At Radiant, we define Asset Accountability as an operational standard achieved when assets accurately self-report: that they exist; that the organization still owns them, and where they are. As organizations grow and acquire assets, accountability gaps can create significant challenges.
Enterprise Accountability Challenges
For enterprise organization, asset accountability challenges impact the entire organization and create risk in the areas of:
Finding assets quickly is a challenge for most enterprise organizations. IT assets are typically mobile in nature. On the other hand, annual inventory audits use static, outdated data created from manual systems. It is unrealistic to expect that IT assets manually inventoried 9 months ago in a warehouse are still located there today. If you can’t locate assets, how do you definitely prove that you still own them?
Paper Location vs. Actual Location
Whether it’s a form, email, spreadsheet, or data entry software, a paper location is manually input and updated by people. Each time people are required to fill out forms, compile emails, and copy cells, opportunities for unforced errors arise. According to Net@work, “Research has shown that as much as 64 percent of financial spreadsheet data contains errors, and that between 10 and 30 percent of the assets on the books were no longer owned”¹.
The result: assets that appear to be located in some areas are actually missing. Missing assets create Audit Risk. The alternative is asset location accuracy, which can be achieved with good receiving and disposition processes combined with technology that uses automation, not people, to track and report assets’ physical locations.
Customer example: A media customer experienced a high growth period. As the organization purchased and installed more and more equipment to meet consumer demand, it realized that traditional methods of asset tracking would not keep up. The customer did not want to risk audit problems and sought an alternative.
In multiple facilities across the country, the organization implemented a technology solution that largely automated asset audit. What used to take months for multiple full-time employees now is completed in two days with a small group of people, and accuracy has increased from 65% to over 98%.
Asset Security – the Challenge of Offline Assets
Consider a 2016 Navigant study that reported over “66-75% of information breaches stem from outright theft of servers and hardware, unauthorized access or use of computers and servers, and damage caused by the loss and/or improper disposal of equipment.”²
Organizations typically address data security with permissions and access systems. The challenge with access systems is that they generally restrict personnel, not assets, from entering and leaving areas. Online assets can have network visibility, however offline assets storing sensitive information and undetected and introduce risk.
By automating asset location of both online and offline assets, organizations can reduce risk of theft or loss. Assets become access controlled. In this scenario, customers will typically install automation systems above entry and exit points and long-range tags on assets. As assets near, their location permissions are evaluated. Restricted assets automatically notify security or other personnel if they enter or leave a forbidden area.
Asset Utilization: Duplicating Spend, Incomplete Financials
Is an IT asset in use, maintenance, storage, or awaiting disposition? Even if organizations do not deliberately assign physical locations to acquire-to-retire lifecycle states, they usually exist. Storage closets, sections of warehouses, RMA cages, receiving docks – these are all actual, physical locations that assets pass through during their lifecycle. By automatically identifying and capturing an asset’s physical location, their status can be automatically updated. ERPs or financial systems can automatically receive this data in real-time and adjust financials accordingly.
Customer example: In 2012 a state law enforcement customer with hundreds of locations and over 350,000 assets enlisted Radiant to help improve asset accountability. The first step was tagging all capital assets with RFID tags and performing a “wall-to-wall” inventory. By physically inventorying each asset, the customer found a 21% increase in the “true” number of assets missing versus those reported missing the previous fiscal year. The benefits were realized on subsequent inventory cycles with actual lost or missing assets ultimately decreasing to 0.15% of all assets.
Consider Technology as Bookends for ITAM Process
There are different technology approaches that organizations can adopt to reduce audit, security and utilization risks. After 14 years of deploying asset tracking technologies to enterprise organizations, we have seen many customers succeed and some that have missed the mark. Today we advise customers that technology is best evaluated as bookends to strong ITAM processes. Understanding how physical location relates to asset management is the first step to building true asset accountability.