Costs of Poor Asset Management Can Add Up

Ann All

Companies fret a lot about maintaining the right data on customers. And it's true that a lack of accurate, up-to-date and relevant customer information can cost companies money and competitive advantage.


Yet few companies seem to grasp the financial significance of missing or inaccurate data on their own internal assets. A recent FinanceWeek article details how poor asset management can drive up a company's insurance costs. To that, we'd add the costs of poor security -- PCs and other items can "walk off" the premises if oversight is lax -- and underutilization of resources.


According to the article (which, unfortunately, cites no source), just 40 percent of a company's physical assets are tracked and recorded well enough so that they can be easily located. Up to 50 percent of assets are so poorly recorded, it's impossible to prove they exist, while another 10 percent to 20 percent of assets are described but cannot be found -- suggesting they may no longer exist.


It notes that one university in the UK was able to reduce its insurance costs by 49 percent, simply by improving its asset management processes.


The article recommends barcoding all assets during a physical audit and storing the information in an integrated asset register, complete with a detailed description and location information for each asset. It's obviously important to follow through by updating the register when items are sold, scrapped or relocated.


Some companies also think RFID has strong asset management potential. Retailer Meijer, for instance, recently tested an HP solution to track 120 of its 600 servers as they moved between racks, so IT staff did not have to manually track the changes.

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Oct 17, 2010 9:21 AM Brad Connely Brad Connely  says:

The costs certainly do add up. After conducting our own internal audit we found similar results. We're on track for a big improvement now that we're tracking our assets with this Asset Register Database. We actually had it purchased, installed, and running the week after the audit.

Now we're starting to think about RFID as the prices continue to come down. It's still a little out of reach to use for everything, but it surely has a lot of potential and makes since for the more expensive equipment.


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