Organisations know the value of Business Intelligence (BI) in monitoring sales performance, analysing the quality of manufacturing processes or customer service and tracking financial indicators. How many, however, are leveraging this technology to assess the corporate risk associated with the tough capital investment decisions now required across an organisation’s asset estate?

With the economic outlook becoming more pessimistic by the moment, senior managers can be prone to rewriting investment strategies and business plans whilst under pressure to make rapid changes.

There are, of course, huge risks associated with such decisions – from escalating maintenance costs to business damaging equipment downtime. Irrespective of financial conditions, organisations cannot risk making hasty changes to capital investment strategies; as Karen Conneely, Group Commercial Manager at Real Asset Management, explains, it is the use of BI to pull together information from fixed asset registers, maintenance systems and finance that will deliver the trusted, real time information required to identify opportunities for asset savings and, critically, predict the risk/reward associated with reining in investment today.

Changing Investment Strategy

The speed with which the economic outlook for UK businesses is changing is unprecedented. Carefully crafted growth plans and expansion strategies from 2011 are hastily being rewritten as organisations look, once again, at how to withstand a volatile economic climate. The implications for every part of the business are significant; but one area that is really bearing the brunt is capital investment across the asset estate. Given that many companies have extended the asset lifetime already in recent years, such decisions are critical: but how can they assess the implications of changes to capital replacement programmes and maintenance budgets on operational performance and business risk?

Asset Discovery

Having the ability to access the information required to maximise the value of the existing assets whose records are located in a range of databases will prove invaluable in providing answers to these difficult questions. To assess the implications and costs associated with changing asset strategies, organisations need to combine information about the existing asset base, concerning what is due to be replaced and the true cost of replacement. This information has to be weighed up against the expense of on-going maintenance and the risk of escalating the downtime of aging equipment. Whilst in the past organisations have laboriously opted to pull data manually from diverse sources, including systems for fixed asset management, maintenance and finance, and have used spreadsheets to support investment decisions, today’s rapid pace of strategic decision making demands far more accurate and timely asset discovery insight that in turn meets the PAS 55 standard.

Organisations need to leverage business intelligence (BI) to pull together information from all of these systems. This holistic approach will enable them to understand asset importance and to identify opportunities for investment reviews, tying in directly with specific objectives for asset replacement, capital investment and maintenance.

Real Time View

This asset discovery process is critical to minimising the risk associated with investment decisions. But, in the current market, undertaking the process on an incremental basis may not be enough. Once the BI tool is in place, organisations can utilise this intelligence to build dashboards that provide real time views of Key Performance Indicators (KPI) to deliver strategic, management level insight.

KPIs would typically include the current net value of an asset, the replacement cost of an asset and its current maintenance cost. Using such an approach, it is possible to set up a simple traffic light system so that organisations can see at a glance performance by asset, category, cost centre or site.

A consolidated source of fixed asset, maintenance and finance information, allows senior managers to assess the implications of different investment strategies – a crucial requirement with today’s fast changing economic outlook.

Conclusion

Maximising the value of the asset base is critical and correct timing is key.

With business strategies increasingly having to be rewritten under pressure of time and lack of information, it is clear that asset investment decisions can no longer be taken incrementally: organisations need to understand the operating position on a daily or near daily basis. BI tools that can be deployed across multiple systems in a matter of days can transform information transparency. By providing the real time asset discovery required to deliver confidence in asset investment strategies, organisations are able to address the business risks associated with minimising both capital investment and running costs.