Assets may be allocated across multiple departments, entities, or other dimensions

Description

This requirement refers to the ability to distribute resources such as capital assets across different departments, entities, or other operational parameters. This allows the business to gain a more complete picture of the business from asset purchase, through depreciation, to salvage.

Example Use Case

Scenario: A large corporation is seeking to understand the impact of its capital asset expenses more clearly. The firm has various departments, multiple business entities, and operates in numerous geographical locations.

Solution: The CPM software can allocate assets across these multiple dimensions. For example, a physical asset like a company vehicle could be allocated to the 'Sales' department, under the entity 'Consumer Products', and in the region 'North America' for 50% of the time, while allocating the balance to 'Service' in the same product / region combination. By distributing resources in this manner, the tool provides a clear picture of asset usage, aids in budgeting, and supports strategic decision making.

Considerations

This feature allows a particular purchased or planned asset to be split across subs, departments, products and so on in a manner similar to allocating an employee's costs across different parts of the business. The big difference with CapEx is the associated costs such as depreciation, and salvage values. Everything related to the asset must be taken into account when this occurs.

Many systems offer the ability to allocate asset expenses, but sometimes only when it is first acquired. The acquiring department, by default, will absorb all expenses. When that asset is partially allocated or otherwise transferred to another department, that department incurs no upfront costs. That is not an accurate method of understanding an asset's impact on an organization. As such, confirm with the vendor that a holistic view of the asset is also allocated.

Questions to Ask a Vendor

• Allocation Abilities: Can your software accommodate the allocation of a variety of assets across multiple dimensions like departments, entities, and location?
• Reallocation Flexibility: How easy is it to reallocate assets within your system as our business needs change?
• Allocation Completeness: Does the asset and all of its expenses including depreciation get allocated along with it?