeen Group in Boston. Essentially, asset management software has the potential to make a company and its assets liquid, says Minahan, meaning that it can not only find out what the value of an asset is, it can also assess how to mine it or use it for future benefits or cost savings. "If there's a new trend, it's more intelligent asset management; not only tracking the asset but really looking at the information and merging it with what's going on in the external marketplace," Minahan says. Companies can use the information they glean about an asset to determine such issues as the best auctions to sell to, the tax implications of disposing of an asset and the technology innovations that will impact the asset's future - for example, how long a shelf life it actually has before becoming obsolete, he says.
KEEP ON TRUCKIN'.
Tracking and deploying large equipment is a major challenge for construction companies with far-flung projects. Until launching its asset management system pilot, TEPSCO relied on manual processes to monitor almost $US10 million worth of "yellow iron", such as excavators, side booms, tractor-trailers and bulldozers. Tellepsen says they also track some smaller items that run around $US3000 apiece, like generators and welding machines. Since the equipment is located around the country, the old method of tracking assets via word of mouth and spreadsheets caused some inefficiencies. "Many times we don't know if [a piece of equipment] is being utilised or not," he says. "And many times we end up renting something we actually own that we could haul over if we knew the status of it, how far it was from the site, who's using it and for what purpose."
Now, TEPSCO plans to use the Web-based product from Houston-based iVita to input information about its approximately 600 pieces of equipment to the global positioning system (GPS) that iVita uses. Tellepsen says that TEPSCO also plans to implement a GPS that will speed up equipment monitoring efforts even more. "A device goes on the equipment, and it's linked to a satellite that tracks it and reports back to the software so we know where it is,'' around the clock, Tellepsen says. Under this system, iVita essentially acts as the ASP for TEPSCO, a benefit to the midsize company that can't afford the staff and IT equipment needed to support such a system.
Using asset management principles and software to track equipment is a "slam dunk" according to Tellepsen. "Because if you've got stuff all over the country, and you can't put your eye on it, and it's expensive, then this makes sense," he says.
ASSETS ON WHEELS.
Tracking bulky ground support equipment is also a problem for the airline industry. About a year ago, officials at United Air Lines decided the time had come to replace a 15-year-old mainframe-based data maintenance tracking system with one called FleetAnywhere from Peregrine Systems, an infrastructure resource management company based in San Diego. The software system was installed at four United hubs: San Francisco, Baltimore, Washington Dulles International Airport, and Ronald Reagan Washington National Airport, says Bob Matkovich, project manager of ground support equipment (GSE) at United.
GSE is responsible for tracking some 30,000 pieces of equipment - including bag tractors, carts, cabin service trucks, aircraft push tractors, ground power units, food and fuel trucks, de-icers - "everything that rolls", says Matkovich.
The new asset management system is helping GSE better manage certain safety projects system-wide and "make the best purchasing decisions relative to the type of fleets we'd buy as replacements,'' Matkovich says. The software tracks the total maintenance cost and overall history of each unit, as well as warranties on newer vehicles. For example, Matkovich says United repairs a lot of vehicles internally that are under warranty, and "we expect to be paid for that by the vendor". As equipment is purchased, it is given an "electronic birth record" and all units are tagged with an identifier - an alphanumeric code based on the vehicle type. This code is then used by the system to keep track of the item.
Although Matkovich says they haven't determined the ROI from using the product so far, he estimates conservatively that it will save the airline $US1.5 million a year in warranty recovery costs. The system is also expected to produce softer savings over the long term by identifying the units that are most efficient in terms of reliability, thereby allowing the company to make smarter purchasing decisions as equipment needs to be replaced, he says. With those kinds of benefits, Matkovich says, using the tool is a no-brainer. "The life cycle cost is what we look at, and that's why this type of tool is critical," says Matkovich.
At some companies and organisations, it's not just equipment that needs tracking. Space can be one of an organisation's most important (and expensive) assets. At the Navy, keeping track of the facilities of this branch of the military is no small task. The Navy Facilities Engin-eering Command (NAVFAC) is charged with the management of planning, design, construction and technical support of some 200,000 facilities around the world, with an annual volume of $US5 billion in contracts, says Captain Dennis Plockmeyer, CIO of NAVFAC in Washington, DC. Plockmeyer says that the Navy recently decided that the answer to its facilities management dilemma was a "space management tool" - a system that is currently being implemented.
The facilities' inventory is kept on a mainframe, but the challenge has been keeping the information current, and the present system doesn't allow for inputting much detail, says Plockmeyer. And the old monitoring system is decidedly low-tech. "The current methodology is to keep track of tenants or occupants in a building using something as primitive as coloured pencils to differentiate between organisational divisions," he says. "[Now,] we're trying to put a tool in the hands of a maintenance worker or facilities planner that helps him not only do his job but maintain information in our legacy database to keep it current. One of the things that can happen is you put an addition on a building or demolish it and not have current information."
