From a wastewater treatment plant that an entire city depends on to a smaller-sized transportation company expected to provide timely deliveries, businesses of all sizes rely on the assets and equipment they own to create value every day.

Asset lifecycle management (ALM) is a data-driven approach that many companies use to care for their assets, maximize their efficiency and increase their profitability. But where do you start and how do you know which ALM strategy is right for you?

In this article, we’ll take a look at some best practices that successful businesses use to care for their assets and extend their useful lives. First, though, let’s start with some definitions that will be key to understanding the value of ALM to the modern enterprise.

What is an asset?

Assets are both physical and non-physical items that companies own and use to create value. Examples of physical assets, or hardware assets, include machinery, factories, office supplies, production plants, vehicle fleets and buildings. Examples of non-physical assets include software, intellectual property, trademarks and patents.

What is asset lifecycle management (ALM)?

ALM is a strategic approach to managing physical assets that helps companies extract the most value from them over time. The maintenance strategies that companies use most frequently are broken down into four stages of the asset lifecycle.

The four stages of ALM

1. Planning

In the first stage of the asset lifecycle, stakeholders assess the need for a new asset, its projected value to the organization and its overall cost.

A critical part of the planning stage is assessing the overall value of the asset. During this stage, decision-makers must consider many different pieces of information to make an accurate assessment. One technique that is becoming increasingly valuable to the planning stage is the creation of a digital twin.  

A digital twin is a virtual representation of an asset that a company intends to purchase. It allows the company to run tests and predict performance based on simulations. With a good digital twin, it’s possible to predict how an asset will perform under certain conditions and what it’s projected lifespan will be.

Read this blog post to explore how digital twins can help you optimize your asset performance.

2. Procurement and installation

This stage concerns the purchase, transportation and installation of the asset, including how the asset will be put into operation, how it will be integrated with other assets the company owns and how data it generates will be incorporated into business decisions.

3. Utilization

This phase is critical to maximizing asset performance over time and extending its lifespan. Recently, asset management software like enterprise asset management systems (EAMs), have become an indispensable tool in helping businesses perform both predictive and preventative maintenance. We’ll go deeper into EAMs, the technologies underpinning them, the types of maintenance they enable and their implications for ALM best practices in another section.

4. Decommissioning and asset disposal

The final stage of the asset lifecycle is the disposal of the asset. At this point, it’s important to weigh the depreciation of the asset against the rising cost of maintaining it. Decision-makers will want to take a variety of factors into consideration to inform this decision, including asset uptime, projected lifespan and the shifting costs of fuel and spare parts.

Why asset lifecycle management is important

What could be more important to a business than the health of its assets? When you’ve invested hard-earned capital in the acquisition of an asset, the asset management process ensures it will run at peak level for as long as possible. ALM best practices help companies systematize and execute their processes and can generate a wide range of benefits, including the following:

• System scalability: Today’s top ALM strategies use cutting-edge technologies coupled with rigorous, systematic approaches to forecast, schedule and optimize daily maintenance tasks, regardless of how many assets need to be maintained or asset complexity. In other words, as a company acquires more and more assets, as long as it has a sound ALM strategy, it will be able to successfully scale its operations and maintenance tasks.
• Real-time visibility into asset condition: An effective ALM strategy helps automate redundant tasks and can dramatically improve decision-making capabilities by giving managers and operators real-time visibility into equipment status and workflows.
• Reduced maintenance costs and downtime: With the availability of asset information thanks to the Internet of Things (IoT)—coupled with powerful AI and analytics capabilities—businesses deploying modern ALM can now perform cost-effective preventive maintenance, intervene before critical assets fail and prevent maintenance risks that can cause costly downtime.
• Greater alignment across business units: ALM best practices help businesses keep different departments and management informed to improve the decision-making process and plan more effectively for the future.
• Reduced risk of security breaches: Through real-time asset tracking and improved asset security capabilities, market-leading ALM systems can now help businesses track and monitor their assets in a way that helps prevent theft and data breaches.
• Improved compliance: Strong ALM helps companies comply with laws surrounding the management and operation of their assets, regardless of where they are located. Data management and storage requirements vary widely from country to country and are constantly evolving. A sound ALM strategy ensures compliance no matter where data is being stored.   

