Establishing an

Asset Lifecycle
Management Practice
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TABLE OF CONTENTS

Asset Lifecycle Management Defined........................................................................................................... 3

Benefits and Return on Investment of Asset Lifecycle Management........................................................... 3
Recovery of Stranded Assets and Repurposing of Idle Assets .................................................................. 3
Reduced Spare Levels ............................................................................................................................... 4
Reduction in Time to Revenue (Deployment Cycle) ................................................................................. 4
Cost Reduction for Physical Audits ........................................................................................................... 4
Other Benefits ........................................................................................................................................... 5
Assessing Your Asset Lifecycle Management Needs .................................................................................... 5
Recommendations for Your Asset Lifecycle Management Practice ............................................................. 6
Establish an Asset Tracking Practice ......................................................................................................... 7
Maturing from Asset Tracking to Asset Lifecycle Management ............................................................... 7
Automate through Electronic Polling........................................................................................................ 8
Evaluating Asset Lifecycle Management Systems .................................................................................... 8
Organizational and Process Considerations.................................................................................................. 9

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Conclusion ................................................................................................................................................... 11
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ASSET LIFECYCLE MANAGEMENT DEFINED

Establishing an Asset Lifecycle Management (ALM) practice first requires us to start with a brief definition:

Asset Lifecycle Management is the systematic process used to efficiently receive, store, dispatch,
track, install, capitalize, operate, maintain, deinstall, return, retire, and dispose of assets. Effective
ALM maintains visibility and control of assets through their entire lifecycle and provides all the
technical, financial and logistical information that various departments might need to know about
any individual asset or group of assets.

There are a vast number of details and considerations involved in effective ALM; it is a many-layered process
combining physical asset tracking, financial and economic data, engineering and operation planning and
execution, and other processes related to your network equipment.

BENEFITS AND RETURN ON INVESTMENT OF ASSET LIFECYCLE MANAGEMENT

ALM provides both tangible and intangible benefits. These benefits can amount to multiples of the
initial investment in the first 2-3 years of implementation. Listed below are some of the key benefits
that Communications Services Providers (CSP) have seen upon implementing ALM.

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RECOVERY OF STRANDED ASSETS AND REPURPOS ING OF IDLE ASSETS

• Through the use of ALM, “stranded assets” can be recorded and brought into the system for full
visibility.
o “Stranded Assets” are assets that were deployed and lost due to poor processes and the lack
of any documentation. Essentially, they are undocumented assets that are not currently
identified in the fixed asset register or any other system. Such assets will be identified and
inventoried because of ALM. In most cases, these assets would have been taken as lost and
financially written off but with an ALM system the CSP will regain visibility into these
stranded assets and can optimize their use.

• Full visibility of equipment, status, and location will benefit reuse planning and enable effective pull-
back and redeployment of idle equipment.
o An ALM system will identify idle equipment to help improve repurposing and redeployment
thereby reducing new purchase of assets.
o The purchase of older technology or near obsolete equipment can be reduced and
decommissioned equipment can be used instead. For instance, the sharing of information
between business units can allow regions where equipment might be obsolete due to
upgrades to share with regions that are still purchasing the older technology.
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REDUCED SPARE LEVELS

• ALM will help in significantly reducing the spare holdings by providing data for setting the right spare
levels based on analytics instead of the manufacturer’s recommendation. The available data can be
used to calculate the utilization of spares allowing you to optimize your holdings.

• An ALM system will track spares wherever they are located, whether that is at formal sparing
locations like warehouses or at field sites managed by technicians or contractors.

• ALM will help reduce older technology spares purchasing by enabling cannibalization of idle
equipment that is visible through the ALM system.

• Reduced sparing levels additionally lowers the amount of administrative cost spent on warehouse
space and personnel required to house and manage the unnecessary additional equipment.

REDUCTION IN TIME TO REVENUE (DEPLOYMENT CYCLE)

• Equipment can be more rapidly deployed with accurate, up to date information about assets on hand
and site status.

