Asset Management
What It Is, What It’s Not, and How It Changes Everything
Thought Experiment: List as many of your organization's assets as you can think of in 15sec.
What is asset management? Asset management is the strategic coordination of everything your business owns or depends on to deliver value. It takes a far more expansive view of assets, including almost anything of potential or actual value, including non-physical things like intellectual property, reputation, or data, for instance. It’s not just about maintaining equipment or managing finances—indeed, it's about numerous functions coming to the table to agree on capital allocation and other decisions that maximize lifecycle value. It’s about ensuring that every decision, from acquiring a new asset to retiring an old one, aligns with your long-term goals.
And here’s what it’s not: Asset Management is not just about protecting or enhancing the value OF assets--what they cost or could be sold for--but also realizing the value obtained FROM the assets and their usage. It isn’t a single department’s responsibility, a box-ticking exercise, or just a maintenance schedule. It's not an additional thing to be done, but rather the way that you do things. And it's definitely not each department competing for a bigger budget in a well-intentioned bid to optimize their piece, but not the whole. It’s a cultural shift that helps your business move from reactive decisions to proactive, value-driven strategies.
Thought Experiment: Armed with a broader definition of assets and asset management, list as many of your organization's other assets as you can think of in 15sec. Are any of these significantly more important or valuable that your first assessment might have indicated? How actively do you know or believe these assets are being managed from a lifecycle, value-optimization perspective?
But don’t just take our word for it. Studies consistently show how prevalent “business as usual” approaches are—and how much they cost organizations.
- Reactive maintenance dominates: According to McKinsey, reactive repairs account for over 50% of maintenance activities in many industries, leading to unplanned downtime that can cost companies up to 5% of their annual revenue. In manufacturing alone, this downtime equates to $50 billion annually.
- Siloed operations cost big: Research by the Aberdeen Group reveals that businesses with disconnected operations see 22% higher maintenance costs and 30% lower asset utilization compared to those with integrated strategies.
- Wasted real estate: Gartner estimates that underutilized office space costs businesses between 10% and 30% of their annual real estate budgets.
These are just three examples from across business, but let’s look at how this plays out in real life—and how asset management can flip the script.
Maintenance in Manufacturing
Business as Usual: Equipment is only repaired when it breaks, leading to unplanned downtime that costs manufacturers up to $260,000 per hour, according to IndustryWeek. Maintenance teams are constantly firefighting, with no time to focus on improvements.
With Asset Management: Predictive maintenance identifies wear and tear before failures occur. Maintenance is planned to coincide with production lulls, saving an estimated 30% in costs and reducing downtime by 45%. For a midsize manufacturing plant, this could mean millions of dollars saved annually and improved delivery reliability for customers.
Fleet Management in Logistics
Business as Usual: A study by Frost & Sullivan found that fleets operating without telematics or asset management strategies experience 20-30% higher fuel consumption due to poor optimization. Vehicles are serviced irregularly, and managers lack insights into which assets are underperforming.
With Asset Management: Using telematics and lifecycle data, managers optimize fuel efficiency and maintenance schedules. Fleet-wide fuel consumption drops by 15%, saving hundreds of thousands annually for a midsize operation. Lifecycle costs are fully mapped, preventing over-investment in underperforming assets.
Office Space for a Growing Company
Business as Usual: Gartner reports that 40% of office space is typically unused at any given time. Growing businesses often expand too quickly or commit to leases that don’t match their actual needs, leading to waste and sunk costs.
With Asset Management: Space planning incorporates workforce analytics and flexible leasing strategies. The result? Businesses reduce unused space by 25%, saving tens of thousands annually while adapting to changing needs, such as hybrid work models.
Why It Matters
The “business as usual” mindset is more than just inefficient—it’s costly and unsustainable. Asset management provides a framework to break free from these patterns, helping organizations:
- Reduce waste: Studies show that asset management can cut maintenance costs by up to 30% and improve asset utilization by 20%.
- Improve resilience: Proactive strategies reduce downtime, enhance compliance, and ensure operations stay ahead of industry trends.
- Unlock hidden value: From optimizing real estate to reducing energy consumption, asset management uncovers savings that reactive approaches miss.
- And so much more!
The evidence is clear: businesses operating without asset management are leaving money on the table and exposing themselves to unnecessary risks. By adopting this proactive, integrated approach, you don’t just save costs—you build a business that’s poised to thrive in an ever-changing world.
Thought Experiment: Where is your organization stuck in “business as usual”? Imagine what could change if you embraced asset management.
