Asset and contract management have become an important part of business, and knowing your asset information and location will enable you to better understand the value of your business. Developing the right processes also plays a key role in ensuring your assets are managed optimally.
“There are three components of asset and contract management people, process and technology,” says Steve Robb, vice president and general manager at LaSalle Solutions, a subsidiary of MB Financial Bank. “There has to be a process around how you move assets or change their information, and you need to have the people and technology to manage that.”
Smart Business spoke with Robb about how to manage IT assets and maintenance contracts and how they are tied to your financials.
What are asset and contract management, and how do they impact a business?
Asset and contract maintenance have become a large part of the IT organization. As companies become more automated in everything they do, it is important for IT organizations to keep up with the technology needs of both departments and of individual employees. Asset and contract management impact businesses from many aspects, including financial, compliance and security.
Financially, asset and maintenance management help in determining the value of the IT assets, or devices. Knowing how many computers and network devices your organization has, where they are located and what maintenance contracts they fall under are important in determining how these devices work for your organization and contribute to their value and your bottom line.
Compliance is critical in today’s world. Depending on your industry or the applications your organization uses, you may need to be compliant with multiple statutes and/or regulations, such as Sarbanes-Oxley or HIPAA, as each has their own method of accounting and tracking processes. Having solid processes around asset management is critical in adhering to these compliance needs.
An example is tracking assets appropriately. If you have a storage device that has not been accounted for or has been moved and the information was not updated, it may cause an issue in an IT audit or, if the items are leased, at the end of the lease or maintenance contract.
Also, if your devices are under a maintenance contract and need to be serviced, knowing where the device is at the time of service will enable your manufacturer or partner to find the device and service it in the appropriate time frame. Knowing where your devices are and having all the information about each device enables not only compliance but also operational efficiencies, leading to cost savings.
Security can be either physical or virtual. How is your network connected to the rest of the world? Where are your devices located? Has a portal to the rest of the world been accidentally opened? Not knowing the answer to these questions could put your business and financial information at risk.
How do you track and manage assets financially?
Asset management is like a balance sheet, with debits and credits associated with each asset. For example, let’s say you purchase a $1,000 item. You have to list that item on your financials. Over time, that asset depreciates.
You have to know what has happened to it do you still have it, or have you gotten rid of it?
The $1,000 is just the acquisition cost; you also need to know the maintenance costs over the asset’s lifetime. You may have that asset for five years and should account for both the acquisition and maintenance contract costs over that time.
If you want to upgrade or change that asset at any point, you need to factor that in and determine if you have maintenance left on the asset. If you’ve prepaid the maintenance for the remainder of the year and it’s only March, you can request to get that money back and apply it somewhere else.
What’s a way businesses can easily manage assets and contracts?
Work with an expert who can offer you a complete toolset with functions within the IT and finance departments.
For example, we offer a Web-based toolset called LAMP. LAMP helps IT and purchasing departments manage the entire life cycle of an IT asset, from acquisition to asset and contracts management and disposition, enabling easier financial management along the way.
How can you manage your assets and update processes as changes occur?
You have to build solid yet straightforward processes, standardizing technologies and practices making it simple for everyone. A lot of companies have failed because they’ve tried to account for or solve every problem an asset could potentially go through, making the process difficult to maintain. If you can’t do something in three clicks, then it’s too difficult and it shouldn’t be part of your process.
It’s important to have flexibility in your processes and toolsets, as change does happen. Manufacturers change, the physical environment and/or people may change, and the financial environment may change. Each will impact the way you manage your assets.
As an IT department grows, the number of devices and the types of equipment necessary to manage all the company’s technology needs to grow. Because of this and the variables mentioned above, a management toolset and partner can be helpful and important to make sure you account for all changes, credits and costs and that you meet the organization’s needs.
Steve Robb is vice president and general manager at LaSalle Solutions, a subsidiary of MB Financial Bank. Reach him at (847) 823-9600 or www.elasalle.com.