introduction
It's essentially a quick, centralised approach for you to keep an eye on and manage the assets of your companies. Everything that is tangible or intangible, including buildings, plants, machines, and tools, may be managed from a single location.
The good news is that your department can save money on productivity and efficiency if you do it well.
A business's valuable assets are monitored and maintained by an asset manager. Adopting an asset management strategy can help you create, utilize, maintain, improve, and dispose of your assets in an economical manner.
This entails having your hands in a variety of pies—administration, finance, capital, and operations—and having a solid understanding of the strategic and operational procedures used by your business.
You can also hire outside experts if you don't want to perform the additional effort. These experts will assess your company's resources, cash flow, and financial situation before making recommendations about how you should reinvest to increase profitability.
What Is the Difference Between Asset Management and Wealth Management?
The activity of managing assets on behalf of organisations, sovereign wealth funds, pension funds, businesses, and other significant groupings is known as asset management. The asset manager is referred to as an institutional asset manager, and these clients are frequently referred to as institutional investors. Investments made using client funds include hedge funds, private equity, individual stocks and bonds, mutual funds, ETFs, and more.
When a person or family is the client, wealth management is essentially asset management. It includes all of this in addition to having a thorough understanding of a person's or family's full balance sheet, cash flows, budgets, and other specific aspects of their financial condition. Workplace policies, money held in trust or by holding corporations, insurance requirements, and charitable contributions are a few examples of this.
Additionally, wealth management companies supply their clients with private banking services that give them individualised, specialised advice on retail banking goods and services including loans and mortgages.
Overall, wealth management is a service that aims to assist someone with their entire financial life, including both assets and liabilities. This assistance may be provided in relation to financial planning, gifting, or creating the legacies that person wants to leave for their family.
Principles
A collection of concepts form the basis of asset management. The organisation will probably experience a decrease in the value that its assets provide if any one of these principles is absent from the management of assets. The processes and plans for asset management inside an organisation should be directly influenced by the concepts. Output Focus, Capabilities, Level Assurance, and Learning Organization are these asset management tenets.
Models
The Asset Management Council has developed a number of models that illustrate and describe asset management. They are as follows:
The conceptual foundation of effective asset management is presented in the asset management concept model.
Asset Management System Model - Shows the interrelationships between the main elements of an asset management system.
Organisational System Model - Shows the typical elements of a management system for an organisation and how they interact.
The Capability Delivery Model (CDM) presents procedures from several disciplines in a schematic manner that can be employed in whole or in part to produce successful asset management.
The asset management system, leadership, culture, and human performance are all integrated into the overall organisation through the use of the maturity model, which illustrates how these factors affect the organisation's success.
Important of asset management
It's crucial for businesses to keep track of their assets since doing so can help them save time and money. Asset management is the practice of optimizing a company's assets to give stakeholders the best returns possible. It frequently includes asset recovery as well. Assets for businesses can be both fixed and liquid, and they come in many different forms. A company needs to be able to manage its assets and use them to generate the highest profits. The top 10 reasons asset management is crucial are listed below.
1.helps the business keep track of all its assets. The company can keep track of all its assets thanks to asset management. It can reveal the assets' physical location, their intended purpose, and the dates of any modifications. The asset management solution's data can guarantee that asset recovery will produce higher returns.
2. Manage assets from many places accurately and successfully. An inventory report that may be required by some insurers or lease financiers can be simply created by the company
3. Additionally, asset management can be employed to guarantee the accuracy of the amortization rates. The accuracy of the company's financial statements will be ensured by routine asset evaluations.
4.An asset management system automatically updates to reflect asset recovery. Assets will be deleted from the company's records and books once they have been sold or scrapped. To free up storage space, related assets like consumables and spare components are written off or sold.
5.Maintenance costs can be reduced. A business may experience issues with under or over maintenance during the operational phase of the asset's life cycle. Maintenance is a cost of doing business that might reduce the company's profits. Overdoing it can cost a lot of money. Conversely, poor maintenance can result in decreased output.
