Asset management is a system that helps companies to keep a record of all their assets, such as instruments, machinery, and expenses. Keeping tabs on the assets helps streamline operations. The process also reduces the possibility of recording ghost assets, since all the assets are well accounted for.
Definition of Asset Management:
Asset management is increasing total wealth over time by acquiring, maintaining, and trading investments that have the possibility to grow in value.
Asset management refers to identifying a client’s financial objectives and then working to accomplish those objectives via portfolio management- purchasing and managing stocks, bonds, and funds.
Asset management is a systematic process of acquiring, maintaining, enhancing, and disposing of assets in the most cost-efficient manner.
Asset Management Life Cycle
Asset management is a multi-step operation that is largely automatized once the basic stages are completed.
there are 4 key stages in the asset life cycle.
Planning is the first stage of the asset management process. It establishes and verifies asset requirements. The establishment of asset requirements is based on the evaluation of the remaining assets and their possibility to meet service delivery needs and identification of management strategies is needed in order to analyze the necessity of an asset.
Effectively planning in asset management helps a company in :
- Determining the possible sufficiency of remaining assets.
- Ensuring resources are available when required.
- Ensuring assets are maintained and liable.
- Funding asset acquisition.
- Estimating options for asset provision.
- Recognizing excess assets.
Taking the finest decision on choosing the best choice can only be made after determining the cost and the requirements. The choice will be the stage of the acquisition planning. The acquisition planning comprises activities involved in purchasing an asset to ensure a cost-effective acquisition. This covers activities such as designing and buying an asset. The application of these activities guarantees the asset is fit for use.
Primarily, the company should decide whether the asset will be perpetually purchased or produced. In the next step, establish a budget for asset acquisition along with a time frame for its acquisition and a purchasing requirement. An effective budget and cash flow should be put as insufficient funds otherwise, project management can put at risk the process of asset acquisition. At the time these conditions are satisfied, a project team should attempt the process to make sure that all acquisition process activities will be accomplished to meet service delivery and other business objectives.
3. Operation and Maintain:
Now you can do several operations with assets once you’ve got it up and running, analyze the asset’s necessity and determine how your team can take the best care of it. Determine if the asset would benefit most from preventive maintenance, routine maintenance, predictive maintenance, or some other maintenance planning.
The plan of asset management should have a major focus on asset maintenance issues. Long-lived assets, in most public sector assets, especially buildings and roads need specific maintenance during their life cycle.
Throughout this time, the asset should be focused on maintenance, observation, and possible improvement to overpass any change in operational requirement.
At a certain point, when an asset is no longer useful, it can be treated as a surplus or an underperforming asset. At that time, the disposal and replacement of that asset will make the most sense. Disposal should be done from the perspective of the effects of the decision on service delivery and any departmental duties. If soon an asset is to be disposed of, in order that statutory maintenance to be taken, the maintenance strategy should be accordingly adjusted.
Types of Asset Management
There are mainly 6 types of asset management,
1. Financial Asset Management:
It refers to a more traditional understanding of managing assets. It deals with investments, brokerage, real estate holdings, and all the nonmaterial investments of an organization.
It refers to managing the acquisition, forming an investment strategy, dealing with budget and costs, handling cash, stocks, and bonds.
2. Enterprise Asset Management:
Enterprise asset management is a rapid-growing aspect. It includes acquisition, operation, maintenance, and decommissioning of the enterprise asset. The definition is sometimes expanded to include intangible assets.
This involves documentation, inventory records, productivity, and the condition of facilities.
3. Infrastructure Asset Management:
The management of public infrastructural assets, such as bridges, roads, railways, waterways, and electric grids with a focus on maintenance, replacement, and rehabilitation of infrastructure, is called infrastructure asset management.
4. Public Asset Management:
It is quite similar to infrastructure asset management, but it has a greater scope that includes facilities such as parks, schools, airports, public spaces, etc. It often focused on increasing the service span of public assets.
5. IT Asset Management:
Management of hardware and software of an organization is called IT asset management.
IT asset includes both tangible (computers, printers, routers, etc.) and intangible (software license, subscriptions, patents, etc.) IT-related assets.
It helps to;
- Build a strong technological footing,
- Provide security,
- Save time and money
IT asset management involves a system for retrieving, storing, organizing, and sharing information, both online as well as offline.
IT asset management is useful no matter what kind of company to service provider is under discussion.
6. Digital Asset Management:
Digital assets of a company such as social media, content, media, websites, and other intellectual properties are controlled through digital asset management. It is a rapidly evolving field.
By maintaining access to such items as intellectual property rights, building plans, and meeting recordings, stakeholders bypass the cost of maintaining multiple copies of these items in storage locations. They can rest assured that they are better secured from natural disasters, fire, and water damage.
Companies that do not sell digital items can also profit from using digital asset management.
Asset Management System
An asset management system is a process an organization uses to deal with all of its assets across the business. Assets can be both tangible and intangible. They can include constructions, software and hardware, inventory, financial assets, and anything significant to the business’s day-to-day running. The process of managing these assets vary from company to company.