• The time it takes to financially recognize the deployment of equipment will be significantly reduced
through tracking receipts and installation in real-time. This will reduce the time to revenue of capex
items.

• The capital work-in-progress (CWIP) will be considerably reduced because new site and equipment

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can be more quickly assembled and deployed once accurate project information is available.

COST REDUCTION FOR P HYSICAL AUDITS

• ALM reduces operating expenses by eliminating the requirement for more frequent physical audits
that might otherwise be mandated for financial compliance. Physical audits are reduced when site
information is highly accurate.

• Financial and other statutory compliance can be met through electronic verification and
reconciliation instead of traditional manual counts by integrating with electronic sources to identify
what is available at a site.

• Using the Audit functionality, technician visits can be scheduled and performed periodically using
maintenance staff, thus eliminating the requirement of third-party audits.

• The data captured using the ALM system’s Audit functionality is automatically stored and can be
reconciled with what is recorded in the official Fixed Asset Register (FAR) – considerably reducing the
required post-audit work by finance personnel.

• Integration with third-party systems provides real-time visibility of all assets further reducing the
need for physical audits.
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OTHER BENEFITS

• Field losses due to theft or fraud are minimized because of the “chain of custody” rules built into
ALM. Accountability is built into the ALM system by ensuring that whenever an asset transaction
takes place the user is identified, and this information becomes a permanent part of the asset record.
Tracing losses and increasing accountability naturally discourages theft and fraud.

• The performance of repair vendors can be tracked, and Service Level Agreements (SLA) better
managed with full visibility into the return and repair process.

• Annual Maintenance Cost (AMC) is reduced by knowing the exact installed base of equipment on
which maintenance is needed. In the absence of accurate data on the amount of installed equipment
against which AMC is calculated, operators may base their AMC calculations on the amount of
equipment purchased, which can be significantly higher than actual equipment in use.

• Repair costs are reduced through warranty tracking. By tracking the exact date that equipment is put
into service, carriers can make use of the maximum effective warranty period instead of having the
warranty start from an arbitrary date such as shipped date.

• In countries like the USA that tax property ownership (Property Tax), such taxes are reduced by
knowing the exact installed base of equipment against which tax calculations are made. Property
taxes are not generally calculated against equipment until it has been installed. Without accurate
information regarding the status and location of equipment, property tax cannot be accurately
calculated. Additionally, knowing the tax jurisdiction each installed asset is subject to will help you
withstand audits and avoid penalties.

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ASSESSING YOUR ASSET LIFECYCLE MANAGEMENT NEEDS

To determine specific needs surrounding ALM for CSPs, multiple topics need to be explored during the
assessment of an organization’s operations such as:

• How are fixed asset transactions managed at all network and storage or sparing sites?

• What level of tracking and visibility currently exists for network equipment from the time it is
received to the time it is installed at a network location?

• What level of tracking and visibility currently exists for equipment that is on site and not plugged in
or is in transit on vehicles?

• How are Enterprise Resource Planning (ERP) financial systems updated with asset receipts,
movements, capitalization, retirement and dispositions?

• How are inventory and equipment levels tracked?

• What audit processes are currently in use (i.e., Methods and Procedures, timing, frequency, etc.)?

• How is equipment handled and recorded throughout its lifecycle? Specific steps in that lifecycle include:
o Receiving against Purchase Orders
o Labeling of Assets for ongoing tracking
o Stocking of Assets
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o Maintaining the minimal effective Spares Pool

o Transfer of Assets
o Installation and Capitalization
o Repairs and Returns
o Replenishment of Equipment
o Retiring and Disposal of Equipment
o Performing Cycle Counts and Audits

RECOMMENDATIONS FOR YOUR ASSET LIFECYCLE MANAGEMENT PRACTICE

The basis for any ALM practice starts with a solid asset tracking process. While asset tracking is a subset of
overall ALM, it is the required first step that provides the foundation from which advanced ALM processes
can evolve.

