Best Asset Lifecycle Management Practices & Systems to Manage the 4 Key Stages
What Is Asset Lifecycle Management?
Asset lifecycle management is a strategic and analytical approach used to determine each stage of an asset’s life cycle to maximise operational efficiency and generate a greater overall return on investment Without a general understanding of the asset lifecycle, businesses face multiple challenges. Such as ageing assets, high maintenance costs, and decreasing asset values.
The asset lifecycle can be broken down into four stages:
- Planning
- Procurement/Acquisition
- Operation and Maintenance
- Disposal/Archive
Through extensive planning and utilising asset lifecycle management best practices, asset managers can better understand how a business’s most critical assets perform and what value they provide. Whether it’s an espresso machine in a coffee shop or a CNC lathe in a manufacturing plant.
Best Software Tools For Asset Lifecycle Management
Ultimo by IFS Ultimo
The Product
A lifecycle-focused asset and maintenance management solution with integrated maintenance, operations and HSE capabilities.
Ideal For
10+ Users
Industry Fit
Manufacturing, Chemicals, Energy, and Utilities
Pricing
From £20,000
Lumada by Hitachi
The Product
An industrial-hardware-agnostic enterprise asset management solution with predictive and field service maintenance capabilities.
Ideal For
100+ Users
Industry Fit
Energy, Utilities, Oil and Gas, Capital Projects and Infrastructure, and Nuclear
Pricing
From £20,000
eMaint by Fluke
The Product
An award-winning system aimed at reducing downtime, increasing productivity, and extending equipment lifespan.
Ideal For
20+ Users
Industry Fit
Manufacturing, Pharma, and Food & Beverages
Pricing
From £25,000
ServiceMax by PTC
The Product
A cloud-based service management platform for asset-centric service providers.
Ideal For
100+ Users
Industry Fit
Industrial Machinery and Components, Medical Supplies and Equipment, Rental and Leasing, and Manufacturing
Pricing
From £250,000
IFS EAM by IFS
The Product
IFS offers two powerful and flexible EAM solutions: IFS Cloud EAM and IFS Ultimo, ideal for handling the complex asset demands of asset-incentive organisations.
Ideal For
200+ Users
Industry Fit
Aerospace & defence, Energy utilities, Construction & engineering, Manufacturing, Service industries, and Telecommunications
Pricing
From £250,000
Can’t See the Right Product? Use Our Tool to Find Asset Lifecycle Management Software That Matches Your Requirements
What Type of Assets Are You Looking to Manage?
What Are the 4 Stages of Asset Lifecycle Management?
Stage 1: Planning
Before asset acquisition, a detailed plan needs to be drawn up. Asset planning helps to establish the requirement of an asset, based on information such as the evaluation of existing assets, current asset performance, and the operational demand for an additional asset. Most of this data can be efficiently analysed through the use of an Asset Management Software tool.
Once analysed, an asset manager and their team will prepare a proposal to understand:
- What asset is needed
- What is the asset’s purpose
- Will this asset improve operations and how
- How long will this asset’s ROI take
- How much of the budget is available to acquire this asset
- What is the estimated depreciation value
- What is the predicted time for operational life
This first stage of an asset life cycle is crucial for all stakeholders, from financial teams to operators. The decision to purchase an asset relies on it fitting a business’s needs. As well as contributing to its operations and ultimately generating revenue.
Planning is also an integral part of asset replacement, Greg Markham (Estates & Assets Director at Serco Health) explains that sustainability and energy efficiency are two driving forces in how businesses plan for asset acquisition today.
Stage 2: Procurement/Acquisition
Once an asset has been identified, the next stage is to purchase it. This means that an asset has been properly analysed and identified as a much-needed resource to improve business operations.
This stage will also focus on the financial side of acquiring an asset which is within a specific budget that has been set at the planning stage.
As procurement is vital, it can be dissected into a procurement lifecycle which is suited to businesses purchasing goods and services. Successful procurement lifecycle management can improve both speed of purchasing and the cost of purchases.
Typically, the procurement lifecycle will look like this:
- Identify goods or services
- Shortlist suppliers
- Negotiate costs and delivery
- Finalise purchases
Stage 3: Operation and Maintenance
Next is the longest stage of an asset’s life cycle; operation and maintenance. As an asset is put to its intended use, it is now improving operations and helping to generate revenue. As well as reacting to upgrades, patch fixes, licenses, and audits.
During operations, an asset will be regularly monitored and checked for any performance issues that unexpectedly develop. This is where an asset maintenance plan will be key to prolonging reliability and performance.
Without a maintenance plan, businesses will most likely encounter unplanned downtime and high repair costs. Over 80% of companies experience unplanned downtime of critical assets at least once every three years.
