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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.
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.