Deciphering the Intricacies of Asset Management Terminology
The world of asset management is a complex one. When it comes to the management of physical assets, in particular, various terms and categories are employed across industries, leading to considerable confusion, to say the least.
The ISO 55000 standard defines an asset as any item, thing, or entity that has potential or actual value to an organization. Although asset management encompasses both tangible and intangible assets, this blog post focuses on concepts specifically related to the management of physical and infrastructure assets. Trust me, it’s complicated enough on its own.
EAM vs. ERP
Enterprise Asset Management (EAM) and Enterprise Resource Planning (ERP) are two commonly used terms in the world of enterprise software, when it comes to managing assets.
While EAM is a business application primarily used by asset-intensive industries to optimize the use, maintenance, and repair of industrial equipment; ERP software helps with running an entire business by automating and overseeing processes in accounting, finance, human resources, manufacturing, procurement, supply chain, and more.
Although ERP software may offer some of the same features as EAM, and even include an asset management module, EAM products are generally way more robust when it comes to the nitty-gritty of managing an asset. The functionality offered by ERP systems is usually broad, and typically covers only the basics of the asset management function. EAM and ERP software can work together, either as separate platforms or as an integrated solution.
Note: I think it’s time ERP got a rebrand…but that’s a conversation for another day!
AIM vs. EAM
Asset Integrity and Asset Integrity Management (AIM) are well-understood and comprehensively employed terms within asset-heavy industries like Oil & Gas, Energy & Utilities, and Aerospace & Defense.
In essence, AIM is the practice of managing assets — be it an aircraft spare part, an oil rig, or a gas pipe — to ensure their ability to perform their function effectively and efficiently, while minimizing health and safety risks, and adhering to regulations. Asset integrity applies to the entire life cycle and operational span of an asset — from its initial design to its eventual end of life.
EAM covers a broader range of business functions compared to AIM. Nevertheless, AIM should undoubtedly be an integral component of EAM. Ensuring integrity is a crucial process throughout an asset’s entire life journey, spanning design, construction, operation, and decommissioning phases. This approach maximizes safety and reliability, upholds ethical and environmentally responsible production, and extends the asset’s service life, among other essential considerations.
Similarly to EAM and ERP, organizations may choose to utilize AIM and EAM software separately, or integrate them into a unified solution.
APM vs. AIM
If you work at an asset-intensive organization, I’m sure you have come across Asset Performance Management (APM).
APM examines the overall performance of an asset within a system. It evaluates its operational status and helps determine how to get the best performance from it. In contrast, as mentioned earlier, AIM focuses on the integrity of an asset, ensuring it is genuine and safe to operate, among other considerations.
Although it is beneficial for an organization to have both APM and AIM, one holds significantly more importance than the other. While APM is nice to have, AIM is an absolute necessity. Implementing AIM is crucial to prevent costly and catastrophic incidents, including failures and shutdowns, which could have severe consequences for the organization, its staff, and society in general.
Asset Assurance vs. AIM
If you haven’t had your fill yet, let me throw another term into the mix. Asset assurance has come up in recent conversations concerning the trustworthiness and reliability of physical assets.
Asset assurance is sometimes described as a common language between asset management, project management, and engineering, where the asset owner is looking to be assured, project management provides the assurance, and engineering gives the assurance.
According to the ISO 55002 standard, assurance is one of the four fundamentals of asset management (alongside value, alignment, and leadership). The standard establishes that asset management must give assurance that assets will fulfill their required purpose.
The fulfillment of an asset’s intended purpose and service relies on its integrity. Therefore, AIM plays a crucial role in delivering asset assurance.
Asset Management Beyond Asset-Heavy Industries
The need to effectively manage physical assets extends beyond industrial environments.
Healthcare systems, for example, rely on medical assets to function properly and efficiently. These medical assets need to be carefully managed both inside and outside of healthcare facilities. Healthcare Asset Management encompasses all activities aimed at improving processes related to identifying, procuring, operating, maintaining, tracking, upgrading, and disposing of medical assets, including medical machinery, equipment, consumables, and other resources.
Similarly, in real estate, Property or Real Estate Management involves the daily oversight of residential, commercial, or industrial properties and land, including tasks such as repairs, ongoing maintenance, security, and overall property upkeep.
ERP is the broadest term and possibly in need of a rebrand. AIM and APM are (or should be) part of EAM. While APM may be a luxury, AIM is a necessity. AIM assumes a pivotal role in delivering asset assurance. Asset management goes beyond asset-intensive industries.