Why Public Sector Companies Use Asset Management to Be Effective

Asset Management / November 2021

The public sector has faced unprecedented funding and staffing cuts, yet demand for services continues to rise. Public sector companies in 2017 struggled with pay freezes and wages capped to below inflation levels. As well as low staff morale and heavy regulatory requirements. When such a system is pushed to its limit, it explores the role of digitisation. Essentially helping to enhance its overall asset management.

Public Sector: Long on Demand, Short on Resources

The Public Sector is responsible for delivering all Public Services within the UK. It is funded via taxation; direct and indirect, local, regional and national. Approximately 5 million people are employed by public sector companies. The biggest and most recognisable public sector company is the National Health Service. Healthcare, Social Care, and Education are allocated the most funding. But the public sector covers a huge range of areas. This includes government agencies such as The Ministry of Defence and HM Treasury. As well as local councils, tourism promotion, criminal justice, and international development.

Between 2010 and 2015, there had been cuts of 37% in funding to local authorities. Leaving public sector companies fighting to do more with less. It is estimated that local councils faced a £6 billion gap in funding by 2020. Mostly due to rising social and healthcare costs for an ageing population.

Staff cuts go hand in hand with funding cuts. The Office for Budget Responsibility predicts close to a million jobs will be lost between 2010 and 2020. With 400 000 lost between 2010 and 2015 alone. Demand for public services and more personalised public services, continues to increase across the board. The workforce available to fulfil this demand, however, decreases year on year.

For those still employed, pay rises capped at 1% have been in effect since 2013. In September 2017, Theresa May raised these caps for police officers (2%) and prison officers (1.6%). But these remain well below today’s rate of inflation. (2.9%). The public sector again is forced to do more, with fewer, lower-paid workers. Unsurprisingly, morale across the public sector is at a low.

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Multi-Faceted Regulatory Environment

In recent years, we have seen an increase in public services being outsourced to the private sector. Capita, G4S, Serco, for example. The public sector is not given a free pass for grinding bureaucratic processes and outdated technology. Public sector companies face many of the same challenges as those in the private sector. Meaning they’re increasingly held to the same standard.

Another challenging aspect of the public sector is the stringent regulatory burden it faces. Taxpayer funding must be correctly accounted for at all times. Public sector companies from across the board manage sprawling asset portfolios. Including property, vehicles, IT, specialised plant and equipment. As well as software licenses and of course, direct funds.

Clear audit trails, purchase/repair/sale history and strict tender processes are required. Generating huge amounts of paperwork. General administrative costs make up approximately 3 million of the public sector’s 5.4 million staff.

This snapshot of the public sector shows companies struggling to meet public service demands.

Cost Efficiency Expectations

Efficient asset management can’t solve the public sector’s funding crisis. But it can ease many of the related problems. First and foremost, creating a clear map of current assets and liabilities. A government body can have hundreds of properties scattered around the country. The Department for Environment, Food and Rural Affairs (DEFRA) have over 200 properties across the UK.

Ensuring asset management is centralised within software avoids knowledge being lost. With staff turnover and data getting caught in silos.

Asset Management Resources, a provider of asset inventory services, states that “After 14 years of experience, AMR has repeatedly found that 65% of fixed asset data is incomplete, inaccurate, or altogether missing, while 10% to 30% of fixed assets are no longer owned.”

Implementing asset management tools, whether physical assets or software assets, brings savings across the board. “Ghost” assets on the books, poorly calculated depreciation, unused software licenses. These are common issues across public and private companies, which can be eliminated with asset management.

IT departments report savings of up to 30% upon adoption. With a complete picture of an asset portfolio, opportunities can be identified and financial drains staunched.

Stringent Compliance Benchmarks

Modern asset management software allows data entry and manual processing to be largely automated. Taking inventory of assets feeds into a centralised system that can be kept up to date. Removing burdens from administrative staff frees up valuable time for more pressing responsibilities.

Using Asset Management Software also improves regulatory compliance. Required asset maintenance and repair can be planned to schedule, with a historical record created that staff and auditors can immediately check. This is important in health-critical public sector organisations such as the NHS.

Finally, asset management enables efficient resource planning. Asset management and enterprise resource planning penetration in the private sector depends heavily on the industry. With real estate and IT/software leading the pack. As so many public sector companies manage large portfolios, they are turning towards the same solutions.

Who Implements Asset Management Tools in Public Sector Companies?

The NHS has made good use of Asset Management Software for healthcare. Due to the specialised requirements of the healthcare sector, some NHS trusts have selected custom software for their needs. Blood360, the leading Electronic Blood Tracking system in the UK, is an example of such as specialised case. Blood360 was introduced to remove the most frequent issues during blood transfusions caused by human error.

Another such specialised software is CES360, software for community equipment services. This uses barcode tracking for all community equipment. As well as scheduling maintenance and repairs, and reducing patient waiting times for equipment.

While custom software is required in specialised cases, savings can be made with a more off-the-shelf approach. Over 80 central government organisations and shared services centres.

As the funding issues in the public sector show no signs of easing, greater efficiency is the only way forward. Both in the private and public sectors, efficient use of asset management software has been shown to reduce the tax burden. As well as reduce time spent on administrative tasks, identify opportunities and risks earlier, and improve compliance.