In this blog, we’ll discuss what the asset lifecycle is and how to effectively perform asset lifecycle management. Through our top tips we hope to communicate the best ways to help you save money and derive optimum value from the fixed assets operated by your business.
Successful management of assets during their lifecycle enables you to maximise the peak period of operation, avoiding sub optimum operation and preventing unnecessary maintenance and repair costs.
Continue reading below for our top money saving tips.
Asset lifecycles explained
Before we consider asset lifecycle management, we need to understand what assets we’re talking about, and what the lifecycle means.
This is a long term tangible piece of equipment/machinery/property that is used in the operation of a business to generate income.
This is the process through which a business's asset is stored, maintained and eventually replaced. The life cycle covers everything from the planning stage when the need for the asset is identified, through to the assets eventual disposal after fulfilling its useful life.
Lifecycles are monitored and tracked in different ways by different companies, sometimes its performed in an informal way. The importance of an asset lifecycle is often determined by how crucial the asset is to the operation of the business and how costly it would be to replace.
The purpose of asset lifecycle management is to prologue the usefulness of assets and increase reliability, allowing them to perform at optimum levels for the maximum amount of time.
How to save money with asset lifecycle management
1. Maintain asset visibility
Businesses usually consist of multiple assets. These could be physical assets such as machinery or IT assets such as servers or software. As businesses grow, so will the number of assets it operates. The need to log these assets may fall on members of staff and is often informally done through spreadsheets.
This can be time consuming and impractical. Employing asset management software solutions can make your assets more visible and makes tracking data easier, with all data sets stored in a central asset register.
By employing a dedicated software solution, whiteboards and spreadsheets can be removed, reducing the risk of errors and allowing for historical data to be logged.
2. Maintenance planning
An important part of asset lifecycle management is to facilitate and perform maintenance. Any asset management system should include an efficient maintenance schedule for all assets operated by the business.
A proactive maintenance strategy can reduce costs by:
Reducing downtime of any essential assets,
Reducing the need for emergency repairs,
Increasing asset runtimes,
Increasing the length of an asset’s useful life.
3. Don’t be afraid of ghosts (or zombies)
Ghost assets are those ‘on the books’ but which can’t be physically accounted for. As businesses grow this can be an increasing problem, making up a material proportion of total assets.
With effective asset management ghost assets can be identified and removed. In future, tracking assets will be easier and missing assets should be identified much quicker.
Zombie assets are those which are physically present, but which aren’t ‘on the books’. These assets will be missing from lifecycle monitoring and will not benefit from maintenance and servicing.
Planning for the assets your business will need in future can help reduce waste and prevent assets from becoming ghosts/zombies. Ensuring that assets are acquired following a rigorous planning process can help make them easier to track and account for. This type of planning process can also help with budgeting and make acquisitions more cost effective.
5. Real time tracking
Fixed assets are an important part of any business. Depending on the nature of the asset, it might move around different locations and be operated by different departments within the company at different times.
Tracking assets in real time can improve the efficiency of assets and ensure their downtown is removed. This type of tracking can be achieved through such things as RFID tags, QR codes and GPS trackers. Through the internet of things and cloud computing, these tagging options and other types of monitoring sensors can be used to keep track and monitor assets. This data can even be used to provide operational process insights, making sure that asset usefulness is optimised and businesses can maintain maximum efficiency.
Need help fostering and maintaining business culture during times of high growth?
The type of culture that is experienced within small businesses is often very different to that in a large corporation, and greater emphasis is now being placed on ‘small business culture’ as a valuable aspect for long term success. Download our guide for help maintaining a successful culture in your business.Download Now
Asset lifecycle management should be relevant to businesses of all sizes and types. Businesses that particularly rely on their assets to generate revenue should focus on lifecycle management as a way to ensure their business is successful.
An efficient way to perform asset lifecycle management is through digitising and automating the process where possible. There are software solutions available in the market to perform this task, but a business may want to create something in-house to support their specific needs.
However the process of lifecycle management is performed, there are some key ways to prevent an inefficient use of resources and promote cost savings. These include such things as ensuring all assets are visible to the management process and performing maintenance in a preventative (not reactive) way.
Hi, we’re Accountancy Cloud
As your business embarks on its growth journey, our experienced and creative team are here to support you. Our accessibility, flexibility and dynamic approach help you make your business a success. We offer companies a market-leading full stack finance function, helping your business leaders in their decision making by providing access to live information and reporting tools. We don’t just provide software though - our dedicated team of financial experts, specialising in tax, payroll and more are ready and waiting to help whenever you need it.
Through our motivated and personalised service, we can help you achieve all of your business goals. Talk to us today to see how we can help you.
#1 finance partner for tech & ecommerce startups
Accountancy Cloud makes accounting easy, transparent and truly fast, by offering entrepreneurs a custom blend of software and expertise.
- 100% online
- Full finance stack for all your accounting needs
- 9/10 customers recommend us