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Do you know where your assets are? Still hunting and tracking capital assets and equipment, hit-or-miss? It's time for software. (Technology).

Big numbers grab attention, and one of the biggest numbers a university has to deal with is the total value of its capital assets and equipment. If you doubt this statement, take a look at the Texas A & M University system: In a recent public request for proposals, the system revealed that it was carrying in its asset database over 100,000 items totaling more than $3 billion. Even for less massive institutions, the sheer number of items included in calculating this total can be enormous, and the job of tracking them as they are acquired, moved, maintained, and retired is daunting. But there are plenty of good reasons to pay attention to this task--time-consuming and tedious though it may be.

Accountability. Every institution wants to exercise good stewardship to make sure that the equipment in its care is properly accounted for. After all, no one wants to have problems verifying the fixed assets records during the financial statement audit.

Regulations. Federal and state requirements provide an added push for public institutions, which now must comply with the phasing-in of GASB 34/35: new guidelines that require capital items to be valued and depreciated in a detailed and accurate manner.

Grants. Institutions with funded research have to fulfill myriad requirements for calculating indirect costs, responding to audit requests, and returning or disposing of equipment after a grant is completed.

Cutting losses. On the positive side, lowering your Loss rate on equipment can return significant savings. Most of us don't even want to think about what happens when a periodic inventory reveals an excessive toss rate.

Keep it running. Finally, maintaining equipment and making good decisions about service contracts and purchasing sources become much easier with accurate records of purchase dates, location, and usage.

Still, doing a good job of managing capital assets and equipment inventory requires cooperation across many functions of the institution: purchasing, business office, physical plant operations, grants management, principal investigators, space planning, and others. The software you use can help this cooperation or hinder it. And if your school is Like many institutions, you may find yourself with legacy databases that grew up in different departments over time, each serving a special purpose. Now you need to pull those records together for better management.

MANAGING INVENTORY, WORK ORDERS, AND SPACE Lansing Community College (MI) wanted a system that would be Web-based, would integrate with its Oracle-based financial system, and would combine inventory, space management, and work orders in a single system.

"Now I can pull up my AutoCAD drawing of a building, Linked to an Oracle database," says Glenn Cerny, chief information officer at Lansing. "I can say, `Give me all the classrooms in this building; and it color-codes them on the drawing. I can see the inventory items in the room. T can even pull a report on any piece of data in the system." Cerny says that his system [Prism Computer's Facilities Administration and Maintenance Information System (FAMIS), www.famissoftware.com] is helping establish better institutional control over equipment. He adds, "Periodic audits can be performed by internal college staff who are not responsible for the equipment."

SCANNING MAKES IT EASIER

If your current system for tracking inventory is too reliant on hand Labor, can software help you do the job quicker and more effectively? Certainly--which is why many institutions have recently decided to take this plunge. One of the advances that has made automated inventory systems so attractive is the improvement of hand scanners. Modern barcode scanners are really full-blown computers, complete with megabytes of storage. Scanner displays now can flash information about the asset, including its manufacturer, model, serial number, description and its current location. To make the scanner this smart, the current inventory database (usually in an abbreviated form) is simply downloaded into the scanner.

A "smart" scanner makes the process of checking the inventory much easier. First, it provides immediate confirmation that the item to which the barcode is attached actually matches the entry under that number in the inventory. Second, the condition, location, and even the custodian of the item can be updated right on the spot, then uploaded back into the inventory database later on. Some schools even lend the scanners out to department inventory specialists so that they can update the location information themselves.

Of course, getting everything barcoded and entered into the inventory in the first place can be an overwhelming task if you try to do it with in-house staff. This is why many institutions have contracted a partner to do it for them. But even if you elect to do it in-house, the best advice is "Plan!" says Becky Say[ors, manager of Fixed Assets and Inventory Services at Virginia Polytechnic Institute. "If you are getting ready to implement barcode scanning, do some smaller manual inventories first. Find out where the headaches are, and then figure out how to automate them." For instance, Virginia Tech IT staffers discovered that they could eliminate a Lot of hand work by programming a "Loose match" when they checked to see if an untagged item might already be in the legacy inventory. In attempting a match on the equipment serial number, the program automatically checks for some common transpositions and errors that might have been made when the item was originaly entered, such as substituting a "5" for an "S." An operator is then able to verify the match, and the item is entered without having to rekey it.

