Effortless Asset Disposal with IQX Asset Disposal Fiori App

Written by: Ana Chua

Managing the fixed asset lifecycle is crucial for organizations to optimize resources and maximize return on investment. This involves strategic planning at every stage, from acquisition to disposal. While acquiring new assets often receives significant attention, the disposal of outdated or unused assets is equally critical for maintaining a healthy and efficient asset portfolio. The IQX Asset Disposal App offers a comprehensive solution that streamlines asset disposal, allowing organizations to manage their fixed asset lifecycle efficiently and effectively.

The Challenges of Traditional Asset Disposal Processes

Disposing of fixed assets is more complex than simply removing them from the premises. It involves several complex steps, often hindered by manual processes and a lack of transparency.

• Identifying Assets for Disposal: Determining which assets are due for disposal can be challenging, particularly in organizations with large asset portfolios. This often involves manual reviews and spreadsheet tracking, which can be time-consuming and error prone.
• Economic vs Accounting lifecycle and valuation: Engineers and accountants value assets differently. Zero-value Net Book Value (NBV) assets may still be operational and have high internal or external value. Conversely, high NBV assets may be economically obsolete or redundant. Recognizing and bridging the perspectives of these two key stakeholders is crucial when making critical asset disposal decisions.
• Book vs Tax Depreciation: Assets are depreciated over their useful lives in accordance with generally accepted accounting principles, which may vary between local (e.g., US GAAP) and group (e.g., IAS). Tax deductions and allowances are stipulated by jurisdiction. Unfortunately, these rarely align. SAP accommodates these different valuation bases with different depreciation areas that apply the appropriate durations, rates, and depreciation methodologies (e.g., straight-line, or declining balance). These varying valuation bases can impact local accounting, group accounting, and the tax implications of major asset disposals.
• Individual replacement vs bulk disposals: Most assets will need to be replaced at their end of life. However, given rapid advancements in technology, identical like-for-like replacements are rare. Typically, replacement assets are proposed that offer enhanced features and capacities and require further business justification through the CapEx process. These asset disposals can be tightly integrated into Capital Expenditure Request (CER). Some assets are simply no longer required and will be disposed of directly without replacement. For example, due to a change in business process, technology, or operating location. In the case of direct disposal, bulk fixed asset disposal is often required. Key attributes of the assets such as their functional location, asset class, or asset group will be referenced to generate disposal lists.
• Related and Sub-Assets: Major assets are often supported by a range of high value spare parts that may need to be scrapped simultaneously at the time of disposal of the major asset. Complex assets also consist of related sub-assets of the physical installation. The sub-assets may be procured separately, added later, or be subsequent additions to the main asset, each requiring its own separate accounting valuation, but operationally integrated.
• Asset vs Equipment: Within SAP maintainable fixed assets are also represented as serviceable equipment records. Fixed asset disposals are often triggered through maintenance inspection and repair processes, and careful communication and consistent updating of both accounting and plant maintenance data is required.
• Projecting Valuation at Future Disposal Date: Accurately projecting the net present value (NPV) of an asset at a future disposal date is crucial for informed decision-making. However, this often relies on manual calculations and estimates, which can be unreliable.
• Capturing Disposal Strategy and Impacts: Defining the optimal disposal strategy, whether it be direct write-off, disposal with associated costs, or disposal with potential revenue generation, requires careful consideration of various factors.
• Obtaining Approvals: The asset disposal process typically involves multiple stakeholders, including engineering, maintenance, tax, business unit management, and finance. Obtaining approvals from all relevant parties can be a lengthy and cumbersome process if done manually.
• Processing SAP Transactions: Once approvals are obtained, the actual disposal of assets in SAP involves various transactions, including equipment synchronization and updates to maintenance schedules.

These challenges can lead to inefficiencies, delays, and potential financial loss.

Introducing the IQX Asset Disposal Fiori App: A Streamlined Solution

The IQX Asset Disposal App provides a modern, user-friendly solution to overcome these challenges. By automating key processes and providing real-time insights, the app streamlines asset disposal and empowers organizations to manage their fixed asset lifecycle effectively.

Key Features and Benefits:

• Identify Related Assets: The app enables users to quickly identify assets due for disposal based on various criteria, such as functional location, cost center, or asset class. This eliminates the need for manual searches and spreadsheets.
• Project Future Valuation: The app leverages SAP data to automatically project the NPV of assets at a future disposal date. This provides accurate financial insights to support informed decisions about disposal timing.
• Define Disposal Strategy: The app facilitates the selection of the most appropriate disposal strategy, considering factors such as asset condition, market value, and associated costs or potential revenue.
• Calculate Net P&L Impact: The app automatically calculates the net profit and loss (P&L) impact of the chosen disposal strategy, providing a clear understanding of the financial implications.
• Automated Approval Workflow: The app streamlines the approval process by automatically routing disposal requests to the appropriate stakeholders based on predefined workflows. Key roles in the asset disposal process typically include Engineering, Maintenance, Tax, Cost Centre and Business Unit Management, and Finance.
• Seamless SAP Integration: The app integrates seamlessly with SAP, automatically updating asset records and triggering necessary transactions upon approval.

Business Benefits of Digital Transformation in Asset Disposal

By implementing the IQX Asset Disposal App, organizations can achieve significant business benefits:

• Increased Productivity: Automation and streamlined workflows reduce manual effort, allowing teams to focus on higher-value tasks and improving overall efficiency.
• Improved Timeliness: The app facilitates faster disposal processing, particularly beneficial when accommodating urgent disposals due to project deadlines or changing business needs.
• Enhanced Governance: Automated approval workflows, built-in validations, and comprehensive audit trails strengthen compliance with internal policies and regulatory requirements.
• Greater Agility: The app enables organizations to actively manage their fixed assets, optimizing asset utilization, reducing operating costs, and improving overall asset reliability.

Visualizing the Power: Showcasing the Fiori App

Embrace Efficiency and Control with the IQX Asset Disposal App

The IQX Asset Disposal App empowers organizations to embrace a proactive and strategic approach to asset management. By automating and streamlining the often complex disposal process, the app unlocks significant benefits, including:

• Reduced Costs: Streamlined workflows and improved efficiency contribute to cost savings by minimizing manual effort and preventing delays.
• Enhanced Compliance: Automated approval workflows and audit trails ensure adherence to internal policies and regulatory requirements, mitigating risk and promoting accountability.
• Optimized Asset Portfolio: By efficiently disposing of outdated or unused assets, organizations can maintain a healthy and optimized asset portfolio, maximizing asset utilization and reducing unnecessary expenses.
• Improved Decision-Making: Real-time insights into asset valuation and the financial impact of disposal strategies empower data-driven decisions and support strategic planning.

The IQX Asset Disposal App is a valuable tool for any organization looking to modernize its fixed asset management processes. By embracing digital transformation in asset disposal, businesses can unlock efficiency, control, and agility, ultimately driving better business outcomes.