What is Asset Management?
What is an Asset?
An asset is a resource that adds significant financial value to an individual, company, or government and is useful in revenue generation. If it is yours, has economic value, and can generate income at some point in time, then it is an asset.
Classification of Assets
There are two major ways of classifying assets. One classification is according to the relative ease with which it can be converted to money or its equivalent (i.e., its liquidity), while the other is based on physical existence.
Current Vs. Fixed Assets
Current assets are assets expected to be converted into cash within a year. They include cash, inventory, supplies, e.t.c. On the other hand, fixed assets are not expected to liquidate within one business year. Examples include land, machines and equipment, and buildings.
Tangible Vs. Intangible Assets
Tangible assets can be felt or touched, while intangible assets lack this physical quality. Assets such as land, equipment, inventory, and cash in hand are tangible, while patents, copyrights, and contracts are examples of intangible.
As far as terminologies go, the term "asset management" is as broad as they come. A simplified definition goes thus: Asset Management is the process and system of keeping track of all assets owned by an individual or company. Wikipedia features a more robust and encompassing definition that states: Asset management is a systematic process of developing, operating, maintaining, upgrading, and disposing of assets in the most cost-effective manner (including all costs, risks, and performance attributes). From fixed to current, tangible to intangible, all assets of any financial significance to the owner(s) require effective and efficient management to maximise the value and lifespan obtainable while assessing its overall performance at predetermined intervals.
Maintaining Your Asset Base
Asset management is a process that spans the entire life cycle of an asset, from the time of acquisition to that of disposal. More often than not, the difference in how long a resource lasts and how much value it commands lies in its management’s efficiency, which makes asset management an indispensable component of the machine that drives profitable businesses.
Asset management in this day and age is down to the asset manager, or managers as the case may be, and the asset management tools on offer. With a knowledgeable manager and functional management tools, an otherwise complex process becomes significantly easier. Let's take a closer look at the factors involved in maintaining an asset base.
The Modern-Day Asset Manager
An asset manager, by simple extrapolation, is an individual or company responsible for monitoring and optimising resources throughout its life cycle. However, it is important to note that asset management cuts across the board. Every member of staff, from the upper-level management to the equipment operators, is in one way or the other involved in this vital process. The asset manager will expectedly shoulder the majority of the responsibility of overseeing and supervising the use of assets.
The role of today's asset manager has evolved to mean individuals or companies could undertake it. Hedge Funds and Mutual Funds represent examples of asset management companies that handle assets - investment portfolios in this case - on behalf of clients. Individual asset managers could be internal members of staff or third-party personnel hired for the role. Strong analytical and critical thinking skills, as well as an eye for detail and an intellect for an organization, are required to assume this pivotal role. Perhaps the most important quality of an asset manager is internalising the myriad of information available and making critical decisions on steps to be taken or untaken at different points.
Asset Management Softwares
Spreadsheets were once the favourite tools of asset managers, but the enormous volume of data to be processed necessitated the invention of asset management software. This software is now the favoured method for executing many of the steps involved in managing assets. They offer the advantages of improving efficacy and saving time and cost incurable over time. Real-time monitoring is also a possibility, and larger companies can integrate data from their various branches for more wholesome management. Some examples of asset management software available to modern-day managers include Nifty, NinjaRMM, xAssets, and AssetExplorer. It also forms part of fully featured facilities management software such as Cleverly. Most of this software is geared towards particular types of asset management, which should be considered when selecting which to use.
Selecting The Right Assessment Management System
Different types of asset management exist, and the division is based on the type and form of the asset. This allows for specialisation in management, as what is required to manage a tangible asset may not be obtainable for intangible ones.
Knowledge of the different types is important in choosing and designing the management system that best suits the individual or company. Below are the different types of asset management:
Digital Asset Management
The assets in question here are digital media and content. It involves organization, improving as well as simultaneously controlling access to and distribution of records, files, plans and any other asset that has been digitized.
Fixed Asset Management
This involves the management of properties, machines, equipment, and other fixed assets. The role of fixed assets in revenue generation cannot be overemphasised, making their management a matter of priority for every company. Regular monitoring, preventive maintenance, and restriction of access to qualified personnel go hand-in-hand in optimising the use, life span, and value of these assets.
IT Asset Management
IT assets include hardware and software, and they require proactive management just as much as any other asset type. From acquisition to disposal of retirement and the states of deployment, maintenance, and upgrading between them, efficient management of these resources translates to increased economic value for the individual or organisation.
Financial Asset Management
This management system focuses on intangible assets such as investments, tax responsibilities, and market rates with the goal of profit-making and risk management.
Infrastructure Asset Management
This concerns government and private contractors, involving supervision and decision-making on roads, power plants and supply systems, water access, and similar utilities. The focus is often on the maintenance and replacement of these assets at various points in their lifecycle.
Enterprise Asset Management
This involves organisation and tracking of tangible assets to preserve their value for as long as is realistically possible. Relentless documentation and record-keeping of the inventory form the foundation of this management system.
After setting up the appropriate asset management system, choosing the most suitable asset management software, and appointing the best asset manager to interpret data and oversee all proceedings, the process of asset management becomes automated. The benefits do not take very long to materialise when planned out meticulously and executed judiciously.
In conclusion, individuals, companies, and governments all require asset management in one way or the other. As laid out throughout this article, its benefits are too numerous to ignore and hold too many financial implications not to be taken with the utmost seriousness.
Asset management within facilities management deals with monitoring and maintaining the physical infrastructure that supports a company's operations.