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How to avoid the most common mistakes that will derail your project
Sam was enthusiastic and friendly as she told me about her project to look for a new asset management system. Her company had built the current system in-house, but as they grew they realised they needed something a bit more comprehensive. It sounded like a great project, but being new to asset management software I didn’t see the warning signs.
Fast-forward 9 months and Sam sounded a lot less enthusiastic and I felt the same. Despite all the initial enthusiasm, and a lot of work, we were still no closer to deciding if the project would go ahead. Where did it all go so wrong?
Looking back, we made three simple mistakes that can derail any asset management project before it even gets going:
Sam’s title should have been a red flag – “Project Support”. It was not her fault, but she did not have the experience or authority to drive through a project this big. When a project does not have an internal project sponsor or ‘champion’ with the authority to agree or veto changes, they usually just get passed on to the potential supplier as an additional feature request.
The lack of a clear, well thought through and targeted project specification increases the risk of an overly complex solution that is delivered late and over budget. The worst case scenario is that the project gets bogged down through a lack of direction and multiple layers of complexity. It eventually gets shelved without ever being delivered, but still at a significant cost to the client.
George Harrison’s lyrics to ‘Any Road‘ could have been the theme for this project – “If you don’t know where you’re going, any road will take you there”. Asset management systems can cover anything from purchasing through production and sales orders, as well as depreciation, tracking and maintenance.
Typically, asset management projects will involve finance, operations and IT as a minimum, so the potential for scope creep is a big risk. Sam’s task was to find the best system, except no one really knew what that looked like.
When I asked Sam which finance package her company used, she sounded a bit surprised and asked why I needed to know. It had not occurred to her that any asset she managed would need to be loaded from somewhere and its value posted back.
A recent survey by the Access Group estimates that almost half of employees in the UK waste 3 hours a day or more on inefficient systems. A lack of integration can wipe out the savings that your new system is intended to deliver.
For more information on getting asset management systems right, have a read of the 10 Steps Guide to Asset Management.
3 big changes an independent Scotland would make to fixed asset management
Whether you agree with the Better Together campaign or not, one thing is clear, from an accounting point of view it would certainly be simpler to stay together. Much has been made of big banks such as the Royal Bank of Scotland’s proposed move out of Scotland if there is a yes vote, but the impact for many smaller businesses will be significant as well. Overnight, businesses across the country could become multi-nationals just by virtue of having a branch in Scotland.
Victoria Stanley, Senior Consultant at FMIS, talks about 3 key issues that will need to be considered by fixed asset accountants and management teams in the event of an independent Scotland.
Bank of England governor Mark Carney and leading figures in Downing Street have made it clear that a straightforward currency union is unlikely. A new Scottish currency could create the need for valuing assets in multiple currencies. For firms using simple Excel based registers or even some off the shelf products, this would be a big challenge.
Having business units in different countries can mean the creation of multiple companies within a group. In addition to the initial complexities of restructuring a business, the changes will need to be reflected in a company’s asset register as well. Simple fixed asset actions like moving an item from one branch to another will now require an inter-company transfer and all the assets will need allocating to one of the companies. Again this is going to get complex when working with a spreadsheet or basic asset management system.
The SNP has certainly positioned itself as a left of centre party, and as the Guardian points out, a new government would need to fund the creation of new systems and structures, all of which seems to point to increasing not decreasing taxes. Different tax rules mean that assets will need to be treated differently depending on where they are.
Where to now?
At the time of writing, the outcome of the vote is too close to call and any changes may take months or years to come into full effect. The reality is, however, that an independent Scotland would mean significant changes to how businesses record their fixed assets and the nice simple spreadsheet is unlikely to be an option.
FMIS asset management software is multi-company, multi-currency and flexible enough to handle international tax reporting requirements. For more information on FMIS Fixed Assets and other products, please see our product pages or contact one of the team directly at firstname.lastname@example.org or on +44 (0) 1227 773003.
Beware of the fixed asset spreadsheet
It is the age old question in fixed assets. Why pay for fixed asset software when you can keep track of it on the trusty office spreadsheet?
We recently came across an article by Liz Fisher in Accounting & Business which dates back to 2003 (view it here) and most of the issues she raised are as true now as they were then. In an age of increasing pressure on budgets, it can be hard to justify the expenditure of rolling out a new fixed asset or asset management system. Here are 5 reasons why it may just be false economy to go cheap.
1. No audit trail
Spreadsheets have no audit trail. Sure you can do some pretty fancy things with macros and Visual Basic in the background, but in the end someone will always find a way round it (I know, I have tried often enough). Any decent fixed assets software will have a comprehensive and secure audit trail, so when the auditors start asking awkward questions about your assets, you don’t get that sinking feeling in your stomach.
2. It doesn’t really save you time
Researching, purchasing and learning a new fixed assets solution can be time consuming, so surely it makes sense to stick with what you know? The truth is, once you add in the amount of time it takes you to start unpicking the gaps in your data every month and manually creating postings back to the general ledger, it soon looks a bit less sensible.
3. Single point of failure
An accounting friend at a large financial services firm in the UK repeatedly warned me of the risks of using any system that only one person fully understands. Good advice, especially if he had listened to it himself. When one of his team left suddenly, it soon became very clear that no-one else understood the spreadsheets he had been using for the last few years. They had just pressed the ‘report’ button and he looked after the rest. Fixed asset spreadsheets don’t usually come with a very good support plan!
4. Size does matter
It made sense at the time, after all who needs an expensive system to track a few desktops, a photocopier and the microwave? 5 years down the line, business has been good and you now have to try and migrate several thousand assets from your spreadsheet to your new fixed asset register. Most fixed asset software will allow you to do a bulk import, but it is still going to get more complicated the longer you leave it.
5. One size doesn’t fit all
Every area of the business needs to report on fixed assets in a different way. Whilst a commercial solution will do this (to varying degrees), your old fixed asset spreadsheet probably doesn’t. Most often the spreadsheet was started by and designed for one specific department and each area of the business had it’s own one. When you start multiplying that across different offices, divisions and even countries the chances of getting a coherent picture of your fixed asset register rapidly shrink.