What is the asset management life cycle?

Benefits of asset life cycle management

Among other benefits, diligent asset management reduces organizational waste to reduce costs, primarily by giving you visibility into your assets’ status, usage, and performance.  

To illustrate, imagine an IT department using an IT asset management platform to track software licenses across the company. By doing this, they could find many ways to save money or better allocate resources. 

They may discover that 30% of their purchased licenses are unused. With this usage data, they can reassign the licenses or renegotiate pricing with the vendor. This could save them thousands, which they can reinvest into other parts of their IT infrastructure. 

Below are some of the other key benefits you can expect: 

• Improved asset performance: Collecting and analyzing data about your assets helps you identify ways to improve their performance. Maintaining the asset keeps it operating effectively, which means fewer issues that slow productivity, including reduced downtime and less frequent repairs. 
• Extended asset life: By purchasing a high-quality asset and monitoring and maintaining it throughout the life cycle, you’ll extend its life and save money in the long run.
• Risk mitigation: During the planning phase, you’ll identify potential issues and create plans that will lower their chances of occurring. 
• Regulatory compliance: Tracking the health of your assets and staying aware of the regulatory landscape will enable you to comply with laws and avoid fines. Also, with an asset management tracking solution, you’ll have the licenses and other info stored safely in case of an audit. 

In the IT space, businesses can dramatically save money with simple additions to their asset management process. 

For example, in the 2024 State of ITAM Report, businesses that used software license tracking as part of their software asset management (SAM) experienced 12% less estimated waste for their data center software than businesses that just performed reactive audit responses and basic SAM practices.

Taking asset life cycle management seriously allows you to enjoy the benefits of reliable, efficient assets while helping you reduce costs and increase productivity.

Stages of the asset management life cycle

The five stages of the asset management life cycle include planning, acquisition, operation, maintenance, and disposal. To help you get the most out of your assets, here’s a look at each stage's main activities and objectives.

Planning

During the planning phase, asset managers create an acquisition plan. This outlines performance requirements, potential risks, ROI, budget, and success criteria. It may also include guidance on how to evaluate vendors. Below are the most critical parts of your plan:

• Demand analysis: Determine your performance needs to ensure alignment with business goals. Involve all relevant stakeholders in this process. 
• Risk management: Identify potential risks and creation mitigation strategies. In ITAM life cycle analysis, this might be changes in the regulatory landscape or a cyber attack. 
• Cost-benefit analysis: Compare the estimated benefits and costs of the asset to get a clear picture of your predicted ROI. 
• Budgeting: Build a budget for the initial purchase and the ongoing operation and maintenance of the asset. 
• Success criteria: Create KPIs that will help you measure the success of your asset and spot areas for improvement. 

• Evaluation criteria: Determine which features, functions, and services your asset requires to achieve the performance goals outlined in the demand analysis. 

If you’re replacing an old asset with a new one, the previous asset’s performance will also influence your decision-making about what constitutes a quality asset. 

When you take the time to plan accordingly, run the critical analyses, and involve key stakeholders, from finance to IT operations, you’ll increase the likelihood that your asset is within budget and up to your standards.

Acquisition

After the planning stage, asset managers begin the acquisition process, during which they procure and implement the asset. Below are the steps in the acquisition process: 

1. Research and shortlist vendors. Study the market and find 2-3 vendors from which to obtain pricing. Consider the vendor’s cost, delivery, quality, reliability, support, scalability, and compatibility with your systems. You may also want to think about potential routes for future upgrades. 
2. Negotiate contracts. Ask for contracts from the shortlisted vendors and negotiate each one until you arrive at the ideal agreement. Look for extended warranties, usage volume discounts, and service level agreements. Consider the difference between leasing and buying assets. 
3. Receive approval. Get the green light from internal decision-makers and purchase the asset. 
4. Deploy the asset: Install, set up, or implement the asset. Depending on the asset, you might receive help from the vendor in this process.

You should consider your budget, needs, and current systems. For example, new IT assets should integrate with your current tech stack so data transfers smoothly between systems. 

Also, if you have specific company standards for security, sustainability, or other areas, ensure the asset meets them. For example, if a company prides itself on respecting data privacy, new sales intelligence software should comply with data privacy regulations such as GDPR.

Operation

The operation phase of the asset management life cycle is where you start to see the returns of your investment. It’s here that your asset performs its function. 

Asset managers should support the asset’s performance with ongoing oversight, staff training, and compliance monitoring. Below are the typical activities during the operation phase: 

• Performance management: Track asset performance metrics such as uptime and percentage of unplanned maintenance. Analyze data to spot areas for improvement. Make adjustments to optimize performance. 
• Training and support: Ensure that employees know how to use the asset safely and effectively, and provide them with ongoing technical support. 

• Compliance monitoring: Ensure your asset is hitting sustainability benchmarks and complying with government regulations regarding data, privacy, and security. 

The duration of this phase depends on the asset. While a laptop usually operates efficiently for 3-5 years, a switchgear typically lasts around 15-30 years. Regularly updated software assets can last as long as your business (if on-premises) or the vendor (if SaaS) stays open.

Maintenance

A routine maintenance plan is critical for keeping your assets working effectively. In this phase, asset managers monitor health indicators like vibration readings, operational anomalies, temperature data, or power consumption measurements to inform asset maintenance. 

There are three different types of maintenance involved in asset management:

• Preventive: This kind of maintenance work helps prevent future breakdowns and issues. Examples include replacing a part, cleaning a database, or preemptively repairing old equipment. Many businesses use preventative maintenance checklists to standardize the process. 
• Predictive: This maintenance strategy uses real-time data to predict when equipment will likely fail. This allows you to fix or update it before it does. 

