The landscape is changing for local governments as auditors place greater scrutiny on long term planning, asset consumption and financial sustainability.
With recent changes to the fair value accounting standard AASB113 that came into effect on 1 July 2013, councils need to put a stronger focus on long term planning as part of more strict financial reporting requirements.
The average council asset portfolio in Australia is worth approximately $600 million, ranging from $250 million to $3 billion, depending on the size of the council. With average asset consumption at about 1 per cent per annum, many councils do not have enough funds to replace and maintain infrastructure at that rate.
As local governments continue to struggle with funding gaps and financial reporting requirements become more stringent, it is vital for councils to determine the best allocation of funds that will deliver the optimum result.
Bringing together financial data and asset lifecycle information enables councils to make realistic funding decisions that take into consideration medium to long term cost projections as well as immediate requirements. Stand alone asset management systems generally do not address these factors.
Modelling the future with sophisticated analytics
While most organisations have the necessary asset data to support long term planning, many do not have the correct analytical tools to model the future from that data.
TechnologyOne Strategic Asset Management uses industry-benchmarked algorithms and modelling for long-term financial analysis, forecasting and community service planning.
Councils can now use proven science to model different scenarios and identify ways to spend funds more effectively, in order to reduce the funding gap and deliver an improved service to the community.
A holistic, enterprise approach
When a Strategic Asset Management solution is used as part of an enterprise solution, councils can reduce the amount of time required to consolidate data. An integrated, holistic approach to enterprise asset management enables councils to focus on their core business to reduce funding gaps and improve their return on assets.
A number of TechnologyOne customers using Strategic Asset Management as part of an Enterprise Asset Management solution are successful in achieving their long term planning requirements.
With the correct skills, analytical tools, and integration of financial and asset data, councils can use this information to make realistic funding decisions. Strategic Asset Management allows local governments to exploit the science of optimisation to achieve the best level of service for the community at the lowest long term cost.
Peter Suchting is the General Manager of the Asset Management product group at TechnologyOne. He has almost 30 years experience in the enterprise software industry, mostly related to asset management. A qualified accountant, Peter has held a variety of senior management roles in software development, product management, industry marketing and executive management.
At TechnologyOne, Peter has overall responsibility for the strategy and direction of TechnologyOne Asset Management. Since joining the company in 2010, Peter has set a new direction for the asset management product to better align it with the needs of customers.