IT broadens approach to asset management

A new enterprisewide approach to asset management is emerging in which IT organizations will be asked to look beyond their hardware and software to track plant floor equipment, facilities, real estate and other properties.

Although few companies have adopted what industry experts are referring to as total asset management (TAM) or strategic asset management, analysts and industry executives say that large manufacturers will lead the charge during the next year or two, with services firms and other industries following suit within a few years.

The shift to this more comprehensive approach is being driven in part by the proliferation of intelligent self-notification technologies being built into plant floor equipment, said Houghton LeRoy, director of consulting at ARC Advisory Group Inc. in Dedham, Mass., which published a report on the topic last month.

The TAM approach will create more work for IT managers, but it could also let companies track, manage and depreciate all of their IT systems and other equipment more efficiently.

"The outcomes for strong performance and bad performance are the same, whether it's an offshore drilling platform that's not performing at capacity or you've lost track of several hundred PCs that you have under a lease," said Chip Drapeau, CEO of MRO Software Inc., an asset management software vendor in Bedford, Mass. "All have the same ramifications: You're leaving money on the table and operating at substandard service levels."

One MRO customer that's using TAM to improve its bottom line is Lockheed Martin Asset Solution Integration Services, a Titusville, Fla., division of Lockheed Martin Corp. that's tracking and managing assets for 12 NASA centers across the U.S. Under the 10-year deal that began in October 1998, Lockheed Martin is helping NASA track everything from radar dishes to forklifts.

Lockheed Martin has consolidated 26 work-control systems used to track equipment at each NASA facility into a unified Oracle-based data repository. By eliminating the need to support so many legacy systems, Lockheed Martin has helped NASA meet its head count and cost-reduction goals, said Gail Talbott, a program director at Lockheed Martin.

Among the key challenges Lockheed Martin faced were tagging the entire inventory of equipment from all 12 space centers and developing a common set of business rules for managers at each location to use. To help do that, Lockheed's team had its trainers work closely with NASA maintenance engineers to go over the requirements of each space center, said Talbott.

"Each center thought they had a unique way of managing assets," she said. "As it turned out, they pretty much tracked their assets the same way; they just used different terms."

Indus Replaces CEO, Plans Cuts in New Turnaround BidFacing a drop-off in its sales, asset management software vendor Indus International Inc. last week announced the resignations of its CEO and chief operating officer and said it plans to follow with layoffs and other cost-cutting moves.

Atlanta-based Indus named Thomas Madison, chairman of its board since December, to replace Kent Hudson as CEO. Hudson is leaving along with COO Richard Beatty, whose position will be eliminated by Indus. The company also lowered its revenue forecast for this year from between $135 million and US$150 million to $125 million or less, citing weak IT spending in key vertical markets such as utilities and mining.

Hudson, who joined Indus when it was having problems in early 2000, was credited with making the firm more user-focused [QuickLink: 23321]. Indus was profitable in the third and fourth quarters of last year, but it fell into the red again in this year's first quarter, due partly to a delayed project with the U.K.'s Ministry of Defense.

Jeff Babka, Indus' chief financial officer, said the company plans to restructure operations and reduce staffing in a bid to return to profitability in the fourth quarter. Babka said Indus will look at making cuts in its professional services group, which he described as overstaffed. A cost-cutting plan is due to be disclosed Aug. 1, when Indus reports its second-quarter results.

Indus will now focus on running more efficiently, said Madison, but he added that the changes should not affect users or the company's software development efforts. Indus will also put more emphasis on marketing, Madison said. For example, it's trying to appeal to new users by offering its flagship PassPort enterprise asset management software in a Web-hosted format.

Marc McCluskey, an analyst at AMR Research Inc. in Boston, said Hudson succeeded in tying users back into the product development process at Indus. But the new management's primary task will be to stabilize the company once again, McCluskey said.

Indus isn't the only asset management vendor facing difficult times. San Diego-based Peregrine Systems Inc. last month announced plans to cut 1,400 of its 2,900 workers in North America, the latest in a series of restructuring moves triggered by the discovery of accounting errors at the company. However, Peregrine's problems are different from the ones Indus faces, said McCluskey. Peregrine has done a good job of focusing on its core technologies but was waylaid by the revenue-recognition problems that it uncovered, he said.

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