Asset tracking means knowing what assets you own, where they are located, who has them, their status and
their condition. This is no small step. Establishing a complete, accurate and current inventory of those items
deemed to be worthy of tracking on an individual basis is the key to effective ALM. After all, assets can’t be
individually managed if basic information is not recorded and retained.

The basics include information like what the asset is (manufacturer’s item number and revision number) and its
serial number, which is often used as the unique identifier to distinguish it from other assets. Additional
information includes its original cost and the date it was placed in service, its warranty, and association with a

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project, business unit and other relevant information. All this data should become part of the record for that
individual asset at the time it is received. Each serialized asset will have its own record in the database and its
own unique identifier – such as an Asset ID or the manufacturer’s serial number.

For each asset that is tracked it is important to know its location including the address, latitude and longitude,
tax district, entry codes, directions, etc. There should be user defined fields available for you to add information
you want to know about a site if it isn’t already built into the system.

In order to accurately identify and track each unique asset, it is best to make use of automated data collection
technology that includes barcodes and RFID. A simple barcode that is easily identified as the unique “license
plate” for each asset is still the preferred method of identifying a physical asset. Some carriers use the
manufacturer’s serial number but there are problems with this approach. For instance, sometimes the serial
number is not able to be seen when an item is plugged in. There is also the risk of duplication by different
manufacturers. Manufacturer provided 2D barcodes can be difficult to read as they require advanced parsing
logic. Additionally, there can be multiple similar looking manufacturer barcodes on the asset (such as serial
number and item number) which can lead to confusion when identifying the correct barcode to scan.

To solve these potential problems, it is recommended to use a unique barcode label that is easy to distinguish
from other barcodes on the asset. The manufacturer’s serial number should be captured for each asset as well.
It can be useful in identifying the asset if the label is removed and in matching the items with electronically
discovered data (refer to the section on Electronic Polling).

Each additional layer of ALM relies on accurate, real-time asset tracking data.
7

ESTABLISH AN ASSET T RACKING PRACTICE

In the initial step of implementing asset tracking, buy-in can be gained from the affected departments and
momentum built for including additional components of ALM.

At a minimum, the initial implementation of an asset tracking solution should focus on seven high-value
transaction types:

• Receive/Store/Stock

• Pick/Pack/Ship

• Install

• Move/Transfer

• Return/Repair

• Audit/Update

• Deinstall/Retire/Dispose
These few transaction types can provide a large quantity of critical information that can be leveraged as
additional transaction types are added to increase asset visibility, management, and control. To facilitate
transactions, key data elements should be identified and limited in scope to the minimum required to establish a
solid asset tracking practice. Additional data elements can be added later as the user groups become accustomed
to the system and metrics become available to guide decisions and determine key performance indicators.

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MATURING FROM ASSET TRACKING TO ASSET LI FECYCLE MANAGEMENT

The possibilities for cost and time savings by maturing your ALM practice are endless. After you have mastered
your asset tracking practice, you should consider performing the following:

• Integrate to ERP, Operational Support System (OSS), Network Management System (NMS), Element
Management System (EMS) and others.

• Evaluate purchase requests to compare against available equipment before purchasing new.

• Perform automated requisitioning based on advanced inventory carrying options and equipment
ordering rules that are set according to your specific needs which may include, but are not limited to,
options based on locations types, projects and purpose.

• Provide the warehouses with expected receipts and shipments for the day.

• Integrate packing slip printing capabilities for ease of receiving at the end destination.

• Track inventory by projects and ensure it is reserved for its intended use.

• Track activity by jobs to make certain that tickets are completed, and the SLAs are met.

• Search for available spares based on proximity between where it is needed and where it is available.
8

• Manage sparing and inventory levels with minimum and maximum set for designated items.

