Spare Parts, Equipment, and Other Fixed-Asset Purchasing Requires Special Functionality Not Provided in Today's Indirect Purchasing Platforms.

Business Editors/High-Tech Writers

HALF MOON BAY, Calif.--(BUSINESS WIRE)--Aug. 24, 2000

A new report from Granada Research, Electronic Commerce for Fixed Asset and Facilities Management, highlights a major expenditure category of industrial enterprises that is woefully undersupported by today's indirect purchasing systems.

Fixed assets (which are the machines, equipment, buildings & facilities, spare parts) are an important, substantial portion of an enterprise's expenditures, especially in capital-intensive industries.

Leading industrial enterprises, such as Cargill, Chevron, Vivendi, Dow Chemical, for example, manage fixed assets with IT applications that are different from recently deployed 'indirect purchasing' systems. The indirect systems are used primarily for purchasing office supplies ('white collar' supplies) while asset management systems are used for stockroom purchases of the enterprise's physical plant ('blue collar' supplies).

"Commercial transactions for fixed assets and equipment is very different than buying offices supplies," according to Torrey Byles, president, Granada Research. "Expenditures on fixed assets, including parts and repairs, are capitalized, not expensed. They impact investment and financing activities of the enterprise, in addition to operations. Their criticality to operations is much higher. And, often times, suppliers are strategic and cannot be substituted, as can happen with commodity supplies," he says.

This new report from Granada Research provides a comprehensive analysis of the economic impact effective asset management can have on enterprises, namely:

-- Increasing sales. For example, keeping facilities and

machinery running and more fully utilized is critical when

market demand is high.

-- Reducing costs. More effective maintenance programs,

streamlined connections with parts suppliers, warranty

tracking and reimbursement, asset disposal activities, among

many others, help reduce costs.

-- Leveraging investment and financing alternatives. Asset

management solutions can make huge differences regarding

balance sheet positions of companies, which has a direct

impact on the ability for the enterprise to grow, to obtain

financing, and to reduce tax liability.

Electronic commerce capabilities extends the capabilities of asset management throughout supply chains. This extension is the basis for radically new organizational formats such as outsourcing, contract manufacturing, equipment leasing, ASP and shared-risk business models, etc. where the user of the asset pays on a 'per-use' basis and avoids making large financial commitments in order to bring on capacity.

The report illustrates the many specific impacts of asset management with 11 case studies of real world enterprises. It identifies the industries that stand the most to gain from comprehensive asset management solutions. And it identifies 17 core functional requirements that asset management solutions should have. The report offers recommendations to operators, manufacturers, and lessors of assets and capital equipment, and to IT vendors.

One of the findings of the report is, "A comprehensive asset management solution that possesses electronic commerce functions may be a more powerful management tool than today's Web procurement applications aimed at indirect supplies. 'More powerful' because it allows management to coordinate capital and labor resources across the enterprise, out to trading partners, in fast response to changing market conditions."

Last year in the United States, companies invested approximately $1.75 trillion (19% of GDP) in new equipment and facilities (fixed assets). They spent another $700 billion (8% of GDP) on spare parts and repair services of the fixed assets acquired in previous years.

The report is available now. For more information, contact:

Mary Turner 1-800/588-6099 (U.S. and Canada) email: [e-mail]

About Granada Research

Granada Research is a consultancy based in Half Moon Bay, California that specializes in business-to-business content-driven commerce systems including indirect procurement applications, net marketplaces, Web and other electronic catalog systems, third-party content services, and service and repair document management systems.

Through publications, retained advisory services, and custom consulting, Granada Research assists companies and IT vendors in implementing e-commerce solutions.

Keywords: electronic commerce, electronic purchasing, procurement, asset management, equipment-maintenance, -leasing, outsourcing, application service provider.