The majority of South African companies claim to be set on controlling costs, but are in fact wasting large amounts of money in their procurement processes.
The purchase and management of infrastructural assets, far from being an investment in the efficient running of the company, is often nothing more than a drain on corporate finances.
Inana Nkanza, MD of iLAYO Software Solutions, says without effective asset management, South African companies are not able to discern the location and condition of their assets. This is not simply an unfortunate lack of knowledge, but prevents companies from understanding if their purchases are boosting employees' productivity and delivering the business value they were intended to.
"One of the reasons for the lack of asset management is that it costs time and money to implement," explains Nkanza. "Additionally, asset management is also a business in itself and needs people with the appropriate skills if it is to deliver value to the enterprise - skills that are expensive to obtain and retain. The result is poor control and a loss of financial and business value with respect to their assets.
"Of those companies that try to engage in proactive asset management, an unfortunately large number believe purchasing an application will do the job for them. Software dedicated to managing corporate assets is a necessity if the job is to be done correctly, but the right people are also needed to make the software deliver value."
An effective asset management solution consolidates the process of buying, tracking and managing infrastructure. More than a simple list of what was bought when (although this information is important), details relating to the use of the assets, the purchase contract (whether bought or leased), the expected life and disposal methodology of the product also need to be garnered and integrated into the system.
"South Africa's corporations need to critically examine their asset management processes, not only for the value they can gain or because there is money to be saved," notes Nkanza. "As local legislation changes and as they deal in international territories with sterner laws, regulations such as Sarbanes-Oxley require companies to keep accurate records of their assets with serious penalties if they do not."
Given the growing importance of asset management and the fact that money will have to be spent to implement an effective programme, executive buy-in and oversight is imperative. The traditional approach of leaving IT to handle a company's asset management will no longer work for organisations striving to meet new, more restrictive legislation while also focusing on reducing costs and improving productivity.
Instead of focusing procurement on negotiating the lowest deal, value-added asset management requires a change in people's mindset. An asset's value needs to be measured by its contribution to the business and to staff productivity, not only by its purchase price. The appropriate asset management solution will also integrate this information into the company's financial systems to provide a true 360-degree overview of the assets and their application and usefulness within the company.
Share