What is Asset Management, and What Do Asset Managers Do?

Asset management is a systematic and strategic process of managing an organization’s assets over their entire life cycle. It is about the planning, sourcing, deployment, monitoring, management, review, and ultimately, withdrawal of assets to give value and support organizational aims. 

Resources are important financial and operational values in a contemporary workplace, and just having an asset does not mean it will be utilized effectively. A good system, correct information, well-balanced asset ownership, and ongoing monitoring are necessary to ensure that assets provide desired value. That’s where asset management and asset managers come into play. Let’s understand the concept in detail in this blog!

What is Asset Management?

Asset management is the streamlined functioning of the processes of value realization from assets. It takes into account the current cost of an asset and the costs of operating, maintaining, depreciating, taking risks, performing, replacing, and disposing of the asset. 

If 100 laptops are bought to supply employees, then that is just the first step in the management chain. The company should document the laptops, assign them to the users, keep track of where they are, maintain them, keep an eye on the warranties, ensure the data stored on them is secure, and finally dispose of them or replace them in a secure manner. 

Asset management thus involves all activities related to an asset’s life cycle, from the time it is decided to purchase an asset to when it is retired. 

Now that we know  what is asset management, let’s understand the role of the managers. 

Who is an Asset Manager?

An asset manager is a person who manages assets and ensures they are utilized in an efficient, safe, and cost-effective manner. The roles and duties of the asset manager will vary depending on the type of work and assets they are managing. 

Managers working in an IT environment could be responsible for managing computers, servers, mobile devices, software licenses, networking equipment, and more. Managers working in manufacturing could oversee machinery, manufacturing equipment, manufacturing tools, and facilities. In the financial services industry, asset managers can handle financial holdings and investment portfolios for their customers. 

The key role in any industry is to maximize the value of assets and minimize costs and risks.

Key Responsibilities of Asset Managers 

An asset manager plays a vital role in the organization that ensures that assets are managed, used, maintained, and protected throughout their life cycle. The position involves strategic planning and daily coordination and monitoring for various departments. 

• Planning and Acquisition: Analyze the business needs, determine the need for assets, and facilitate the acquisition of appropriate assets within the budget. 
• Tracking and Record Management: Keep accurate records of assets with location, ownership, condition, purchase information, warranty, and asset lifecycle status. 
• Audit Opportunities: Track the utilization of assets and highlight opportunities to reassign, share, upgrade, or replace underutilized assets. 
• Maintenance and Performance Monitoring: Make sure that assets are maintained and monitored at the right time to enhance performance, minimize downtime, and maximize asset life.
• Risk and Compliance Management: Understand the potential financial, operational, security, and compliance risks that may arise with regard to assets and put in place suitable measures to control the risks. 
• Cost and Budget Management: Keep track of the cost of acquisition, maintenance, operating, and replacement to ensure that expenses are managed by the organization and investment decisions are made with regard to costs. 
• Reporting and Decision Making: Interpret asset information and produce reports that assist management in understanding asset performance, costs, risk, and asset needs. 

In general, an asset manager is a link between people, processes, technology, and financial resources to ensure the optimal return for the organization on its assets. 

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What is the Asset Management Lifecycle?

Knowing about asset management can be understood in a series of lifecycle stages. 

• Planning: The first step is to determine the needs of the organization. The asset managers collaborate with various departments to identify what the assets should be, why they should be required, the cost of the asset, and the value that is expected to be realized. 
• Acquisition: When needs are identified, assets are obtained by purchasing, leasing, transfer, or other means. Asset managers can collaborate with procurement and finance teams to make sure acquisitions are compliant with policies. 
• Deployment and Assignment: Once acquired, assets are applied to the right places, departments, or employees. All assets are to be identified and assigned. 
• Tracking and Monitoring: Assets should be tracked throughout their lives. Barcodes, QR codes, RFID technology, GPS, or asset management platforms can be used to track assets. 
• Maintenance and Optimization: The managers keep an eye on asset status and performance and perform the necessary maintenance when needed. Organizations can also use asset performance to assess if assets are being used efficiently.
• Retirement and Disposal: All assets have a life span, either useful or economic. Now the organization has to decide what to do with it: sell it, recycle it, transfer it, return it, or dispose of it. 

Role of Technology in Asset Management 

Technology plays a key role in asset management. It has revolutionized management in the organization. As paper-based and traditional spreadsheets can become cumbersome as the numbers grow, software programs can give a unified perspective of an organization’s assets and streamline many tasks. It can monitor who owns it, where it is, maintenance dates, warranties, depreciation, and its life cycle. 

Dashboards and reports can provide live and regularly updated data that enables asset managers to recognize trends and make informed decisions. 

There can be other benefits when it is integrated with other systems used by your business. These systems can be integrated with procurement, finance, IT service management, inventory, or enterprise resource planning systems. Human errors can also be minimized with automation. 

Benefits of Asset Management 

There are many benefits of asset management, like cost control, reduced operational risk, better financial management, and more. 

• Cost Control: Having a clear understanding of what assets an organization owns and how they are being used can help to minimize unnecessary spending. More visibility can help avoid product duplication and find opportunities to reuse existing products. 
• Improved Asset Utilization: Using unused or underused assets can be identified by asset managers and, if so, how they can be reassigned or shared efficiently. 
• Reduced Operational Risk: Proper maintenance and monitoring can minimize unexpected failures and interruptions to the business.
• Better Financial Management: Asset information can be used for budgeting, depreciation calculations, replacement planning, and financial reporting. 
• Better Strategic Decisions: Management can use asset data to guide decisions on where to invest, what assets need to be replaced, and where costs can be minimized. 
• Enhanced Compliance and Security: Keeping good records and having good processes in place assists with meeting internal policies and external requirements. Proper disposal methods can also help secure sensitive information. 

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Challenges Faced by Asset Managers 

Although asset management can be beneficial, it is a difficult job. An issue that often arises is the wrong or stale asset data. If employees start to move assets without updating the asset register, the data becomes unreliable very quickly. 

The other difficulty is the number and diversity of assets in today’s organisations. Many errors can be made when managing thousands of assets, and it can be time-consuming. 

However, budget constraints are another big problem for asset managers. There is a need to balance the demand for maintaining or replacing assets with financial resources. 

Technology problems can give rise to inaccurate data. Proper implementation, maintenance, and integration of management systems with existing systems is required. Staff also require proper training so that information about assets is kept up to date. 

Plus, asset managers need to be constantly ready to adjust to new technical, business, and security demands. 

Best Practices for Asset Managers 

There are a number of key practices that successful asset managers follow: 

• Keep an up-to-date and accurate asset register. 
• Assign an ID number to each asset. 
• Establish asset ownership and responsibility. 
• Carry out physical and electronic security and permit checks. 
• Monitor the entire asset life cycle properly. 
• Set up a preventive maintenance schedule. 
• Track usage and TCO. 
• Wherever possible, automate repetitive tasks associated with asset management. 
• Have clear guidelines on transfers of assets and asset disposal. 
• Secure sensitive data in the entire asset lifecycle. 
• Apply data and reporting to aid management decisions. 

Final Words 

The process of asset management is an integral part of business operations that helps organizations to realize maximum value from their assets. It isn’t just about stating what an organization has. The process needs careful planning, tracking, maintaining performance, and managing risks. 

Strong asset-management practices and skilled asset managers can help organizations be more efficient, control costs, minimize risk, and make more strategic decisions. 

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FAQs 

Sources :

• Asset Management – By Office of the Comptroller of the Currency 
• What is Asset Management and what does a Financial Asset Manager do? – By News and Events UONLINE