Top 4 Benefits & Use Cases of Asset Management Automation in 2024
Asset management automation is transforming how finance teams track, value, report on, and optimize their company‘s physical and financial assets. Manual processes involving spreadsheets, email trails, and disjointed systems are rapidly giving way to automated solutions. According to Gartner, by 2025 over 50% of mid-to-large enterprises will have moved their asset accounting to a fully or partially automated solution.
This guide explores the top benefits and practical use cases driving adoption of automation technologies like robotic process automation (RPA), artificial intelligence (AI), and advanced analytics for enterprise asset management.
The Challenges of Manual Asset Management
Before diving into the remedies, let‘s set the stage by reviewing common pain points with legacy approaches:
- Lack of holistic visibility – Asset data trapped in silos across systems makes getting a comprehensive view for reporting difficult. Finance must manually reconcile multiple sources to produce a consolidated asset register.
- Labor-intensive processes – Calculating depreciation, tracking transactions, generating reports, and other asset tasks require enormous manual effort from finance teams. Maintaining fixed asset registers in Excel is tedious.
- High risk of errors – All the formula-based analysis and data consolidation done manually leads to frequent miscalculations and erroneous reports. These jeopardize compliance and financial integrity if undetected.
- Delayed insights – Reporting and analytics are only as current as the last manual updates. Critical business decisions end up being made on outdated asset data.
- Inability to scale – As portfolios grow, finance teams can‘t keep pace with manual processes. New acquisitions create data issues until information is updated in multiple systems.
Transitioning to automated solutions addresses these universal asset management pain points while enabling new use cases.
Automating the Asset Lifecycle
Asset management automation doesn‘t mean tossing out your existing ERP, accounting, and other core systems. The key is integrating them using intelligent automation platforms consisting of RPA, AI, workflow, and analytics tools.
Here are examples of how leading organizations leverage automation to manage the end-to-end asset lifecycle:
Acquisition & Onboarding
- RPA bots extract asset acquisition data from purchase orders, invoices, and billing systems and automatically update the fixed asset register and general ledger.
- Machine learning algorithms classify new assets based on set policies to determine depreciation method, useful life, capital vs. operating expense, etc.
- Workflow tools route assets to appropriate reviewers for confirmation of automated coding.
Depreciation & Valuation
- Automated schedulers calculate monthly, quarterly, or annual depreciation for each asset based on established formulas.
- RPA posts updated asset valuations to accounting systems ensuring they are reflected in financial reports.
- Analytics dashboards allow drill down to see current book value and projected depreciation over time based on various methods.
Monitoring & Reporting
- RPA compiles asset data from all systems into standardized financial, managerial, and regulatory reports. Automated reconciliation ensures accuracy.
- Natural language generation converted report data into narratives and visualizations for stakeholder consumption.
- BI tools monitor asset KPIs and trigger alerts around threshold breaches to cue human review.
Transfers, Disposals & Retirements
- Process mining identifies relevant transactions like asset sell-offs in source systems and automatically adjusts accounting codes and fixed asset registers.
- RPA produces any certificates needed for asset disposals and retirements to maintain compliance.
- Workflow orchestration gathers asset removal approval from authorized reviewers.
Budgeting & Planning
- Analytics tools forecast asset spending needs and depreciation expenses based on growth projections and maintenance assumptions.
- Dashboards enable dynamic what-if scenarios to model trade-offs of various capital budget and asset allocation plans.
- RPA feeds data into budget loaders and financial planning applications.
By seamlessly connecting systems and applying intelligent automation to execute routine tasks, asset-intensive organizations can optimize the entire asset lifecycle. Next let‘s examine the top benefits achieved.
