Four Reasons Why ERPs Can’t Effectively Manage the Life Cycle Information of Physical Assets
There is this big myth that the ERP systems, including Oracle, SAP, Costpoint (from Deltek), NAV (from Microsoft), can manage the life cycle information of physical assets.
It is a myth because it is only perceived to be true.
ERP systems are deployed in many businesses and government agencies. If they can effectively manage the life cycle information of physical assets, then why do we find these symptoms everywhere?
- Excel sheets are used to track the locations, barcodes, and other information (e.g. asset condition, usage) of assets
- Asset chain of custody, or auditable trail of asset movement information is missing
- The systems can’t tell when the last time this asset was audited
- When a group of assets were bought in the same purchase order line item, there is no information about where the individual asset is or how it is being used.
- Ghost assets, i.e. Assets that are in the ERP systems, but nobody knows where they are.
That’s because ERP systems are not designed to manage the life cycle information of physical assets. There are four reasons why ERPs can’t effectively manage the life cycle information of physical assets.
- Acquisition of assets vs. life cycle of assets — ERPs focuses on acquisition of assets. They don’t track the movement, usage of assets after the acquisition
- Periodic update vs. real time update — The information in ERPs are updated periodically, often associated with a financial event, like receipt of the assets, depreciation reporting, and asset end of life recording. But the status of physical assets change continuously. It requires real time update of information.
- Restricted access vs. wide access — Access to ERP systems are restricted to a group finance professionals, not widely available to operational staff who handles physical assets on a daily basis.
- Desktop vs. mobile — Because of the restricted access, ERP systems don’t’ need to be mobile. But the people who handles physical assets on a daily basis are highly mobile. They need to be able to update the location, usage condition, audit status of assets when they see or use the assets. ERP systems can’t support that.