The Best Kept Secrets
Once all the tools to start tracking your assets have been selected, the larger and equally consequential part of the project awaits. The data environment must be defined and populated with the asset data. Usually, this task is far more costly than the price of the tools already purchased. It should be noted that the failure to complete this step is possibly the single greatest reason for the failure of asset management projects.
Depending on your circumstances, you may have a range of choices available or you may be facing a significant and labor intensive inventory. Whichever the case, we will concentrate on how to populate the data base, not data base design. Particularly, this paper will discuss best approaches, the risks of each and what to expect to spend.
What are my choices?
Most organizations will face three broad strategies for populating the data base. The easiest is to simply convert the data from a predecessor or parallel data base. Much of this effort can be performed by the data base administrator, perhaps, augmented with guidance of the software vendor.
The second choice is evolutionary. Simply start populating the data base with new asset purchases and wait until the assets churn completely. This is often used in concert with other approaches to gradually improve the completeness of the data over time.
The final choice is complete tagging (or retagging) of the asset base. Obviously, this is the most comprehensive and costly alternative. Even in smaller organizations it is a significant undertaking, but many organizations are left with no option to this solution.
Converting data from existing sources can be the most cost effective and rapid choice. Any commercial grade asset management program will have data import compatibility and it can be used to create the data base quickly. If you are well positioned you will be able to capture data from an existing asset tracking data base or, with some greater difficulty, the fixed asset accounting system. For this to be feasible requires the following:
- Asset data must be sufficiently granular to identify the individual asset and contain an asset identifier (tag number or serial number) that can be found physically on the asset.
- The accuracy of the description and respective asset identifier must be great than 75%.
If you have this situation, a conversion is likely your most cost effective option. Even if indicated, a small scale field test is recommended to make certain that the expected results can be properly achieved.
Once you have determined that a conversion can work, it is time to scrub your data. Over time, any data base will tend to deteriorate in quality. Bear in mind that incorrect or inconsistent data that has lain dormant for years in your existing system may compromise the performance of your new asset management system. Indeed that outcome is quite common if left unattended.
Now is the time to correct inaccurate, archaic and inconsistent data. Before establishing a new data environment, it is essential that these errors be eliminated.
The final step in conversion is a field confirmation. An asset audit must be conducted to update the location/condition of all assets, tag those whose entry has been overlooked and identify assets no longer owned. These field results are applied to the converted data base establishing the accurate, reliable starting data base.
Evolutionary Approach: A Study in Patience
If you can afford to wait for the project’s ROI for several years you can use an evolutionary approach. The idea is to establish starting date and record information on new purchases only. Gradually, asset data becomes increasingly complete as older assets not recorded are replaced with new ones entered into the data base. Generally, this is effective only for assets that have a comparatively short lifecycle (less than 3 years) or where most assets will be replaced in the near term. Occasionally, it is used in concert with a conversion to project improved asset data into the future, gradually.
Obviously, there is no cost to populate the database because that step is ignored. The chief weakness with this approach is that complete, accurate results are not available until a full recycle of the underlying assets is accomplished. Even if used in concert with a conversion, results will remain suspect because the field verification step is skipped for converted data. In fact, we have only witnessed this approach succeed when applied to IT assets that were refreshed diligently.
The Frontal Assault
The best practice in establishing the asset data base is a complete asset inventory. Often, this involves tagging each asset with a new asset identifier (barcode or RFID tag) and can include the following:
- Accurate identification of the asset.
- Evaluation of the asset’s condition.
- Tagging of the asset.
- Recording of the asset’s location.
- Capturing supplemental data such as cost center, custodian or status.
- Reconciliation to existing records (optional).
To accomplish these tasks, authorized personnel visit each location and perform the needed steps. The field results are aggregated to create the final data base.
Some organizations are able to accomplish a complete asset inventory using their internal staff. Indeed, in high security sites, this is the only choice. In most, the decision to use internal staff is driven by a number of factors:
- Can sufficient staff be assigned full time for the project’s execution without adversely impacting other assigned duties?
- Are the assigned individuals able to reliably and efficiently indentify and describe the assets?
- Are the designated individuals able to travel to all locations?
- Do the assigned individuals possess the necessary skills to operate equipment and manage the process?
Assuming these are answered in the affirmative a project plan needs to be developed to define the scope of the undertaking, including:
- Assets to be inventoried.
- Data to be collected.
- Locations to inventory.
- Project schedules.
- Field inventory contacts.
- Product labeling standards.
The first step is to train all personnel on the selected data collection technology and the inventory process. Throughout, the inventory staff must be supervised and results reviewed for accuracy. Finally, the field inventory detail is consolidated for the completion.
A warning is in order. Often, organizations are tempted to use temporaries or interns to perform the inventory because of expected cost savings or limited availability of in-house staff. Do not succumb to this temptation. Because temporaries and interns have little or no investment in the quality of the outcome, the results are categorically unacceptable. Unfortunately, the quality issues surface after, sometimes long after, the inventory is complete. Moreover, it is often impractical or impossible to verify accuracy in detail during the project so poor results can be difficult to prevent.
The most convenient approach to completing this task is to engage an outside professional that specializes in conducting asset inventories. All responsibility for project staffing, supervision, scheduling and data integrity is borne by the outside firm. The cost basis of the inventory can be established before the inventory starts to reduce the risk of unexpected cost overruns.
Bear in mind that not all asset inventory firms are equal. Consider several factors before making a selection.
- Experience in conducting asset inventories (not retail inventories).
- Specialized knowledge of the type of assets being inventoried.
- Background of the staff.
- Technology tools used.
- Type of final results (data base, printed reports, etc.)
A field asset inventory firm may appear to present a higher cost alternative compared to using internal resources. However, it is difficult to assess comparable internal costs. For example, an outside vendor knows the issues likely to be faced in the field and considers them in the price. Without experience, it is difficult to factor these issues into internal costs. There is a substantial difference in throughput between full time professional inventory personnel and internal staff performing the inventory for the first time. Finally, do not forget to consider opportunity cost—what was the cost of activities not completed while the internal staff was occupied with the inventory.
Determining cost indicators is difficult because individual circumstances will vary widely.
What is presented below should be used as a comparative guideline.
Type of Approach Cost per Asset
| Conversion of existing data
Asset Inventory - Internal Staff
Asset Inventory - Outside Professional
$2.00 - $4.00
In the final analysis the choice of strategy may be driven by circumstances as much as by choice. Often the current asset environment will drive the decision. Considering the following factors will indicate how best to proceed:
- Presence of reliable asset tagging.
- Reliability of serial number data.
- Granularity of existing data.
- Quality of existing data.
- Deadline requirements.
- Resource constraints.
Answering these questions honestly will provide important direction on how best to proceed.