Asset Management vs. Managing Assets: What's the Difference?
Asset management and managing assets may sound similar, but each has a different meaning that impacts how facilities managers and finance teams approach the use of assets within an organisation. These teams have become more strategic in recent years, requiring people to make longer-term decisions that address the company's broader needs. To that end, assets must be fit-for-purpose, reduce waste and deliver the ability to make data-driven decisions. This article outlines the difference between asset management and managing assets and why having a strategic approach to asset management is essential.
The difference between asset management and managing assets
Looking after the specific maintenance requirements of assets and expected near-term expenditure is managing assets. The focus is typically operational. In contrast, asset management is more strategic. It considers the broader needs of an organisation, how it can derive a strong return on investment (ROI), and what can be done to optimise the asset lifecycle, whether it's for heavy machinery and equipment or smaller devices such as laptops, tablets and mobile phones.
The shift toward asset management has been driven by the need for decision-makers at all levels to make more informed, data-driven decisions. Similarly, public and private companies have been focusing on asset performance by updating service level agreements (SLAs) and developing asset management frameworks to ensure vendors align with the increased strategic focus on asset management. For example, in 2016, the Victorian Government's Department of Treasury and Finance established the Asset Management Accountability Framework. Similar frameworks have emerged in New Zealand, with publicly funded organisations required to operate under an Investor Confidence Rating (ICR). The ICR assesses government-funded services every three years to determine the agency's performance. These frameworks have lifted the expectations of service providers and customers, requiring accountability in how assets are managed and whether they deliver on SLAs.
Why asset management is important
Effective asset management requires a strategic long-term view of a company's needs and trajectory. The ability to demonstrate that assets are managed to optimise service delivery, drive stronger commercial decision-making, and, in recent times, address environmental, social and corporate governance (ESG) risk delivers a range of benefits. Not only does having assets operating at peak efficiency drive higher standards of product and service delivery, but it also provides the tools to demonstrate accountability and transparency to important stakeholders, such as investors, lenders, and customers. Companies that don't have a proactive approach to asset management risk not having the data, systems, and processes available to make strong decisions. As a result, this can cause operational and financial inefficiency and instability at the executive and leadership levels of organisations.
How to strengthen your asset management systems and processes
Like any organisational improvement, strengthening asset management systems and processes requires a methodical approach to derive full value from assets. With a holistic asset management solution, companies gain full control and visibility over the assets held by a company, accurate budget forecasting, and the information required to address compliance requirements.
Quadrent's LOIS, for example, helps companies easily manage their IFRS 16 compliance and provides a central location for all leased (and non-leased) asset information. This central location ensures companies have the data to plan equipment maintenance and upgrades accurately, complete more accurate cash flow forecasting, and reduce and stabilise costs where necessary. Further, the right provider should be able to deliver the tools, products and services needed to manage the entire asset lifecycle proactively. With Quadrent, companies gain access to:
- the equipment and technology they need without sacrificing working capital
- powerful asset management and lease accounting software
- Quadrent’s Green Lease, a sustainability-focused initiative that addresses ESG risk.
Maximise your ROI through asset management with Quadrent
Across all industries, asset management requires a strategic and proactive approach to remain ahead of competitors. It's no longer enough to manage the near-term requirements of an asset when the market, regulators and financiers demand greater efficiency and transparency over how assets are managed and why decisions are made. With a range of entry points available to suit companies, including buyback, sale and lease back and new asset funding, Quadrent makes it easy to switch to a sustainable asset management solution that provides the full suite of features to maximise the ROI on your assets and make data-driven decisions.
Quadrent works with organisations helping them access assets without sacrificing cash flow and addressing their ESG risk in the process. With a team that has in-depth leasing knowledge and specialised accounting backgrounds, we'll help your business weather tough economic conditions, get the most value out of your assets and address growing ESG requirements and reporting expectations.
Implement a sustainable asset management solution with Quadrent. Click here for more information.