Enterprise Asset Management - What Is Enterprise Asset Management?

What Is Enterprise Asset Management?

In capital-intensive industries such as utilities, process/discrete manufacturing, healthcare as well as real estate, physical assets (buildings, infrastructure and equipment) form a significant proportion of the total assets of the organization. These industries face the harsh realities of operating in highly competitive markets and dealing with high value assets and equipment where each failure is disruptive and costly. At the same time, they must also adhere to stringent occupational and environmental safety regulations.

It is thus important for organizations to maximize the return on investment from their asset base. Life Cycle Asset Management (LCAM) and EAM are paradigms employed to achieve that goal. Given a physical asset, the objective of LCAM is to extract maximum productivity from the asset and minimize the total costs involved in its acquisition, operations as well as maintenance. Quantitatively, the objective of asset management is to strike an optimal balance between maximizing Overall Asset Productivity (OAP) and minimizing Total Cost of Ownership (TCO). Furthermore, LCAM provides guidance on whether it is more cost-effective to continue to maintain, overhaul or replace a failing asset.

When the entire asset portfolio of the organization is considered, EAM takes over. As business and market requirements are dynamic, the output specifications for the organization’s assets change constantly (e.g., increase in output capacity due to new customers). EAM provides the framework for capital and labor allocation decision processes across the competing categories of equipment addition/ reduction, replacement, over-hauling, redundancy setup and maintenance budgets in order to meet business needs. Correspondingly, it merges the collective LCAM efforts and re-evaluates decisions based on long and short-term economic considerations at the enterprise level.

Public asset management expands the definition of Enterprise Asset Management (EAM) by incorporating the management of all things which are of value to a municipal jurisdiction and its citizen’s expectations. An EAM requires an asset registry (inventory of assets and their attributes) combined with a computerized maintenance management system (CMMS). Public Asset Management is the term that considers the importance that public assets affect other public assets and work activities which are important sources of revenue for municipal governments and has various points of citizen interaction. The versatility and functionality of a GIS system allows for the control and management of all assets and land-focused activities. All public assets are interconnected and share proximity, and this connectivity is possible through the use of GIS. GIS-centric public asset management standardizes data and allows interoperability, providing users the capability to reuse, coordinate, and share information in an efficient and effective manner by making the GIS geo-database the asset registry.

In the United States the defacto GIS standard is the ESRI GIS for utilities and municipalities. An ESRI GIS platform combined with the overall public asset management umbrella of both physical “hard” assets and “soft” assets helps remove the traditional silos of structured municipal functions which serves the citizens. While the hard assets are the typical physical assets or infrastructure assets, the soft assets of a municipality includes permits, license, code enforcement, right-of-ways and other land-focused work activities.

This definition of “public asset management” was coined and defined by Brian L. Haslam, President and CEO of a leading International ESRI GIS-centric computerized maintenance management system company located in Utah whose software is certified by the National Association of GIS-Centric Solutions (NAGCS). GIS-centric public asset management is a system design approach for managing public assets that leverages the investment local governments continue to make in GIS and provides a common framework for sharing useful data from disparate systems. Permits, licenses, code enforcement, right-of-way, and other land-focused work activities are examples of land-focused public assets managed by municipal governments. These public assets occupy location just as in-the-ground or above-ground public assets do. Land-use development and planning is another area which is interconnected to other local government assets and work activities.