Key Benefits of Asset Management Automation
Finance teams implementing comprehensive automation programs are quantifying significant value across three categories as shown below:
| Productivity | Risk Reduction | Finance Transformation |
|---|---|---|
| – 70% less time spent on manual reporting | – 80% fewer asset data errors | – 50% faster period close cycles |
| – 60% acceleration of depreciation analysis | – 40% lower audit fails and queries | – 30% improvement in forecast reliability |
| – 55% reduction in transaction monitoring effort | – 60% less non-compliance fines | – 25% more assets analyzed per FTE |
Let‘s explore some of the leading benefits unlocked by asset management automation:
1. Increased Productivity and Cost Savings
Automating repetitive, manually intensive activities like transaction processing, report building, and depreciation calculations reduces the staff time required for asset management by over 50%. Teams gain back time to focus on value-added analysis and exceptions.
This translates to hard dollar cost reductions from needing fewer staff dedicated to asset management and related activities. Outsourcing costs for external report production also decline.
2. Reduced Risk of Errors and Improved Compliance
Automation minimizes the chances of incorrect or out-of-date asset data appearing in financial statements and management reports. Algorithmic calculations also eliminate inaccuracies compared to manual depreciation analysis.
Together this reduces audit failures and restatement risk by up to 40%. There is also less likelihood of non-compliance fines which average $3.92 million per incident according to Ponemon Institute data.
3. Agile Decision Making with Real-Time Data
Waiting for month-end reports slows critical decisions dependent on knowing current asset valuations and performance data. Automation provides self-updating dashboards giving teams on-demand access to the latest numbers.
Business leaders can be far more proactive analyzing asset trends and responding quicker to market shifts. Automation also facilitates dynamic what-if analysis and stress testing.
4. Streamlined Period-End Close
Traditional asset management procedures significantly slow financial close because of dependencies on manual processes like creating consolidated reports. Closing cycles can be reduced by weeks through automation.
Rather than racing against the clock, teams have more bandwidth to handle exceptions and adjustments at month-end. Auditors also benefit from accelerated response to asset-related queries.
The bottom line is that automation not only eliminates drudgery, it also unlocks game-changing benefits from productivity gains to proactive decision making.
Overcoming Barriers to Adoption
However, many finance teams remain hesitant to handover asset management tasks to virtual workers and algorithms. The top concerns include:
- Lack of knowledge – Unfamiliarity with capabilities and limitations of automation technologies.
- Fear of job losses – Misconception that automation equates to headcount cuts.
- Project risk – Concerns about cost, complexity, and disruption of implementing automation.
- Change resistance – Cultural opposition to new ways of operating outside spreadsheet-driven comfort zone.
These barriers slow adoption, but can be overcome through a measured approach:
- Prove quick wins – Start with a contained use case like automating capital expenditure reporting to demonstrate benefits.
- Communicate value – Share compelling metrics on increased productivity, reduced errors, and faster insights.
- Incentivize usage – Encourage adoption through training and tying performance goals to leveraging automation.
- Reassign staff – Repurpose staff savings from automation to more complex exceptions and projects to avoid job losses.
With deliberate planning and change management, asset intensive organizations can transition to a more automated, insights-driven future state.
Recommendations for Getting Started
If you see the potential for asset management automation to resolve your finance team‘s pain points, here are tips to begin your journey:
- Document current processes – Thoroughly map out all asset management workflows, stakeholders, systems, and pain points before assessing automation opportunities.
- Prioritize use cases – Focus initial automation on high-value activities like financial reporting and depreciation with clear ROI impact.
- Select a platform – Asset accounting spans multiple needs requiring a combination of RPA, AI, analytics, and workflow tools. Evaluate automation platform vendors that integrate these capabilities.
- Pilot a rollout – Prove value with a focused pilot automating a contained process like fixed asset reconciliation. Use lessons learned to refine your approach before enterprise-wide implementation.
- Measure results – Verify productivity and compliance improvements through metrics like man-hours saved, error rates, and period close time reduction.
- Expand scope – Once perfected, progressively apply automation to more asset management processes from transaction monitoring to budget forecasting.
The right automation platform tailored to accounting and the measured rollout approach above will drive adoption. Reach out if you need help scoping an asset management automation business case or initiative. Now is the time to join the automation revolution in enterprise asset management.
