Assets are the lifeblood of any successful business—from software programs tailored to meet an enterprise’s unique needs to a pipeline that stretches across oceans. One of the most important strategic decisions a business leader can make is how these assets are cared for over the course of their lifespans.

Whether you’re a small enterprise with only a few assets or a large-scale corporation with offices spanning the globe, asset lifecycle management, or ALM, is a fundamental part of your operations. Here’s what you need to know in order to build a successful strategy.

First, let’s talk about what an asset is and why they are so important. Companies use assets to create value. There are many different types of assets, both physical and non-physical. Examples of physical assets include equipment, office buildings and vehicles. Non-physical assets include intellectual property, trademarks and patents.

Each asset a company acquires goes through six main stages over the course of its life, requiring careful maintenance planning and management tactics to provide its owners with a strong return on investment.

The following are the six stages of asset lifecycle management:

1. Planning: In the first stage of the asset lifecycle, stakeholders assess the need for the asset, its projected value to the organization and its overall cost.
2. Valuation: A critical part of the planning stage is assessing the overall value of an asset. Decision-makers must take into account many different pieces of information in order to gauge this, including the assets likely length of useful life, its projected performance over time and the cost of disposing of it. One technique that is becoming increasingly valuable during this stage is the creation of a digital twin.
3. Digital twin technology: A digital twin is a virtual representation of an asset a company intends to acquire that assists organizations in their decision-making process. Digital twins allow companies to run tests and predict performance based on simulations. With a good digital twin, its possible to predict how well an asset will perform under the conditions it will be subjected to.
4. Procurement and installation: The next stage of the asset lifecycle concerns the purchase, transportation and installation of the asset. During this stage, operators will need to consider a number of factors, including how well the new asset is expected to perform within the overall ecosystem of the business, how its data will be shared and incorporated into business decisions, and how it will be put into operation and integrated with other assets the company owns.
5. Utilization: This phase is critical to maximizing asset performance over time and extending its lifespan. Recently, enterprise asset management systems (EAMs) have become an indispensable tool in helping businesses perform predictive and preventive maintenance so they can keep assets running longer and generating more value. We’ll go deeper into EAMs, the technologies underpinning them and their implications for asset lifecycle management strategy in another section.
6. Decommissioning: The final stage of the asset lifecycle is the decommissioning of the asset. Valuable assets can be complex and markets are always shifting, so during this phase, it’s important to weigh the depreciation of the current asset against the rising cost of maintaining it in order to calculate its overall ROI. Decision-makers will want to take into consideration a variety of factors when attempting to measure this, including asset uptime, projected lifespan and the shifting costs of fuel and spare parts.

When you’ve invested your hard-earned capital in the acquisition of assets, it’s important to keep them running at peak levels for as long as possible. Systematizing and executing an effective asset management strategy can produce a wide range of benefits for your organization, including the following:

• Scalability of best practices: Today’s asset lifecycle management strategies use cutting-edge technologies coupled with rigorous, systematic approaches to forecast, schedule and optimize all daily maintenance tasks and long-term repair needs.
• Streamlined operations and maintenance: Minimize the likelihood of equipment failure, anticipate breakdowns and perform preventive maintenance when possible. Today’s top EAM systems dramatically improve the decision-making capabilities of managers, operators and maintenance technicians by giving them real-time visibility into equipment status and workflows.
• Reduced maintenance costs and downtime: Monitor assets in real time, regardless of complexity. By coupling asset information (thanks to the Internet of Things (IoT)) with powerful analytics capabilities, businesses can now perform cost-effective preventive maintenance, intervening before a critical asset fails and preventing costly downtime.
• Greater alignment across business units: Optimize management processes according to a variety of factors beyond just the condition of a piece of equipment. These factors can include available resources (e.g., capital and manpower), projected downtime and its implications for the business, worker safety, and any potential security risks associated with the repair.
• Improved compliance: Comply with laws surrounding the management and operation of assets, regardless of where they are located. Data management and storage requirements vary widely from country to country and are constantly evolving. Avoid costly penalties by monitoring assets in a strategic, systematized manner that ensures compliance—no matter where data is being stored.

How to build an effective asset lifecycle management strategy

Because of the increased complexity of asset maintenance and the technologies required to build an effective maintenance strategy, many businesses utilize enterprise asset management, coupled with a strong computerized management system (CMMS) and advanced asset tracking capabilities to manage their most valuable assets.

Enterprise asset management systems (EAMs)

Enterprise asset management systems (EAMs) are a component of asset lifecycle management strategy that combines asset management software, systems and services to lengthen asset lifespan and increase productivity. Many rely on a CMMS to monitor assets in real time and recommend maintenance when necessary. Top-performing EAM systems monitor asset performance and maintain a historical record of critical activity, such as when it was purchased, when it was last repaired and how much its cost an organization over time.

Computerized maintenance management systems (CMMS)

Computerized maintenance management systems (CMMS) are software systems that maintain a database of an organization’s maintenance operations and help extend the lifespan of assets. Many industries rely on CMMS as a component of EAM, including manufacturing, oil and gas production, power generation, construction and transportation. One of the most popular features of CMMS is its ability to spot opportunities for companies to perform regular preventive maintenance on their most valuable assets.

Preventive maintenance

Preventive maintenance helps prevent the unexpected failure of an asset by recommending maintenance activities according to a historical record and current performance metrics. Put simply, it’s about fixing things before they break. Through machine learning, operational data analytics and predictive asset health monitoring, today’s top-performing asset lifecycle management strategies optimize maintenance and reduce reliability risks to plant or business operations. EAM systems and a CMMS designed to support preventive maintenance can help produce stable operations, ensure compliance and resolve issues impacting production—before they happen.

Asset tracking

Asset tracking is another important component of asset lifecycle management strategy. Like EAM and CMMS, asset-tracking capabilities have also improved in recent years due to technological breakthroughs. Here are some of the most effective technologies available today for tracking assets.

• Radio frequency identifier tags (RFID): RFID tags broadcast information about the asset they’re attached to using radio-frequency signals and Bluetooth technology. They can transmit a wide range of important information, including asset location, temperature and even the humidity of the environment the asset is located in.
• WiFi-enabled tracking: Like RFIDs, WiFi-enabled tracking devices monitor a range of useful information about an asset, but they only work if the asset is within range of a WiFi network.
• QR codes: Like their predecessor, the universal barcode, QR codes provide asset information quickly and accurately. But unlike barcodes, they are two-dimensional and easily readable with a smartphone from any angle.
• Global positioning satellites (GPS): With a GPS system, a tracker is placed on an asset that then communicates information to the Global Navigation Satellite System (GNSS) network. By transmitting a signal to a satellite, the system enables managers to track an asset anywhere on the globe, in real time.

Many of today’s asset lifecycle management (ALM) solutions leverage cutting-edge technology like real-time data delivered via IoT, AI-enhanced analytics and monitoring, cloud-based capabilities and powerful automation that can help streamline workflows. Enterprise asset management (EAM) with the IBM Maximo Application Suite helps companies optimize asset performance, extend asset lifespans and reduce downtime and cost. It’s a fully integrated platform that uses advanced analytics tools and IoT data to improve operational availability and spot opportunities to perform preventive maintenance.