Enterprise asset management refers to the management of an organisation’s physical assets across various departments, locations, business units and facilities. Every business has assets, whether they are buildings, vehicles, office equipment or machinery, and these assets must be managed efficiently to sustain a business’s operations and guarantee a return on investment.
Effective asset management has several essential business benefits. Namely, it optimises and extends asset life cycles, reduces risk and total cost of ownership, improves decision-making and ensures compliance. In this blog we will explore important considerations for an enterprise asset management plan – from acquisition to the decommissioning of assets.
It’s important for businesses to acquire their assets strategically. This protects the business from unnecessary loss and optimises the life cycle of the asset. Timeframes have to be established for the acquisition, depending on whether it will be built, bought or leased. Every asset acquisition requires a budget and cost negotiations to ensure it is cost-effective. Warranty and guarantee agreements must be worked into the asset’s life cycle and all assets should be barcoded and tagged. Timeframes and budgets for the acquisition of an asset must include time and cost considerations for any installation or commissioning the asset might require.
Accounting for an asset forms part of the asset’s acquisition, but it does involve a few considerations that require a separate mention. It’s vital to determine the total cost of ownership (TCO) of an asset before or during its acquisition. This figure includes the selling price, maintenance, service fees and insurance. In addition to the TCO, it’s important to track the depreciation of the asset over its life cycle. Business owners must ask themselves questions involving the decommissioning of the asset early on. This helps to inform them whether the asset will be sold, traded in or disposed of.
Maintenance and decommissioning
Once an asset has been acquired, accounted for and commissioned, it begins its usable lifespan. During this time, most enterprise asset management concerns are related to maintenance. A systematic and scheduled maintenance plan must be in place to ensure that the asset is always in its best working condition and to highlight any potential areas of improvement. This keeps the TCO low and extends the life cycle of the asset.
Businesses have options to consider when an asset is no longer usable. The asset can be considered surplus stock or ready for disposal, depending on the type of asset it is. There are budgetary and time-based adjustments that must also be made at this stage to mitigate risk and retire or sell all decommissioned assets in a cost-effective and legally compliant manner.
Sage X3 helps you keep track of your assets
All the essential steps and decision-making that go into an efficient enterprise asset management strategy are made simpler with an integrated ERP solution such as Sage X3. Sage’s Enterprise Asset Management suite integrates fully with the master files and operational elements of Sage X3. This is essential to the delivery of up to date data and seamless transaction flows. It connects all the elements of a business, improves accounting and record-keeping, and decreases risk and errors.