The life cycle of an asset starts from the day it is purchased to the day of its disposal. During this whole process, there are a lot of changes in the state, condition of asset and user history, depreciation being incurred and multiple other things. It is very important to keep a track of all of this so that an organization is well aware of the asset that they procure. Traditionally organizations used to depend on methods like spreadsheet Maintenance to keep a track of all the assets that they procured. With the change in the whole environment and the way, organizations work there is a shift in the way they maintain track of their assets too.
Asset Management Software is now being used to keep a track of all the assets. This software is efficient as it saves a lot of time, effort and money. The record-keeping is up to date, real-time basis and all the data present in the software is error-free. The system is all optimized which reduces human interaction, which ultimately helps an organization maintain error-free records.
In this blog, we will try and understand the steps included in the life cycle of management of the assets present in an organization. Let us dive right in!
What is Life Cycle Management?
To run any business multiple strategies are running at different levels of the organization this helps them to build up a good workflow with no downtime. An organization possesses multiple assets no matter which industry they belong to. They need to keep a record of all these assets from the time they purchased them to the time they discarded this asset.
Keeping a track of the life of any asset, and managing it comes under the Life Cycle Management of that asset. It includes all the information starting from the vendor it was being purchased to depreciation incurred to the final disposal of this asset.
This holistic picture of the life of an asset helps an organization to keep good track of all the assets present. This even allocates assets easy within the organization. Having a track of user history also helps them in a major way. Life cycle management of any asset can be done under the head of Asset Management Software, which is capable of tracking and managing all the assets on a real-time basis.
According to Precedence Research, the global enterprise asset management market size is projected to hit around USD 10.6 billion by 2030 and register growth at a CAGR of 11.75% from 2022 to 2030.
Why Asset Life Management is important?
No matter what the size of the organization is, no matter what is the length of operations they are performing. Every asset that an organization possesses has a set life to it, it degrades with time. There is a time in the asset’s life cycle when it is giving its peak performance. But with regular wear and tear, it loses its power and starts to decompose in a way. This decomposition is called depreciation, it is incurred from the time the asset is purchased.
Asset Life Management plays a very important role. With the help of this management plan, an organization can easily decide how well an asset is performing at the moment when it performed at its best and by analysing that they can even know about the length of life left of any asset. If they know this they will be able to keep track and they will be prepared by setting up the money aside for the purchase of another asset, this is what we call Preventive Management.
The simple Steps included in Life Cycle Management are:
The type of asset differs with different organizations, but the major process of their Management is the same which we will be discussing below
Planning is the first step in Asset Life Management. It revolves around the plans of the organization and the product they deal with. Planning to buy any asset depends on the need of the organization. This need is being identified by the analysers or the management team in the organization. It also has a lot to do with the financial team as the purchase of the asset needs money. When everything is discussed and planned, the asset is purchased.
After planning the next step that we come across is acquisition. The acquisition is the purchase of a predefined asset. We set in vendor in the picture. The day of acquisition is the day from which we start counting it as owned and procured by the organization. Depreciation is being incurred on the asset from the same day.
Operation and maintenance:
It is the longest phase of asset management. After the asset is purchased and installed in the organization next step is to maintain it well while getting all the work done for which it was being installed in the first place. During the operations asset is being taken care of to prevent sudden downtime and to increase their life cycle. This is very important to prevent the risks.
This is the end of an Asset’s life cycle. When an asset is used to its fullest it is set to dispose of. This happens because of the regular wear and tear with depreciation being implemented on the asset. This is where the maintenance and management of assets is not an issue because it has lost all its powers and now is the time to buy a new asset and replace this one after proper disposal.
Asset Management Software is a way by which an organization can understand the whole life of any asset. It helps the owner of that asset to make procurement decisions by looking at all the data present with them. Asset Management Software helps an organization keep track of the assets present on a real-time basis. It also gives them accurate information about the asset. One must install this software and try to understand the difference that it can bring in!
Frequently Asked Questions:
Q1. Is it possible to manage Fixed and Non-fixed both kinds of assets in Asset Life Cycle Management Software?
Yes, it is possible to keep a track of all kind of assets life cycle under this software.
Q2. Is it possible to see real-time situation and depreciation incurred till now on any asset present in the system?
Yes, it is possible to look at the real-time situations and depreciation incurred at any given point.
Q3. Is disposal also a part of the Asset Life Cycle?
Yes, Disposal to is a part of the Asset Life Cycle.