The Hindu Business Line : Value for your money

Companies spend a considerable amount of time and money on their physical assets - which could be personal computers, furniture or electrical appliances. The assets have their own life cycle. Their mismanagement can lead to sub-optimal use of existing assets and unnecessary investment in new systems.

But tracking assets is time-consuming. Most often, it is left to the time periods when the books of accounts need to be closed and details of the assets need to be supplied to the accounts department.

So what is to be done?

Barcodes are the answer, says Intellicon Pvt Ltd.

The company specialises in tracking assets through its barcode solution, IntelliASSET, which provides unique identification (barcode-enabled) for each individual asset. This, says the company, enables managers to track materials in real-time. The solution gives managers an electronic crystal ball of assets — department wise, branch-wise and reduces inventory by better tracking and planning, says Intellicon.

Chetan Turakhia, Director, Intellicon, talked to eWorld on barcode asset tracking (BAT) and its benefits. Excerpts from the chat:

Asset information is at the heart of enterprise asset management. This is increasingly important as companies are under pressure from their shareholders and regulators to improve performance, manage risks and reduce costs whilst maintaining high safety and environmental standards. Access to accurate data is not only essential for due diligence, but also leads to better decisions that can be implemented in real-time in order to transform asset businesses and meet these pressures, says Turakhia.

Indian market for BAT...

Following the enterprise resource planning (ERP) boom, it is now the turn of specialised products such as Asset Management and Warehouse Management Systems. ERP's main focus was on issues such as finance, purchase and inventory and it is not fine-tuned to offer specialised features.

ERP systems may give a company details about what assets it has. But they may not help with regard to their whereabouts or the transactions happening or of allocation on project basis.

This is the reason there is a huge opportunity waiting to be tapped. More and more companies are realising that managing their assets will benefit them in terms of cost and time.

Many government offices and hospitals may not have an ERP but they do have assets that are being managed manually. Almost all companies (small, medium or large), banks, manufacturing units, insurance companies, IT companies and government organisations need BAT, according to Turakhia.

For example...

A company has 100 personal computers (PCs). Now IBM has launched a special scheme for new machines. The purchase officer concerned needs to know the configuration of each PC; which PCs are under annual maintenance contract (AMC); when does the AMC expire; which system is getting obsolete and needs replacement and which user is using such a system. If all this information is available, then the officer can go ahead and take advantage of the scheme.

However, if the information is not available, the officer may not be in a position to take a decision. This means the company would lose out on the financial advantage the scheme offers.

Also, as the PCs get obsolete, they will need to be changed. If they are changed at a later stage, the company will have to shell out more towards higher costs, says Turakhia.

Reducing inventory carrying cost

Asset management systems create a centralised database that can be accessed quickly. The inventory of assets, their location, condition assessment, maintenance and repair history, and other relevant information can be shared in real time and updated continually. Responding to inquiries ranging from simple questions to complex analyses is easier and faster. Easy access to information helps managers, executives, and policymakers in better asset planning and control, he says.

On the data entry front...

Normally, every department maintains an Asset Register. Each time an asset is moved in/out of the department, an entry in the Asset Register has to be made. In companies that have implemented BAT, just by scanning the barcode, an entry is done in the system. In such a case, one person can handle many departments, says Turakhia.

What the experts say

70 per cent of organisations have a 30 per cent discrepancy between planned inventory and their actual physical inventory - Gartner.

Up to 30 per cent of an IT budget can be saved by effective Asset Management - Gartner.

Organisations that practice Asset Management had 15 per cent or lower total cost of ownership — IDC

"Gartner Measurement" research shows that 90 per cent of audited sites exhibit marginal practices for hardware asset management.

This increases the risk of poor system manageability, complex change management and below average service levels. These risks can increase the total cost of ownership by 7 per cent to 10 per cent annually - Gartner.

During an economic downturn, enterprise management technology and processes, especially asset management and performance management, can help organisations reduce costs and get the most out of their infrastructure - Gartner.

By retiring unused assets, companies can reduce tax bills for assets by as much as 20-30 per cent — KPMG.

(Provided by Intellicon)

raja@thehindu.co.in