In this article, we discussed the meaning of asset management, the functions, we also talked about the types of asset management
Definition
Asset management is the practice of buying, selling, and managing investments, commensurate with specific risk tolerances, to increase wealth over time.
Asset management professionals perform this service for clients. They may also be called portfolio managers or financial advisors.
Understanding Asset Management
Asset management has a double-barreled goal: increasing value while mitigating risk. Tolerance for risk is one of the first topics that an asset manager might raise with a client.
A retiree living on the income from a portfolio or a pension fund administrator overseeing retirement funds is (or should be) risk-averse. On the other hand, a young person, or an aggressive investor of any age, might want to dabble in high-risk investments.
Functions of Asset Management
Asset Data Management
Each asset in an organization has a wealth of data that could be associated with it. But if you are relying on manual tracking, it can become an overwhelming task. Let alone when you have hundreds or even thousands of assets. Without an asset management system, it would be extremely onerous to determine the full visibility into an organization’s asset picture.
Software can help you track the status, condition, location, and performance of each asset – plus information like purchase price, contract terms, date of purchase, maintenance history, depreciation value, and more. In fact, some asset management systems will automatically calculate the asset depreciation, streamlining tax reporting. Asset management systems will also highlight assets that are no longer productive or used, facilitating a timelier, tracked disposal. A major benefit of these systems is the full overview of the asset lifecycle.
Maintenance Data
It’s a fact that any fixed asset is going to require maintenance in order to keep it running. Some assets may even require a severe schedule of maintenance in order to keep warranties active. If you are using pen and paper, it can be very difficult to track dates of service performed, what service was performed, who performed the service, and what parts were used. Let alone schedule reminders, plan for outages, and create the appropriate work orders.
Software enables full visibility into an asset’s upcoming maintenance as well as historical data. This helps spot trends in the asset’s viability, costs associated, warranty work, and downtime. This type of data can be very valuable when determining the asset’s total cost of ownership and can even guide capex planning.
Reporting and Analytics
Logging and tracking the data is a critical first step, but real value is wrung from analyzing the data to guide operational decisions. A critical element for any asset management system is the ability to generate reports that provide actionable insights. At a minimum, reports should provide data on asset performance, downtime, repair history and frequency, and the lifespan of each asset. The reporting functionality should also provide data that is easily sharable among the entire organization.
Security
It goes without saying that asset data is critical to your operations and it is imperative that the system that you select contains robust safety and security protocols. Role-based access controls allow you to ensure that only the appropriate people have visibility to the data and restrict unauthorized users. Encryption, regular security updates and patches, disaster recovery, regularly scheduled backups, and other cybersecurity measures are important to protect the integrity of your data and confidence in your system.
Integration and Customization
The best asset management systems allow for integration with mobile devices as the majority of the work is performed in the field. Similarly, each organization has specific needs to capture regarding their asset data, work orders, and other documentation. A system needs to be flexible to handle the customization that is required in order for your asset management program to be most effective.
Asset Management Types
Digital asset management
Digital asset management (DAM) refers to the efficient organization and storage of digital media content. The purpose of DAM software is to create an enhanced digital library that streamlines all digital assets in a way that enables quick and easy file access, cuts operational costs, improves asset security, and integrates all files with a businesses wider tech system.
IT asset management
ITAM platform is used for the end-to-end tracking and management of IT assets to ensure the proper use, maintenance, upgradation and disposal of IT assets. A properly utilized ITAM solution uses financial, contractual, and inventory information to track and maintain data that can be used to facilitate strategic decision making, and optimize the use of IT assets. According to a 2023 report by Crayon, 90% of businesses consider IT cost optimization a high priority.
Enterprise asset management
Enterprise Asset Management (EAM) manages the lifecycle of tangible, physical assets (such as railroads, pipelines, manufacturing equipment or transport fleets) similarly to how ITAM manages IT assets. EAM helps organizations track, assess, manage and optimize asset quality and reliability. This makes EAM highly useful for firms in the manufacturing, energy, transportation, logistics, healthcare, telecommunication and public sectors.
Network asset management
Network Asset Management (NAM) creates and maintains an inventory of all network components. This includes workstations, switches, routers, modems, printers and any device that is attached to a network. Any business that needs to oversee complex network infrastructure can benefit from NAM, including sectors like telecommunications, IT, utilities, finance, healthcare and education sectors
Data center asset management
Data center asset management (DCAM) revolves around the management of assets falling within a company’s data center environment. This includes assets such as servers, storage devices, networking equipment, cooling systems and other devices supporting data center operations. A DCAM strategy includes tasks such as rack positioning, capacity planning, monitoring environmental conditions, and ensuring the efficient use of space and resources. It can be particularly useful for any kind of large corporation that needs a data center to support their IT infrastructure.
Conclusion
Asset management firms provide asset management services, which, broadly, involves the buying, selling, and management of assets on behalf of their clients. There are many types of asset managers. Some work for family offices and wealthy individuals and others are employed by major banks and institutional investors.