For an effective system, the company has to deal with all aspects of its business assets. It doesn’t depend on the size of the company. To stay in control, a proper and real-time asset tracking system requires to be in place. Otherwise, you have the risk of losing time and money.
In other terms, it simplifies the tracking of corporate assets, their condition, and helps better planning. To maximize profits, the cost of maintaining operational and fixed assets should be minimized.
Asset Management Process
Here are some steps involved in the asset management process:
- First of all, all existing assets are assessed and determined the need and purpose of a portfolio.
- Diagnose the condition of the existing assets to figure out if they meet financial targets.
- After that, the extent to which the assets realize their purpose is found out.
- The usefulness of future endeavors is measured. Based on future requirements, the need for new assets is determined.
- Then the asset life cycle and efficiency are analyzed to determine a maintenance cost.
- Then the overall impact and depreciation rate of the assets are evaluated.
- After that, the potential risks associated with each asset are assessed.
- And finally, each asset’s lifespan, value, and disposal strategy are predicted by the manager.
Importance or Benefits of Asset Management
Now let’s talk about some importance or benefits of an asset management strategy;
1. Reduce Customer Complaints:
Effective asset management will make your entire process run smoother – whether you’re in a construction field, a warehouse, or an emergency chamber. And the sky is the limit when you have a documented process for the care and use of the things you need to give the best customer service.
2. Increase Customer Value:
When your consumers aren’t accusing, they’re likely to buy from you again. Also, consumer loyalty is less about the service or product and more about the experience that comes with using it.
Enhancing customer value has great downstream benefits to any business and solid asset accountability measures definitely lead to a better customer experience all around.
3. Improve Efficiency:
An asset management approach naturally consists of checks and balances that will help you find areas for efficiency. Diligent asset management has helped you to do better utilization of equipment and reduce the cost of replacing resources.
4. Helps Identify & Manage Risks:
Asset management involves the finding and management of risks that result from the utilization and ownership of particular assets. That means a firm will always be able to manage any kind of risk that comes its way.
5. Budgeting For the Future:
As you begin to increase organizational efficiency so, you’ll have to make it much easier to budget and plan for both current and future operations. Even a basic pen and paper technique, like sign-in sheets for critical assets, facilitates you to more effectively track how and when they are being used.
Asset Management Softwares
There are some asset management software or tools that enable you to do operations such as identity, locate, snd monitor important assets like tools, equipment, and people.
Here are some benefits of asset management software;
- easily locate assets,
- Productively monitor equipment condition,
- Know where your assets have been,
- Improves Work-In-Process (WIP) tracking,
- Reduce compliance risks,
- Ease the burden of audits,
- Ensure employee safety,
- Add-on capabilities.
Now let’s talk about some useful asset management tools or software;
1. Service Now
ServiceNow is a cloud-based workflow automation program that facilitates organizations to improve operational efficiencies by streamlining and automating routine work tasks.
- Fast customer service,
- Scale IT with automation and AIOps,
- Reduce software and cloud spending,
- Ensure resilience for business operations,
- Deliver digital employee experiences,
- Create new workflows fast.
To learn more about service now, click here>>>
2. Kissflow Operations Cloud
Kissflow is a very simple administration-automation tool. It is a finance cloud that you can use to do operations like asset management, budgeting, facility management, accounting, cash management, etc.
Pros (especially for asset management):
- Unified repository of all your assets,
- Allocate your assets wisely,
- Simplify asset repairs and returns,
- Calculate depreciation expense automatically,
To learn more about Kissflow Finance and Operations cloud, click here >>>
3. SAP ERP Suite
SAP not only focuses on asset management but also does several other operations too, such as accounting and financial management, sales and customer relationship management, purchasing and supplier relationship management, inventory and distribution, reporting, etc.
- Enhance efficiency,
- Integrate your business,
- improve performance,
- User-friendly interface and environment,
- Scale operations,
- Strong service expertise
To learn more about the SAP ERP suite, click here>>>
4. Oracle E-Business Suite
Oracle E-Business Suite is a set of business applications for managing and automating processes for your enterprise. It is also known as Oracle Enterprise Resource Planning (ERP), and Oracle Financials on the market. It provides functions like; integrated business intelligence portfolio, an adaptable global business platform, and a customer-focused application strategy.
- Run in the cloud,
- Deliver more value,
- Soar to the cloud,
- User friendly,
To learn more about Oracle E-Business Suite, click here>>>
5. IBM Maximo
Get the most benefit from your enterprise assets with Maximo Application Suite. It’s a single, integrated cloud-based platform that uses AI, IoT, and analytics to improve performance, increase asset lifecycles and reduce operational downtime and costs.
With market-leading technology from IBM Maximo®, you’ll have access to configurable CMMS, EAM, and APM applications, along with simplified installation and administration, plus a better user experience with shared data and workflows.
- Leverage market-leading EAM, add-ons, and industry models,
- AI-powered monitoring,
- Simplified licensing,
- Greater flexibility
To learn more about IBM Maximo, click here>>>