Where will all the assets go?

Feb 25 2014

Public sector staff cuts continue. But little attention has been paid to the now redundant assets – from furniture to IT. Can these assets be disposed of? Reallocated to other departments? Made available as an alternative to on-going capital investment programmes? Or will they just be left to depreciate and slide off the balance sheet unnoticed?

Failing to consider the best way to exploit these assets is not only wasting existing investment, it risks incurring additional unnecessary spend – from insurance premiums to unneeded software licenses and IT support contracts.

We all know that reducing staff numbers can be complex and time consuming, but the continued cost reduction does not stop at salaries.  By proactively considering the condition, location and usability of now released assets, organisations across the public sector can further reduce costs and gain far greater use of the existing asset base.

But the reality is, that few public sector organisations are in any position to even consider the reuse or disposal of these assets for one simple reason: they have no accurate picture of the current asset base. With no single source of asset information, organisations are unable to identify the affected assets – and certainly not ascertain their location, condition or due replacement date.

So what is the way forward?

A comprehensive asset audit, using barcode or RFID tags, provides a complete picture of asset location and state. This asset register should also be linked to the finance processes, ensuring any new asset purchase invoice can be clearly reconciled with the actual asset.

Even if organisations are unwilling to dispose of unused assets for accounting reasons, this clear accurate picture of the asset base will enable renegotiation of insurance premiums, software licenses and IT support costs. Furthermore, with a single register, newly redundant assets can be flagged as available to the rest of the organisation. Before any new asset purchase is made, department heads can search the inventory and request an asset transfer. This process will reduce capital expenditure and provide fast access to available equipment.

For each public sector organisation, the individual value of its equipment may seem small in comparison to the financial gains being achieved by reducing salaries. But understanding the asset base does not just deliver one off value – it should be a fundamental component of asset management.  As budgets continue to be cut, it is essential to maximise the value of the existing asset base and avoid unnecessary overspend.

But, in the short term, it is effective management of these newly redundant assets that can deliver measurable value to the organisation – providing fast track access to equipment, minimising the need for capital expenditure and, critically, avoiding unnecessary expenditure on insurance and IT support. Perhaps it is time to stop avoiding the asset issue.