It's not just about the money
Investing in an asset management solution is about forward planning, but how can you measure your return on investment (ROI) Whenever you're building a business case, one of the key areas that the decision-makers are going to focus on is ROI. If they're going to commit a significant amount of resources to any investment, they want to see proof that it's going to be worth it.
One of the things managers struggle with when calculating the ROI on investing in an asset management planning solution is that several of the key benefits are intangible; they can't be measured in dollars or cents.
What's important to remember is that intangible benefits can be just as valuable as their tangible counterparts, and it's important to highlight this when developing a business case for investing in an asset management planning solution.
Risk mitigation - reducing reactive spend
What this comes down to is taking a proactive approach toward asset management. It's all about forward planning - the aim is to operate and maintain assets in the most cost-effective way to meet the needs of customers. One key aspect is reducing reactive works to reduce risk and cost. If you have a solution on board that enables you to plan ahead, you'll ensure that assets are maintained and renewed in a timely fashion, avoiding the emergencies and costs associated with unplanned replacement. Nevermore important than now with current supply chain disruption resulting in long and uncertain lead times.
You'll also mitigate the 'key person risk'. Let's say you've had someone looking after assets for a significant length of time. What they do works well - but the minute they leave the organisation, their asset knowledge leaves the building with them. It amounts to an invisible cost over the next several years; because your team no longer has the right knowledge to inform them, which can lead to the wrong decisions.
When you invest in an asset management planning solution, a key requirement is to critically assess the risks your organisation is facing. Learning what those risks are and implementing a forward-planning approach to mitigate them is a highly valuable yet intangible benefit - and very significant to your return on investment.
If your operations are generating revenue, and one or more of your assets fail and cause those operations to cease, you're no longer making money. It really is that simple.
Increased efficiency – an intangible measurement
With the right asset management planning solution onboard, you'll have processes in place to support consistency across your teams. With a system that acts as a single source of truth, everyone has visibility over the assets and the underlying data quickly and efficiently. With organisations increasingly operating from multiple, and often remote locations keeping track of assets is vital. Investing in a solution that provides these efficiency gains supports significant but intangible ROI.
The assets - an investment, not a cost
One of the key benefits of an asset management planning solution is that it often produces a shift in mindset. What we've learned from our clients is that instead of viewing the assets themselves as liabilities, they begin to see them as an investment in and of themselves - as enablers of success.
Seeing their value from this standpoint means organisations take more of an interest in the maintenance of their assets - one of the core features of any asset management system. Think of it like your house: if you don't maintain it properly and you let it deteriorate the value of that property will fall over time. As a result, you'll have to spend more to repair it than you would if you'd maintained it properly from the beginning. It's the same with all assets - if an organisation doesn't maintain the financial value of them, they'll end up costing that organisation more money than necessary. That is why an asset maintenance plan can be helpful.
Meeting cost-related challenges with strategic procurement
The insights an organisation can glean from the data produced by their asset management solution means purchasing should become more efficient and cost-effective. The right solution will provide an organisation with a more strategic view of their asset portfolio requirements, and that enables more options and better decision-making around procurement. For example, if a housing provider has an accurate view of their long-term requirements for heat pumps, and then went through a procurement process with suppliers, they're likely to benefit from reduced capital costs and reduced maintenance costs because of the specification of a common product.
Putting it all together - building the business case
What you're aiming to do is provide reliable evidence to convince the powers-that-be that investing in an asset management planning solution will be worthwhile. The big one is risk; what you need to do is calculate how much it could potentially cost your organisation if your assets are:
- Not clearly identified
- Not understood in terms of condition and performance
- Not available when required
- Not maintained properly
- Not replaced at the right time
- Not purchased considering whole-of-life costs
Present these figures as a central part of your business case, and back them up with the potential for lost revenue if lack of asset management actually causes operations to stop. Then pose the question: are they willing to take that risk? Can your organisation afford to ignore how critical forward planning is, and how an asset management planning system will help achieve that?
All the assets an organisation uses are investments. Properly managed, each of them provides their own ROI. That's the way your organisation needs to look at it when evaluating the ROI of an asset management planning solution and remember that many of the benefits you'll experience are intangible - but no less valuable.
No matter how you approach asset management, we have a solution for you.
Find out more here, or request a demo to see our software in action.
To learn more about the ROI of asset management and how to evaluate whether your current systems and processes are delivering value read our blog: Four questions to understand if your asset management software is delivering value.