What is asset management?
Broadly defined, asset management is a blend of operational and financial processes and practices that can help you make the most out of your business assets. It involves looking after all the things that have actual or potential value to your business.
Asset management comprises:
- physical asset management, also known as enterprise asset management
- fixed asset management
- IT asset management
- digital asset management
- management of intangible assets, such as intellectual property
Business asset management is different from the financial asset management, which relates to people and companies that manage investments on behalf of others.
Asset lifecycle management
The focus in managing assets of any kind is not so much on the actual assets, but on the value that the particular asset delivers to the business over the whole of its lifecycle, from pre-purchase to disposal.
Asset lifecycle management seeks to optimise the profit you derive from your assets by minimising the cost of acquiring, operating, maintaining, renewing or disposing of assets.
Keeping a record of your assets
Most businesses manage their assets by keeping an up-to-date asset register. This is simply a record that clearly identifies all the fixed assets of a business. It allows you to quickly retrieve information on an asset, including:
- its description
- purchase date and price
- accumulated depreciation
- estimated salvage value
A fixed asset register helps in tracking the correct value of the assets, which can be useful for tax purposes, as well as for managing and controlling the assets. You can create and manage the asset register yourself, or you can get your accountant to keep one for you.
Asset tracking software can help you to monitor and manage your inventory, maintain accurate records and calculate asset depreciation. If you want to sell or buy a business, a detailed asset register will be particularly important.
Asset management systems
The ISO 55000, ISO 55001 and ISO 55002 standards cover best practices in asset management. They specify the requirements for the establishment, implementation, maintenance and improvement of an effective asset management system within a business.
Why is asset management important?
Effective management of assets is important to almost any business, as it can reduce costs, boost productivity, improve your goods or services, and help you comply with regulatory obligations.
Asset lifecycle management can also help:
- reduce the cost of asset ownership
- prevent wastage and theft
- increase output while reducing operating costs
- reduce planned downtime
- improve the business' reputation among customers, regulators and suppliers
- improve workforce motivation and performance
- improve business processes
Find out how to protect your business assets.