Institutions can interface scanners to their existing systems, writing the interface in-house. Or they can go for a commercial "snap-on" system like InCircuit's Scan & Validate (www.incircuit.com), which uses barcode scanners and a custom-designed Web site to attach to an existing finance or inventory system. InCircuit vice president Dean Hebert explains: "Using your data and built-in utilities, the Scan & Validate site becomes an extension of the university's asset management system. The system automatically creates custom scanner applications using the data elements you select. Users see the same field names and data as in the main database, and can edit data during the inventory process." Scan & Validate uses a Palm-based, handheld scanner that synchronizes data via the Internet.

LINKING INVENTORY TO THE CORE SYSTEM

Once you establish an automated system for tagging and tracking items, you want to make sure that newly purchased items get entered into the asset records automatically, if they qualify. One of the strengths of integrated purchasing, finance, and inventory software systems is that you can set up rules that do this for you. The major vendors of integrated higher education enterprise software all provide at Least some fixed asset and inventory capability, some quite sophisticated. That includes offerings from Datatel, Jenzabar, Oracle, PeopleSoft, SCT, and SunGard Bi-Tech. (For more information on these companies, see "Enterprise Vendors Come of Age," University Business, May 2002.) To get a handle on the Level of fixed asset and inventory capability when evaluating a vendor of integrated software, ask the vendor:

* Is software provided to upload and download inventory information to specific scanning and tagging systems?

* How flexible are the rules that govern whether equipment purchases get entered automatically as asset records?

* Can the software calculate depreciation on the asset items? How hard is it to set up the depreciation rules and verify their correct operation?

* Does the system allow you to maintain a barcode that is distinct from the inventory number? Is there a place to retain old inventory numbers that were assigned in a previous system?

* Can the system track controlled items that are not capitalized?

* Can you determine whether items get added to the inventory when they are received or when the invoice arrives?

* Can the system record warranty information, lease requirements, maintenance schedules?

GRANTS & EQUIPMENT

One area in which having precise information about assets can really pay off is in getting reimbursed for overhead in funded research. Government agencies have strict guidelines that control the calculation of the Facilities and Administrative (F&A) cost rate for an institution. In order to get the most favorable rate, an institution must have extremely accurate records about equipment, where it is, how it is being used, and what it cost. Just moving a piece of equipment down the hall to a classroom can make it ineligible to be counted as research overhead. Some agencies now require research institutions to calculate the actual average lifetime of certain types of equipment, such as computers, rather than using a standard lifetime. This makes it more important than ever to be able to retire equipment and remove it from the capita[ asset records when its useful life is over.

THE BOTTOM LINE

While full-blown asset management systems range anywhere from $10,000 to $250,000 (depending upon size of institution, etc.), we know of one IHE that spent $500,000. Vendors report installation times of two to eight weeks, but a simple scanning system (around $5,000 to $10,000) can be set up in mere days. When tracking assets, however, there is one asset you don't want to Lose sight of: the time your staff spends looking for missing items, updating equipment lists, and even answering questions that could be handled by a self-service Web site. Upgrading your asset management system and using the Latest technology to tag and identify items can make it possible to do a far better job with the Limited people and time that you have available. And that job can be important to having a full picture of the financial health of the institution. As one fixed-asset systems expert recently told me: Not tracking capital assets is like ignoring 50 percent of your business.

John Sovarese is a consulting principal with Edutech International (www.edutech-int.com), a technology consulting firm.
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Author:Savarese, John
Publication:University Business
Date:Jun 1, 2002
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