Asset Management Software

The term “Asset Management Software” paints with a wide brush.  Two primary interests are served by a wide variety of asset management software “packages” – 1. Asset Accounting and 2. Asset Stewardship.

Asset Management Software – for Asset Accounting

Accounting requirements for assets are significant and potentially complex.  Organizations are required to report assets on their balance sheets, at their current value, in accordance with generally accepted accounting principles.

Asset Management Software – for Asset Accounting

From the date an asset is purchased until the date the asset is disposed, its value can be changing.  Its value gets eroded over time through depreciation.  Its value may spike due to a field upgrade or through costly preventive maintenance.  Systems that support asset accounting must stay continually aware of the events that change an asset’s ‘book’ value.

In general, systems that support asset accounting, though essential, do not make organizations any money or create asset-related value.  They exist to support accurate asset value reporting and comply with accounting-related regulatory requirements.

The user communities for these systems might never see or touch the assets for which they account.

Asset Management Software – for Asset Stewardship

Asset management software, for asset stewardship, answers to a mandate to extract greatest value from asset investments.  Software is but a small part of the “solution”.  The packages ought to spawn lively discussions from asset stakeholders.

Asset Management Software – for Asset Stewardship

Asset life cycles are examined and improved.  Acquisition, placement into and out of service, maintenance, and disposal are ripe for discussion; particularly when cross-functional teams are involved.

Asset failure modes are identified and monitored.  In more sophisticated settings, Failure Mode Effects Analysis (FMEA) is brought to bear on observed failures to set priorities for preventive and corrective action.

The results generated by Asset management software, for asset stewardship, ought to include…

  • extended asset service life
  • increased asset availability
  • reduced asset failure risk.

The user communities for these systems are in constant contact with the assets with which they serve as stewards.

Asset Management Software – Implementation Guidance

Software for accounting may have step-by-step instructions or online help or chat to assist with setup and operation.

Software for stewardship ought to be bundled with guidance on process.  In the course of implementing stewardship software, a team should be formed.  The team ought to convene regularly, particularly at the start, to address specific topics.  Team get-togethers will spawn actionable discussion.  And that’s when value starts to get created.  Software guidance should propose meeting agendas, prescribe team actions, and show teams ways to assess their impact on asset value extraction.  So, while businesses may seek software to help manage their assets, it’s the team processes, conversations, and actions that actually help the business – with mere support from the software to keep track, reveal opportunities for corrective and preventive action, and objectively depict progress.

Asset Management Software – Shopping for Asset Management Software?

You’ll likely find asset accounting support in most ERP packages and in general accounting packages as Fixed Asset Accounting modules.  The package you select will be based more on buy-in for the overall package rather than its specific features for asset accounting.

asset accounting packages

Support for asset stewardship is more purposefully delivered in standalone packages.  The package you select can be based specifically on ways it can help your business extract greatest value from its tangible assets.  These packages target teams that acquire, manage, and dispose of tangible assets. 

asset stewardship solution

It’s not redundant to have assets represented in an accounting package and also represented in a stewardship solution.  The user communities have substantially different requirements and are even likely to describe assets differently to suit the distinctive contexts.

The different user communities speak different languages, have different motivations, and have very different requirements.  Get a handle on your asset management requirements, and your anticipated user community, when you shop for asset management software.

Asset Depreciation – Should Asset Management Software Calculate It?

Asset Depreciation – Asset management solutions are about. . .

  • Spawning actionable team discussion about ways assets are managed.
  • Supporting team efforts with asset data repositories.
  • Delivering insightful asset metrics to assess asset performance.

Asset Depreciation – The accounting function. . .

  • Needs automated asset services that differ from needs of the asset management team.
  • Determines when assets are expensed or capitalized.

Asset Depreciation

Capitalized assets are eroded off the books by scheduled depreciation – “straight line”, “sum of years digits”, “double-declining balance” and other methods determined by business convention and perhaps applicable law.

Learn more about depreciation and depreciation methods.

An organization’s accounting, or sometimes ERP, application software supports accounting’s specific, narrower, requirements – including calculating depreciation.

When an asset management solution has depreciation calculation capabilities, using them might result in the asset management team duplicating efforts already performed by the accounting function.

You certainly don’t want two separate functions, accounting and the asset management team, using separate tools to calculate depreciation. This would represent duplicated effort and could lead to dueling numbers; where the separate calculations do not agree and people spend time picking through minutia to account for the differences.

When the asset management team wants to know the book value of the assets it’s watching, it should rely on the accounting function for this information.

The asset management team is likely to have little need for asset depreciation capabilities. The team ought to be looking at life cycle events and studying asset failure modes. The goal is to enhance asset utilization, extend asset service life, and increase asset availability.

Significantly extending asset service life could trigger a chat with Accounting – to base depreciation on longer asset service lives.