• Manage standard and advance replacement for repairs. Ensure that returns and repairs are closed,
warranties are utilized, and that damaged or defective items are returned promptly in the case of
advanced spares replacement.

• Capitalize assets as they are placed into service.

• Retire assets as they are issued out by way of disposal, consignment or placed in scrap because they
cannot be repaired.

AUTOMATE THROUGH ELECTRONIC POLLING

The final component to a full-blown ALM practice is Electronic Polling (E-Polling), also known as Discovery &
Reconciliation. Implementing this technology will round out your ALM practice by automating some of the
manual processes that make up asset tracking. For instance, E-Polling can supplement, or in some cases replace,
the audit and reconciliation of installed equipment. This is accomplished by making use of OSS, NMS, and EMS
data through full integration with network systems. This data should include serial number, manufacturer’s item
number, location of item, and sometimes status such as in-use or idle.

Select an ALM system with advanced E-Polling capabilities that can integrate with OSSs and NMSs or an
intermediary aggregator that can easily normalize the data from multiple OSSs and NMSs.

The system should include a configurable reconciliation engine and configurable rules-based action engine. It
should also be able to integrate with your ERP software. Choose an E-Polling solution that automatically updates
your ERP with current location, status, and other required attributes. Select a system that can provide readily

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actionable information such as potentially idle equipment, last-seen-at, and other information useful to
operations.

EVALUATING ASSET LIF ECYCLE MANAGEMENT SY STEMS

When evaluating ALM system options and preparing for implementation, the following should be
considered:

• Engage a consultant with proven expertise in ALM to assist in establishing a strategy and in building a
tactical plan for implementing asset tracking. This engagement should jump start the process through
tasks such as the definition of what to track, how and when to tag an asset, understanding the right
types of barcode labels to use in different environments, business process analysis, and best practice
implementation.

• Form a cross-functional project management team comprised of representatives from

Accounting/Finance, Supply Chain Management, Network Operations, IT, and the Executive Team that
can drive the implementation, establish processes and make timely decisions.

• Evaluate an ALM system that can serve as the system of record for the physical assets and all other
inventory (serialized assets and non-serialized items). The data mined from this system will provide a
level of confidence around the physical record, as well as augment the data available from other
systems through integration.
9

• Engage a consultant that can guide you through the evaluation of the data requirements for a robust
ALM system including item codes and item types, items to be tracked, items to be tracked by unique
Asset ID, manufacturer’s item number, bill of material for parent items, and current inventory of
items with their current location. The starting item master and inventory data must be accurate and
made available on time. In the case that reliable data is not available, other methods need to be
established to enable post-implementation data collection and validation.
• Select an ALM system that can be implemented in logical phases. The system should initially provide
basic asset tracking functionality (from receipt through disposal), but also be able to grow and evolve
with an organization as the asset tracking process evolves over time into a complete ALM practice.
This phased approach will not only help to ensure the success of the implementation but will allow an
organization to determine how to maintain the data integrity of the system using the appropriate
compliance measurements and correct user behavior modifications.

• Consider a hosted/cloud/software as a service (SaaS) offering to minimize the IT infrastructure and

system administration costs, including potential additional headcount.

• Evaluate only ALM systems with a robust and standardized application programming interface (API)
for integrating with a multitude of critical external systems for data sharing. The most common
targets for integration with ALM are financial/ERP systems (Oracle, PeopleSoft, SAP, etc.), and
OSS/NMS/EMS systems (OSSRC, NetAct, U2000, Netnumen, MetaSolv and Granite, etc.).

• Review the ALM system for optional add-on modules to enhance your ALM practice as you mature
such as Sparing, Network Discovery & Reconciliation, and Requisitions.

• The ALM system should leverage the latest technology platforms via a system that provides mobile
capabilities through the smartphones (iPhones and Androids) already used by technicians. These

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mobile platforms will also provide options for more robust, dedicated scanning tools that warehouse
personnel and others in high-production environments can use more efficiently than a standard
phone. In addition, the ALM system should provide a web interface.