Asset maintenance strategies differ depending on a business’s budget and asset type. Some take a more reactive approach, whereas others opt for a predictive or preventive strategy. Ideally, a chosen maintenance plan will work to:
- Reduce downtime
- Minimise emergency repair costs
- Increase equipment uptime
- Prolong an asset’s life expectancy
By targeting potential improvement areas, maintenance can even help an asset perform better than originally intended.
Stage 4: Disposal and Replacement
At the end of an asset’s life cycle, it is removed from service and either sold, re-purposed, thrown away, recycled, or replaced.
Although typically an asset’s lifecycle is budgeted for 15 years, this final stage can come at any point after purchase. For instance, an asset manager may determine an ideal disposal point based on its current re-sale value or if there is a more sustainable opportunity to replace an asset that can yield greater long-term results.
If there is still an operational need for this type of asset, a replacement is planned for and the asset life cycle begins again. The planning for a replacement asset is detailed and offers several options that either provide a like-for-like replacement at the same purchase price (considering inflation) or provide an alternative that has higher up-front costs but provides a greater ROI.
For instance, Greg Markham talks of a similar scenario where his team where responsible for introducing LED lighting throughout a hospital wing. Due to the energy-saving benefits, the investment was returned in four years. As a knock-on effect, the facility was able to accommodate two new CT scanners with no need for extra energy output or infrastructure, which also alleviated patient wait times.
There’s also the consideration of ethically disposing of assets. Even though an asset has no business value at this stage, it may still need to be disposed of efficiently to ensure it does not harm the environment. Particularly if it has been operating in industries such as oil and gas or chemicals. This process could involve dismantling the asset piece by piece or wiping it clear of data if it has operated in an IT hardware asset lifecycle.
Why Asset Life Cycle Management Is Important
No matter what the industry or size of operation, all businesses are reliant on their revenue-generating assets. Each asset has a life cycle, including a period of useful life where it runs at peak performance.
But, after inevitable wear and tear, an asset’s optimal operating life decreases and requires maintenance. Until repair costs eventually outweigh the price of replacement.
The disposal of an asset can be for various reasons including the amount of usage by a production team, the way it had been used by operators or even the effectiveness of a maintenance plan.
With the deployment of asset life cycle management, or LCAM (Life Cycle Asset Management), businesses can gauge when an asset will reach its optimal peak performance and analyse how long of a useful life it has left. Before eventually planning for maintenance work or its replacement.
This detailed data-driven approach to asset life cycle management also ensures businesses are keeping their assets operating for as long as possible. Among other capabilities such as:
- Calculating asset depreciation value
- Building preventive maintenance strategies
- Specifying asset roles in operations
- Ensuring compliance with regulatory standards
- Calculating the cost of procurement and replacement
- Integrating assets into asset tracking systems
Track & Improve Each Stage of Your Asset’s Life Cycle With Asset Management Software
What Type of Assets Are You Looking to Manage?
Utilising Asset Lifecycle Management Software Best Practices
For asset lifecycle management to be successful, stakeholders need access to relevant and accurate information. That includes purchase, condition, location, value, and maintenance data. This can be captured and shared on manual asset management tools such as Excel spreadsheets. But spreadsheets are notorious for errors when it comes to large pools of data.
Instead, businesses can achieve greater efficiency and accuracy by using Asset Management Software. With an asset management system, asset managers can improve their lifecycle management tasks with access to:
- A searchable asset register
- Continuous real-time tracking
- Updated asset value figures
- Warranty, license, and lease information
- Maintenance and repair analytics
As an example, an asset manager can utilise Asset Management Software for lifecycle management in 5 steps:
- Identify, locate and prioritise assets
- Understand an asset’s importance to operations
- Track performance and output
- View historical and planned maintenance data including costs and downtime
- Determine and plan for disposal
Types of Asset Lifecycles to Consider
Although synonymous with the management of fixed and physical assets, asset lifecycle management is relevant to various types of different assets. This allows businesses to implement their own LCAM protocols.
- IT Asset Lifecycle Management: This is focused on incorporating both software and hardware assets.
- Software Asset Management Lifecycle: This is designed to determine the lifecycle of software licenses and usage, which helps to reduce the risks of using outdated software and improve employee offboarding processes.
- Fleet Lifecycle Management: Similar to equipment and machinery, a fleet lifecycle will focus on maintenance for the safety of fleet vehicles during their operation as well as fluctuating values.
- Digital Asset Lifecycle Management: This helps to better understand the digital asset lifecycle from creation and management to distribution and archiving.
Written By Ryan Condon (Head of Content at Comparesoft), Co-Produced by Greg Markham (Estates & Assets Director at Serco Health)