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How Enterprise Asset Management Works

enterprise asset management

To determine the value of your organization, you have to start with what you own. Assets are the primary measure of valuing any organization—so you need a comprehensive way to manage them.

This calls for enterprise asset management (EAM). IBM defines EAM as an asset lifecycle management approach that supports asset performance from acquisition to disposal. EAM aims to utilize assets and optimize asset throughout the asset lifecycle by way of policies, processes, and resources that maintain and control operational assets and equipment.

Without such a framework, you’re risking lost assets, cost overruns, inefficient usage, and even security threats.

So, let’s take a look at Enterprise Asset Management. Stick around for the end, where we point you to more resources for asset management.

What is an asset?

The ISO 55000 standard for asset management defines an asset as item, thing, or entity that has potential or actual value to an organization. Value is mainly considered from a financial perspective (we can make/save money from it, i.e., ROI). But other non-financial aspects also matter, such as brand, comfort, ease of use, and competitive advantage.

The standard also classifies assets in two main groups:

  • Physical Assets. Those that can be touched, e.g. equipment, inventory, and properties
  • Intangible Assets. Those that are immaterial: leases, brands, digital assets, use rights, licences, intellectual property rights, reputation, and agreements

You might ask yourself, what about people? Don’t we hear a lot of statements like “people are an asset to an organization”?

Well, yes. People have very great value to any company, and without them chances are high of failure and loss. However, the EAM perspective consider does not people in this bracket—instead it focuses on any inanimate objects that can be acquired, used, sold or disposed during the routine business operations.

What’s enterprise asset management?

ISO 55000 defines asset management as the coordinated activity of an organization to realize value from assets. Activity here is used broadly as it can include:

  • The approach
  • The planning
  • The plans and their implementation

So, asset management isn’t simply just about having an inventory of what you own. A better definition is:

Asset management is a precise science that considers how to effectively track, assess, manage and optimize asset quality and reliability.

Read more…

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