Plockmeyer says that the new system will detail how a facility is being used, whether it is occupied, for what purpose, and who is the tenant (what command or organisation).
The tool had to complement the existing legacy system, which gives NAVFAC details on the condition the assets are in and when maintenance is required. NAVFAC chose California-based Facilities Information Systems (FIS), which met the criteria that it be able to integrate and synchronise with the legacy system and a maintenance management system, as well as the requirements that it be Oracle-based and Web-based, he says. The tool is undergoing testing at a Navy complex in Washington, DC.
FIS is being used in an ASP model, but with a twist: the application is internal to the Navy, and they host it for the building owner inside the Navy, he says. So far, the system has streamlined information that NAVFAC was previously unable to capture manually. The system is also scalable, Plockmeyer says, so that it will grow as the organisation's usage needs grow.
The equipment is tagged with a barcode and the information is scanned into the FIS system. In some cases, with a browser, users can click on an icon to pull up a floor plan of the building and then drill down to do a query on the equipment in that space. Plockmeyer says the automation of space management is new territory for the Navy, but an essential one, given the multiple levels of asset classifications they must track for land, facilities, minor property and office furniture. Presently, NAVFAC is working on expanding the capabilities of FIS to include minor property (such as calculators and computers) into the system. "If you want to move me and want to know what's in the space, you only have to go to one source," he says. "You can more effectively manage the space."
Eventually, Plockmeyer hopes FIS will enable his group to determine whether a facility is being optimally used, if there are any vacancies in buildings and whether there are efficiencies to be gained by reconfiguring the space or consolidating organisations - without having to physically go from room to room with a tape measure.
But for most companies and organisations, utilising asset management technology outside IT still remains an elusive concept. At Ford Motor, the focus is on monitoring what software is running on a particular machine, says Bruce Miller, the global software planner in the Computer and Network Services Department for the automaker. However, Miller says he can definitely see the benefits of using the tool outside its data centre. "It's useful because you're tracking where products are and eliminating products that are no longer needed," he says. Recently, someone he knows in another department needed some RS/6000s IT no longer had any use for, so he was able to transfer them over - but the exchange was informal. "If we'd had an automated system of what assets were free" this type of equipment deployment would be easier, Miller says.
Likewise, George Cunningham, a consultant with Texas-based Electronic Data Systems (EDS), who is acting as asset manager for an automotive supplier based in Detroit, says that asset management tools may eventually be used in such areas as manufacturing to better organise historical data. At the automotive company where he is acting as asset manager, Cunningham says they are currently using a server-based system to track what software is installed on more than 2000 clients. But it may not stay just in IT for long. "We're getting lots of interest from other departments in the company because of the historical basis we can report on and the quality of the reports coming out, and some of the information that was never available before,'' says Cunningham. He thinks the tool may eventually be used in the company's manufacturing area, since the company's focus is on automation, a single point of data entry and the ability to get information whenever someone needs it.
As for what the future holds for asset management technology, Carl Greiner, a vice president and director at Meta Group (US), sees greater synergies between IT and the financial department starting to occur because of the mutual benefits the two roles can bring to each other. "There are knowledge transfers taking place, as well as tool transfers, because the CIO realises he needs the CFO in IT, and vice versa," he says. The CFO organisation gains by having better financial controls within IT, and IT gains brownie points whenever it shares the wealth, so to speak, on tools that provide information to create efficiencies and cost-savings on all types of equipment. "Some of the tools can fit within the overall structures of the corporation in general, to track very high-priced equipment - it's new automation for asset tracking," says Greiner. Most important, it protects divisions outside IT from having to reinvent the wheel. Now that's an asset.
Going, Going, Gone.
Companies are turning to online auctions to dispose of unwanted equipment.
Disposal of assets was high on the priority list for officials at Monro Muffler/Brake after they acquired a competitor, Speedy Muffler King's US operations. With the new company came a leased phone system that carried a costly maintenance contract, says Steve Andrews, facilities coordinator at the national muffler and brake company, which posted $US240 million in gross sales last year. By contrast, Monro Muffler's locations were using a much less sophisticated phone system that could be replaced simply by running over to a K-mart, Andrews says.
"So we made the decision we'd buy them out at the end of the lease and remove the phone systems," he says. "Now the problem is, we have 150-plus of these phone systems, some in less than perfect condition, and what do we do with them?" With no telecom staff and no time to research a practical solution, last summer Andrews turned to Gizmo.com, an online auction site that helped Fortune 2000 companies deal with the asset disposition process. Gizmo.com has since ceased operations.
"It was such a big project, and if I were to go online and list every phone system [for sale] it would have taken several weeks,'' says Andrews. Gizmo.com conducted an online auction for the muffler company and was able to sell the systems at a higher rate than Andrews says he would have got from a wholesaler - if he could have found someone to take them all.
The process has worked so seamlessly that when Monro upgrades some IT equipment in the next year, Andrews says he would recommend again using an online auction site to sell off any excess hardware. That sure beats the idea of throwing computers in a closet to gather dust.