While the term asset management broadly refers to investment markets, a growing number of executives are applying its principles internally to their own organisations to cut costs, improve efficiency and generally contribute to good corporate governance.
A Johannesburg analyst says this can be a complex process, but to accurately report to investors, asset management within an organiÂÂsation has to be tightly monitored, analysed and controlled.
“Modern businesses have many tangible assets that need to be managed and these can include buildings, vehicles, computer equipment and furniture. However, companies also contain many intangible assets such as intellectual property, which can slip under the radar if not regularly checked,” he says.
“Take the example of computers. Just because the physical device is still sitting on a desk, it doesn’t mean that somebody hasn’t opened it up and stolen half the memory for use on his or her own machine.”
Data on computers or company networks has to be carefully managed as well, especially as volumes of data tend to double every 18 months or so. Management has to keep that data private, according to the Electronic Communications and Transactions Act. While sophisticated software exists to do this, at board level company executives are responsible for ensuring that the requirements of the Act are carried out. Data has to be confidential, secure and available.
Then there is the issue of software piracy. Software is probably one of the most difficult assets for an organisation to manage. Most computer systems were either anaylsed or replaced prior to the turn of the millennium when the Y2K scare had everybody sweating over what might happen to his or her computer when the dates switched to the new millennium. A programming error meant that many computers could not read the data properly and fears were high that masses of sensitive company data could be lost or destroyed.
The computers that were replaced during that time are now due for replacement, because systems have evolved and become a great deal more sophisticated since 2000. The Business Software Alliance, which represents the interests of major software companies, says in today’s digital economy, software is indispensable to every organisation, large and small.
“To get the most out of your software, you have to manage it well, just as you would any other valuable company asset. Poor software management robs companies of the full value of the productivity and efficiency of software. Poor software management can easily mask software piracy, which is the installation or use of unauthorised copies of software. Software piracy is against the law and can have costly consequences to businesses. Illegal software is more likely to fail, rendering computers and the information on them useless. There are no warranties or support for unlicensed software.
“There are legal consequences, including stiff civil penalties and the risk of criminal prosecution. The software industry is vigilant and vigorous in protecting the intellectual property of software developers. Software pirates increase costs to users of legitimate, authorised software and decrease the capital available to invest in research and development of new software.”
Software piracy costs the economy about R1,2-billion a year — about 40% is illegal.
Fleet managers now use sophisticated computer systems to manage everything from electronic refuelling to satellite tracking. And company directors now hold managers more accountable for their effect on the bottom line.
Security is a hot button. This covers everything from access control to the physical security of the company property — from paper clips to buildings.
Intellectual property is probably the most difficult of a company’s assets to manage. The knowledge that is stored in the heads of everyone, from the most junior employees to the most senior, is really the lifeblood of any organisation.
Now that succession planning in most companies is more of a science than a thumb-suck, transfer of intellectual property is high on the corporate agenda. There are ways to capture employees’ business experience and this is usually done using software tools.
But this is a tricky issue. The very software that helps retain a departed employee’s skills and knowledge can be used against a company in corporate espionage. Because communications technologies are so powerful and because an increasing component of the workforce is mobile, it is easy to get competitive information out of an organisation.
Data theft is rife and the big problem is that data can simply be copied without the company’s knowledge. The original is left where it was stored, but a copy can be sent out of the building using the internet, email, viruses or an increasing array of mobile devices such as handheld PCs and smart phones.
Management schools emphasise the need for flat management structures where most people have access to a much greater amount of information. Historically, company knowledge was held almost exclusively at executive level. That has now been devolved to the greater workforce. While this empowers people to do their jobs better, it does open organisations to risk if it is misused either intentionally or accidentally. It is a process that needs to be carefully managed.