Asset lifecycle management best practices

The primary objective of asset lifecycle management (ALM) should always be the optimization of assets throughout their lifecycle. Until recently, managers and technicians relied on manual tools like Excel spreadsheets and document tracking to accomplish this. However, recent technological leaps in asset management software capabilities have added new dimensions to ALM best practices, making manual tools like Excel insufficient.

Today, asset management software helps companies maintain the most important information about their assets—such as condition, maintenance and repair history, location, licensing and performance metrics—more accurately and efficiently.

What follows are some asset lifecycle management best practices that companies rely on.

Deploy a comprehensive software system to streamline processes and improve decision-making

Asset management software like an enterprise asset management system (EAM) helps optimize asset performance from acquisition to disposal in a way that manual tools like Excel never could. In the IoT era—with everything from valves to vehicles connected by sensors and systems—maintenance operators now have the opportunity to incorporate advanced analytics and artificial intelligence (AI) into everything they do. Data gathered from instrumented assets can be analyzed using AI techniques, and the resulting insights can help maintenance teams make smarter decisions.

A computerized maintenance management system (CMMS) is software that centralizes maintenance information and facilitates the processes of maintenance operations. It is often deployed as part of EAM to help optimize the utilization and availability of physical equipment like vehicles, machinery, communications, plant infrastructures and other assets.

Centralize asset information and make it easily accessible to employees

A CMMS underpinning a strong EAM approach ensures that all relevant asset information is stored in a single location and accessible to anyone who needs it. From up-to-date value figures to critical warranty, software licenses and lease information (as well as the latest maintenance and repair analytics), CMMS capabilities make critical asset information readily accessible in the event of an audit.

Use modern solutions to resolve issues before they result in costly breakdowns

EAM and CMMS software enable the most modern approaches on the market—such as preventive and predictive maintenance—to help companies prevent equipment failure.

• What is preventive maintenance?: Put simply, preventive maintenance is about fixing things before they break. By using asset management best practices and historical averages like mean time between failure (MTBF), preventive maintenance helps business leaders strategically plan for downtime so they can repair assets at a time when the impact to the overall business will be minimal.
• What is predictive maintenance?: Predictive maintenance takes the maintenance monitoring capabilities associated with preventive maintenance one step further. Predictive maintenance constantly assesses and re-assesses an asset’s condition in real-time via sensors that collect data via IoT. That data is then fed into AI-enabled CMMS, where advanced data analysis tools and processes like machine learning (ML) spot issues and help resolve them. This information is then used to build predictive models of asset performance over time and help spot potential problems before they arise.

Maximize asset performance with real-time data analysis

AI-powered remote monitoring not only delivers predictive maintenance capabilities, but it can also help monitor asset performance and deliver insights into how to improve it. By aggregating data across departments and information silos, it can reduce the number of asset alerts that maintenance managers must deal with and ensure their accuracy. Historical and real-time data collected from IoT devices and analytical and diagnostic tools can help extend asset uptime.

Ensure asset health and security with real-time location and condition tracking

Like asset condition monitoring, asset tracking has also seen big advances in recent years due to technological breakthroughs. Some of the more frequently used devices include radio frequency identifier tags (RFID), Wi-Fi-enabled tracking systems, QR codes and global positioning satellites (GPS). Each offers unique strengths and are upgrades on their predecessors.

RFID tags broadcast a variety of information about an asset in addition to its location, including the temperature and humidity of its environment. Wi-Fi-enabled tracking systems use a tag affixed to an asset that transmits information over a local Wi-Fi network. Like RFIDs, however, they’re only effective if an asset is indoors and within range of a Wi-Fi network.

QR codes are a significant upgrade on their predecessor, the universal barcode, but unlike the barcode, they can be easily read using only a smartphone. Global positioning satellites are widely used for assets while they’re in transit since, unlike other tracking systems, they allow managers to see where an asset is out of doors and away from Wi-Fi networks, anywhere on the globe.

Asset lifecycle management solutions

Many of today’s asset lifecycle management (ALM) best practices are only possible with a comprehensive solution equipped with advanced technological features like IoT, AI-enhanced analytics and monitoring, and cloud-based capabilities.

The IBM Maximo® Application Suite is a fully integrated platform that helps companies evolve their maintenance operations from timed scheduling to condition-based, predictive maintenance informed by real-time insights. It has a proven track record of helping enterprises boost asset performance, extend asset lifespan and reduce cost and downtime.