• Consider a flexible ALM system that allows for tracking of items at different levels of granularity
such as unique identification for individual capital assets as well as expense and consumable
tracking at the item identification and quantity level.

• Evaluate an ALM system that provides robust security options – including native authentication,
LDAP, SSL, SAML, and SSO capabilities.

• At a minimum, an ALM system must have robust reporting capabilities native to the application
along with the ability to easily export and import data using standard text file conventions.

ORGANIZATIONAL AND PROCESS CONSIDERATIONS

To ensure the success of the ALM initiative, from an organizational and process perspective:

• Establish a team to manage the transition. This could originate as one or two key participants
currently employed at a company, whose focus would be shifted towards asset management
activities. These key employees could work to define and standardize asset tracking processes across
the entire organization.
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• Establish a Master Data Management (MDM) process and team for accurately creating an item
master with item codes with including all asset management attributes and parent child relationships
at the time of item creation. A similar process should be established for creation of locations and
location master.

• Perform an asset designation exercise that determines what and how specific types of items should
be tracked using an MDM process. This could include redefining capitalization cost thresholds,
consideration for the mobility of items, whether return management processes occur for items, and
if warranty tracking is important.

• Create and communicate information to all departments within an organization on the benefits of
asset tracking and ALM (i.e., Accounting/Finance, Supply Chain Management, Network Operations,
IT, etc.). Measuring compliance by field technicians, warehouse personnel and contractors will help
ensure the success of your ALM initiative. A good system will make compliance reporting easy.

• Define and communicate the need for assessing the results of, and compliance with, your ALM or
asset tracking practice. Consider awarding incentives for reaching and exceeding compliance metrics.
By rewarding good behavior, you reinforce the importance of the new initiative throughout the
organization.

• Eliminate conflicting priorities surrounding your ALM practice. These conflicts may include:

o Short-term performance opportunities and long-term sustainability

o Between initial capital expenditures and ongoing operating costs (CAPEX vs. OPEX)
o Risk and performance
Throughout the implementation process, keep in mind the key structural items for a successful ALM

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implementation:

• The Organization: Holistically embrace the process and the implementation.

• The Leadership: There must be complete buy-in and sponsorship within the key departments of the
organization including Accounting/Finance, Supply Chain Management, Network Operations, IT,
and the Executive Team.

• User Support: Both internal support (Tier 1 help desk and regional/local super users), and external
(Tier 2 help desk) should be provided.

• Operational: Successful ALM systems are focused on the needs of a mobile workforce
because those working with equipment don’t sit at a desk. It is essential that the ALM
system have an easy to use mobile platform. The mobile platform must be flexible and
provide real-time control. Additionally, the ALM system must provide tools for measuring
compliance and ensuring a chain of custody audit trail.

• Compliance and Performance Evaluation Plans: Provide for constant process

improvement that turns data into usable decision-making information.
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CONCLUSION

After engaging with more than fifty CSPs over two decades to help those carriers establish an ALM practice,
Fulcrum Technologies is uniquely qualified to help you optimize the potential benefits that your organization can
realize through ALM. Experienced vendors like Fulcrum can help with developing an overall strategy as well as
helping with the details and minutia required for a successful implementation, such as ordering barcode
scanning tools, or selecting from the many types of barcode labels that can be used in different scenarios.

This white paper documents the opportunity for significant financial and operational benefits at an organization
through implementing an ALM practice. Fulcrum believes the recommendations presented in this paper lay the
foundation for an ALM practice that can grow and continue to provide even greater benefits in the future.

IF YOU ARE INTERESTED IN MORE INFORMATION

Please check out the Fulcrum website at
www.catsalm.com
or
contact us at +1 206-336-5656.

© 2019 BY FULCRUM TE CHNOLOGIES, INC. ALL RIGHTS RESERVED.