6.It brings more efficient operation. Asset management enables a company to comprehend the capabilities of its assets and how to utilise them to their fullest potential.
7.enables the execution of a risk management strategy. The management of hazards associated with the use and ownership of assets is also included in asset management. A thorough analysis of the assets can help to reveal the risks present and provide a way to mitigate them.
8.The planning, usage of resources, and implementation of the management program are all aspects of your operations that can be improved with proper asset management.
9.Your inventory's phantom assets are removed. Items that have been stolen or lost can occasionally still be found in the inventory records. They are referred to as ghost assets. Ghost assets were frequently objects that had been incorrectly recorded, on average.
10.The prevalence of theft events decreases with the usage of asset management systems. By accounting for the asset recovery process properly, the business may maximise returns and prevent any things from being lost in the process.
Types of asset management
1.Managing digital assets
We are aware that digitalization significantly affects our daily lives. Everything has gone digital, from viewing movies and taking pictures to video conferencing. Real-time asset tracking is possible with the digital asset management system. Digital asset management makes it incredibly easy and quick to store and retrieve data because just metadata is needed. If necessary, you can also associate each asset with images, videos, and documents.
2.Organisational Asset Management
One of the most well-known asset management models is this one. It is a system for managing assets, optimising asset life, and minimising all associated expenditures, such as maintenance. Monitoring asset performance helps to improve productivity, efficiency, and effectiveness.
3. Fixed Asset Administration
Monitoring, administering, and maintaining assets and equipment are all part of physical asset management. Office furniture, laptops, computers, printers, machines, and other items are examples of assets and equipment. The system makes it possible to prevent asset losses and maintain the assets in top condition.
Fixed assets can require a substantial investment, including computers, elevators, and transportation infrastructure. Fixed assets require routine upkeep. Without a competent asset management system in place, things can get extremely complicated, which could have an effect on the organisation's bottom line.
4. IT Asset Administration
ITAM is another name for IT asset management. It is helpful when an organisation has several locations. There are numerous IT resources at each branch. When information is not consolidated and inaccurate information spreads, a problem occurs.
Data is synchronised and centralised throughout organisations using IT asset management software. Both actual and intangible assets can be tracked with ITAM. The right to ensure that the company's assets are promptly maintained, updated as required, and disposed of at the end of their useful lives is secured by ITAM.
The stages of asset lifecycle management
The traditional asset lifecycle has four stages: planning, acquisition, maintenance, and disposal. But what digital tools and data will eliminate uncertainty and potential disruption in the way we handle each stage? What is required to prolong the useful life of your assets and guarantee a smooth transition to a replacement when the time comes?
Planning
Your ability to make informed decisions about whether to buy new assets and replace old equipment will depend on the data you have at your disposal. You should have the ability to identify when equipment is failing more frequently and is likely to need replacing if you have been tracking and documenting their service history in specialised management software.
If you haven't, however, it might just be a final, catastrophic failure that indicates you need to start investing once more. When it comes to reactive maintenance and unmanaged assets, there is always a risk that unanticipated costs will derail your budget planning.
In a perfect world, decision-makers would first recognize the need for a new asset and then base their purchase choices on data, such as the value the asset is anticipated to add to the company and its anticipated lifespan. Performance and durability requirements will be weighed against the available budget for the purchase.
This information should help you do that calculation and give you a decent indication of how much you'll save if you've been keeping track of the asset's acquisition and maintenance costs throughout its lifetime.
