What is asset management?
Assets are anything within a business that the company owns, and asset management is the process of acquiring, maintaining, organizing, upgrading, or removing those assets.
The goal of asset management is to ensure that anything the business owns is cost-effective and beneficial to the organization's growth. Asset management also sees to the removal of anything that may be hurting the company’s current or future potential, such as depreciating real estate, machinery, and tools or out-of-date software that could become a security risk.
Using asset performance management software makes this process simpler, as these tools allow for full asset tracking at any given time, along with the ability to tie the information to key performance indicators (KPIs). The software also makes spotting potential risks more manageable, giving the asset manager time to take action before an asset becomes detrimental to the business’s bottom line.
Types of asset management
Only some businesses hold every type of asset, and more than one asset manager typically oversees everything. This usually depends on the category they fall into.
- Fixed asset management. Fixed assets, sometimes referred to as “property, plant, and equipment” (PP&E), generate income for the business. These are significant investments that usually stay in one place, like plumbing, appliances, or machinery that doesn't move. Most fixed asset management centers around maintenance and monitoring.
- Digital asset management. Digital assets are evolving in step with technology. Any digital media a business has is considered a digital asset. Managing these is a challenge for numerous employees and stakeholders. Ensuring that any copies made are necessary, protecting digital data from physical damage, and making digital data easily searchable are critical tasks for digital asset managers.
- IT asset management. Like digital data, IT assets are essential to smooth operations. These assets could be hardware or software. Typically, the same people manage IT and digital assets due to their overlap.
- Financial asset management. Any real estate, brokerages, or intangible investments the business holds are considered financial assets. Maximizing profits on these is typically the goal, with a financial asset manager monitoring market rates and relevant tax changes to the holdings.
- Infrastructure asset management. Any significant infrastructure like roads, water access, or electricity falls under this asset type. Businesses must work with local authorities to maintain these assets, which are considered vital utilities.
- Enterprise asset management. These assets are any physical property a company owns throughout its life cycle, like inventory records, facility documentation, or staff information.
Elements of asset management
Getting a new asset management tracking software installed requires heavy lifting, but once a system is in place, managing the company’s assets should become more straightforward. Regardless of the industry or size of the business, good asset management should include:
- Asset inventory. A comprehensive view of all assets the business holds, along with their value and condition, is the most important part of asset management. This is especially true if different people manage assets within the company.
- Life cycle costs. An asset’s life cycle will have multiple stages, from planning and acquisition to maintenance and disposal. A critical part of asset management is accounting for the costs associated with each stage of the asset’s life cycle.
- Criticality. Companies have to know the risks associated with any asset to make important decisions about maintenance and removal from the business.
- Level of service. Businesses should understand how an asset adds to their portfolio. All asset management should include this information, whether assets are internal or customer-facing.
- Long-term funding. Money for asset maintenance has to come from somewhere. When factoring this into the business’s operational budget, long-term funding options should be reviewed to ensure these assets are sustainable.
Benefits of asset management
All assets are valuable resources, so managing these properly is essential for the company's ongoing success. Effective asset management will:
- Enhance understanding of how assets are performing. Businesses need to know the assets that are helping them grow and the ones that are draining resources. Managing these assets with digital tools can automate evaluation processes, which can catch issues before they get worse.
- Allow for cross-team communication and coordination. With all asset information stored in one place, teams with access can look at the data they need in real-time. As each team will have different needs for the held assets, collaborating with other internal stakeholders can make evaluating an asset more efficient. Both teams can share data easily and come to a shared conclusion about how to proceed in a way that’s beneficial for each group.
- Mitigate risks with assets currently held. Unmanaged assets can quickly become a liability. This is especially true if the company has many assets spanning different locations, potentially with several asset managers at each location. Asset management means any associated risks can be handled before they burden the business.
Best practices in asset management
The overarching goal of asset management is to increase value while minimizing risks. When implementing a new asset management software, businesses should ensure that:
- The software used can support owned and planned assets. If the tools used can’t support a particular type of asset, it’s time to look for a different solution.
- All inventory is accounted for. Every asset must be included in the tracking software for the most up-to-date and accurate records. The tools used are only as good as the information being put into them, so it’s worth investing time and money to ensure the initial records are correct.
- Asset depreciation tracking is included. Many business assets, particularly physical ones, depreciate in value over time. Accounting for this within the software helps businesses decide when to decommission the asset and invest in a replacement.
- Maintenance is planned ahead of time. This should be more than “fix what’s broken.” Planning for scheduled asset maintenance saves money long-term by extending the life of tangible assets thanks to preventative care.
- Data gathering and reporting are automated. An automated asset management system means that data can be gathered around the clock, free from human errors. Automation is also more secure and reliable, making data more accurate.
Make the most of the assets held by your business and maximize their growth potential with automated asset management software.
Holly Landis
Holly Landis is a freelance writer for G2. She also specializes in being a digital marketing consultant, focusing in on-page SEO, copy, and content writing. She works with SMEs and creative businesses that want to be more intentional with their digital strategies and grow organically on channels they own. As a Brit now living in the USA, you'll usually find her drinking copious amounts of tea in her cherished Anne Boleyn mug while watching endless reruns of Parks and Rec.
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