How long can you forgo asset management?
How long can you forgo asset management?
Sooner or later, an ineffective program costs you
By Larry Shoup
President, Janus Technologies
Pittsburgh
Asset management is an emerging issue among today's health care industry managers and budget directors. Many organizations lose substantial dollars either because they have no programs in place or because they are trying to do the work with inappropriate tools and processes. They may incur unnecessary expenses when they add equipment or software licenses at one site without knowing about unused assets available at another. In some cases, they lease technology far longer than originally planned, continuing to make high-rate, month-to-month lease payments when purchasing the technology would have been more cost-effective. Or they miss important maintenance dates. Unless you are managing the inventory, cost, legal and maintenance schedules for your assets and making sure that your equipment and systems are available, utilized properly, and performing safely and effectively, you cannot provide the most effective patient care.
Where you save
In institutions where asset management initiatives are already under way, the actual expense savings are significant and immediate. These organizations have employed database technology to build a central repository of information about all assets that are owned, leased, or licensed for use. These are ways a program saves money:
· Uncovering invoice errors. Because many vendors' billing systems are outdated and because of continuing consolidation in the vendor community, many invoices customers receive are simply wrong. This is especially true for the ongoing maintenance fees, for which the lack of physical deliverables makes the expense difficult to track.
· Maintenance management, renewal, and cancellation. Contracts for software, hardware, and other types of high-tech equipment provide a limited window of opportunity to cancel each year. Customers usually are required to give the vendor notification of intent to cancel the agreement 30 to 90 days prior to the expiration date. The result is that many contracts automatically renew.
· Hardware lease termination. Timing is critical when it comes to deciding what to do at the end of a hardware lease. Without proper planning and notification, an organization may be forced into an expensive month-to-month rental to ensure uninterrupted use. It is important that plans related to renewal, capital authorization, and buy-out be made well in advance for end-of-lease equipment. The repository automatically reminds you of these important upcoming dates.
· Identification of underutilized assets. Tracking all pertinent financial, contractual, and location information for each asset in the repository gives you everything necessary to determine if the asset provides adequate benefit to justify its expense.
· Vendor negotiation. Given the rate of vendor consolidation, customers are more responsible than ever for relying on their own asset information. Knowledge is power to anyone involved in negotiation. It is imperative that organizations have the information necessary to negotiate a beneficial outcome:
- What current assets do they have from the vendor?
- What are the associated costs for those assets?
- Are the assets unused or underutilized?
- Has the vendor been increasing maintenance fees?
- What legal documents exist?
- What are the current and desired terms and conditions?
- What are the terms and conditions to which other vendors have agreed?
- Is the asset providing value to the organization?
- What maintenance schedules must be adhered to?
- How much is maintenance costing over the life cycle of the asset?
· Upgrade protection. Having the asset repository provide contractual information to use when verifying vendor invoices ensures that you are not inadvertently billed for upgrades you should receive at no charge.
· Streamlining the budget process. The budget process for existing assets as well as planned assets is more efficient and expedient through the use of a central repository. In addition, the repository provides forecasting functions that allow easy budgeting of upcoming expenses.
· Increasing productivity. The repository manages contractual and cost details on-line. Referring to vendor contracts and paper files consistently is a time-consuming process because documents are typically located in multiple departments. Scanned images of legal documents available for instant viewing are stored within the system to aid in answering contractual questions.
· Avoiding compliance penalties. Software usage often is constrained by the type of hardware or number of users. Vendors can impose penalties if a customer is found out of compliance with the contract. Tracking compliance constraints and usage limits within the repository helps to ensure that these penalties are avoided.
· Redundant purchases. The asset repository helps you avoid the cost of redundant purchases and prolong the useful life of assets by providing powerful inventory tracking facilities.
· Redundant product evaluations. The repository helps users capture initial product evaluation information for later use by other departments.
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