Acquisition
The asset should be added to an asset register after it is purchased and deployed. Some organizations will only use an Excel sheet for this, while others will use a digital asset register to record all of the equipment's specifics. Regardless of the decision you make, the more information you have to support your choices throughout the asset's existence, the more information you should capture about the item in your records. These specifics must to include:
1.Description of the asset
2.Barcode and/or serial number
3.Location (it’s physical location in your estate)
4.Status
5.Condition grade
6.Manufacturer/ model
7.Date of purchase installation
8.Purchase cost
9.Warranty details and expiry date
10.Lifetime expectancy
11.Current value of asset
12.Depreciation method used (for future ROI calculations)
When these details are captured in a digital asset register operating as part of a CAFM this data can use be used to:
🟡Trigger required planned and preventative maintenance activity
🟡Provide background information for thosmaintaining the asset
🟡Calculate ROI of the equipment over time
🟡Estimate asset lifecycle for budget/replacement planning
The majority of management systems today also feature asset tracking technologies like RFID and QR labelling. When a piece of equipment is purchased, a digital tag is placed to it, connecting it to the register's records, including its complete service history.
Utilisation and maintenance
The FM team uses reactive, scheduled, and preventative maintenance during this phase of the asset lifetime to:
Address serious issues to reduce downtime.
Correct ongoing, non-critical issues and improve machinery
perform yearly maintenance tasks
fulfil legal requirements
A balance of reactive and planned maintenance will be used, depending on the level of sophistication of the digital technologies you're utilising, to maintain the asset operational and compliant while maximising its useful life.
By using a maintenance management tool like a CAFM, a company may manage and track its performance effectively over time while performing the proper maintenance on the appropriate equipment at the correct time. Automation of workflow makes sure:
1.Maintenance requests are triaged and processed quickly to avoid equipment downtime
2.Regular servicing is done on time to assess condition and improve performance
3.The business is not maintaining assets that are still under warranty.
Throughout this stage of the equipment lifecycle, good CAFM software should be ensuring engineering and contractors are:
1.Reporting on every callout outcome
2.Updating condition notes
3.Adding service logs
4.Recording their time spent on each job
5.Invoicing accurately for work done
In this way, the CAFM gathers information about the state of each asset and the expenses related to maintaining it. The company will eventually be able to identify trends in performance and condition that could be cause for worry (multiple breakdowns, increased frequency of breakdowns). Additionally, they will be able to determine when the expense of sustaining the asset is likely to be greater than the expense of completely replacing it.
Disposal
The asset must be disposed of, used again, sold, or recycled after its useful life is through. It's getting increasingly crucial to efficiently monitor and handle "end-of-life" as the circular economy receives more ESG attention and asset disposal prices rise.
It will always be more challenging to anticipate with accuracy when you will need to replace the equipment if you have just maintained the asset reactively during its existence and have little to no data on its performance accessible. The company runs the risk of either replacing the asset before it is absolutely essential or doing so in an emergency if it completely fails. Money, effort, and resources could be wasted in both situations.
On the other hand, companies who have been managing and monitoring the asset throughout its existence using a CAFM system-powered digital asset register are likely to have all the necessary information accessible to ensure the ideal timing for a replacement.
The business will be able to plan budgets more skillfully with the use of data collected across the asset lifecycle and made available in a CAFM. The use of dashboards, graphs, and tables in FM software will assist organisations in visualising the degradation of particular asset types, prospective ongoing expenses for maintaining failing assets, and the business's realisation and planning for substantial Capex well in advance of the requirement.
In addition, all of the information you have collected about lifecycle, usage, performance, maintenance costs, and ROI can be used in the planning stage (described above) of the subsequent acquisition cycle. You can use it to ensure that you purchase the appropriate equipment to satisfy your company's needs.
Conclusion
Asset management is a massive industry that has been expanding quickly. Asset managers choose investments with the dual goals of reducing risk and increasing client wealth.
Increasing wealth and maintaining proper risk are the two overarching objectives of financial asset management. The level of danger depends on how comfortable the client is. These individuals hold titles like wealth manager, portfolio manager, investment manager, registered investment advisor (RIA), and others.
Asset lifecycle management can have a significant impact on a company's productivity and overall profitability. Equipment that is prone to malfunction and is not properly maintained can disrupt operations, turn away consumers, and reduce income.
Without the proper tools, managing assets and budgets for asset management can be reactive, compartmentalised, and myopic. But when done correctly, asset management can boost sales, satisfy customers, and unite the entire organisation around achieving common goals.