Benefits and Stages of Asset Lifecycle Management
Updated October 6, 2023
Asset lifecycle management is the business approach that maximizes the cost-effectiveness and efficiency of the assets during their lifecycle. It involves the conceptual design stage through regular use to the ultimate decommissioning and replacement. With the successful implementation of management techniques, an organization can make the most of its asset register.
The Benefits Of Managing Asset Lifecycle
Before getting into the details of the stages of managing asset lifecycle, let’s understand the benefits of this practice. Firstly, proper management of the asset lifecycle lets the organization approach the register in a proactive manner. For instance, if a team is about to commit to a new project, it already knows the condition and age of its assets. Thus, it can take well-planned actions to get the most out of the available resources.
Secondly, knowing about the state of the asset registry ensures that the assets are decommissioned and replaced right on time. So, the team never has to suffer because of old and outdated assets.
The Four Stages of Managing Asset Lifecycle
In a broader sense, the management of an asset’s lifecycle goes through the following four stages.
Stage 1: The Planning Stage
In the first stage, a business case gets made in connection with the purchase of new assets on the register. This particular case is all about the reason why the asset is needed, along with its uses, proposed costs, and so on. It is important that this stage gets carefully carried out for ensuring that every purchase of the assets fit the business needs and is a necessary addition. As such, it should contribute to the business success.
Stage 2: The Purchase Stage
After a thorough and robust planning is done, the next stage is acquiring the asset. Acquiring any asset involves several steps, such as researching the available options in the market and comparing them. It also involves taking trials or demos before the asset is finally bought and added to the fixed asset register of the organization.
Stage 3: Operations and Maintenance Stage
The operations and maintenance stage happens to be the longest one in the asset lifecycle. It’s the stage that the rest of the three parts actively contribute to for ensuring the utmost success. Smart businesses identify the significance of asset maintenance at this point. Proper maintenance of assets assures value for money for the organization, and the asset has useful operation for the expected time period. This holds particularly true for any high-value asset like buildings.
Stage 4: Decommissioning and Disposal Stage
Finally, there comes a time when the said asset either gets too old or loses its optimal functionality to the organization. It’s time now for the organization to decide on how to dispose and replace the asset.
These days, any mid-sized or large organization has a large number of assets, starting from IT hardware to software licenses. The cost associated with acquiring those assets can only be effectively recovered when they are managed and maintained well throughout their lifecycle. As such, deploying tools and techniques for the management of asset lifecycle is no longer an option, but rather a necessity.