• Corrective: This is a reactive form of maintenance that occurs when an asset fails—for example, repairing a slightly damaged laptop screen. 

A fundamental component of any maintenance plan is recurring inspections. 

This is where you inspect your assets for cracks, bugs, or other issues. If you spot a problem, you can fix it early before it grows and causes downtime or irreversible damage to itself and nearby assets — e.g., a water boiler leaking and flooding the building’s basement. 

Your plan should also include a schedule for ongoing preventive maintenance. Depending on the asset, the routine schedule might be time-based, meter-based, or condition-based. 

Whenever you conduct maintenance, document it so you always know what happened. This also gives you accurate data for analyzing asset performance and prepares you for possible audits. 

Regardless of your maintenance plan’s structure, it will increase asset lifespan and help you avoid costly repairs and operational inefficiencies. 

Disposal

Once an asset stops performing according to the business’s needs and is beyond a cost-efficient repair, asset managers dispose of it. They can do this in a variety of ways:

• Sell: Find a buyer and earn money for the depreciated asset. This is common when a functioning asset no longer meets the business’s needs. Sometimes, it’s done to increase cash flow. 
• Repurpose: Use the asset for a new purpose, like turning a commercial building into an apartment complex. 
• Recycle: Dispose of the asset in a way that allows it to be remade into something of value. 

• Throw away: Trash the asset responsibly, safely, and environmentally consciously. 

Some assets, such as IT equipment, will have to undergo a decommissioning process. This involves retiring the service in a safe, secure manner that mitigates data exposure. For instance, when IT managers shut down on-premise software, they will sanitize their data and eliminate all personally identifiable information to safeguard customer data and adhere to IT Asset Disposition (ITAD) best practices.

A high level of care is fundamental these days as data breaches become increasingly common. In 2024, the global cost of data breaches was 4.88 million in losses, the highest on record and a 10% increase from last year (IBM). 

For many asset managers, environmental costs are also important. Properly disposing of assets according to government regulations will minimize their carbon footprint and keep them legally compliant. 

To dispose of your assets responsibly, consider the following factors: 

• What is your data exposure?
• What are the emission costs of transporting and disposing of this asset?
• Does the asset contain finite metals or materials (e.g., lithium in a battery)?
• How much can you reduce greenhouse gas emissions by refurbishing and selling the asset?

• Does this method align with our company’s sustainability goals? 

Once you have disposed of your asset—or better yet, a few months before its retirement—start planning to acquire a replacement asset, thus resetting the life cycle. 

A streamlined and compliant disposal process sets you up for success with your new asset by preventing fines, data leaks, and other distracting time sinks. 

Strategies for effective asset management

Creating an effective asset management plan can seem daunting, but it doesn't have to be. 

Start by clearly defining its objectives:

• Do you want to improve the lifespan of your assets?
• Is there a specific type of underperforming asset that you’d like to fix?

• Are you struggling to track asset health?

Decide what you’d like to improve about your business assets and determine 1-3 overall goals for your asset management team. Regardless of your goals, define what assets you need to track. This includes everything from hardware and software to cloud services. 

Next, implement an inventory system to keep a detailed record of each asset, including purchase dates, licenses, software renewal dates, warranties, usage, and maintenance schedules. 

Visibility into every aspect of your assets prevents missed deadlines, inspections, and maintenance. It also enables you to make evidence-based decisions in each stage of the asset life cycle.

Many businesses rely on ITSM software to automate routine tasks like tracking assets, monitoring usage patterns, handling incident management, or generating asset performance reports. These tools save time and reduce the risk of human error, making your asset management more consistent.

An asset management strategy should also include measures for financial management, risk mitigation, and regulatory compliance. You’ll need to perform regular cost-benefit analyses on the asset to assess whether it’s earning you more than it costs in repairs, monthly fees, maintenance, and other components of the total cost of ownership. 

For risk management, conduct regular inspections and audits. Enforce strict standard operating procedures for using your assets and protocols for securing and disposing of them. For example, you should set rules for employees to access restricted records or forms. 

To maintain compliance, keep up-to-date asset records in case of a vendor audit, the cost of which is increasing year after year according to the 2024 State of ITAM report.

Best practices in asset management

Below are some asset management best practices to ace each stage of the asset life cycle:

• Know standards such as ISO 55000. Asset management standards are frameworks of proven metrics, methods, and performance standards that you can use to guide your asset management. With one such as ISO 55000, you get a global consensus on the practice and benefits of asset management. 
• Implement life cycle asset management software. Jira Service Management can help you track your assets, monitor performance, manage IT support requests, store critical documents, and get real-time alerts about your asset’s status, deadlines, and more. 
• Train employees to use the assets. When your employees know how to use your assets, you increase their effectiveness and avoid damage. Be sure to inform them of important security and legal protocols to remain in compliance. 
• Engage stakeholders. Stakeholders can provide asset managers with information to help them make better decisions about purchasing, managing, and disposing of assets. Involving them will also ensure the assets under your watch meet their expectations. 

Like any business process, asset management is imperfect. Consistent experimentation with new approaches, tools, and processes will help optimize your asset management life cycle. 

If you’re in IT operations management, check out this guide on IT asset management best practices.

Leverage Jira Service Management for effective asset management

A helpful framework for asset managers, the asset management life cycle contains five stages—planning, acquisition, operation, maintenance, and disposal—each with its own objectives, routines, and metrics. However, carrying out the tasks associated with each phase can be cumbersome and time-consuming.

To improve your asset management in each stage, use Jira Service Management. 

Jira Service Management (JSM) offers several key features that enable asset tracking, monitoring, service request management, documentation, and performance reporting, as well as maintenance tasks and upgrades:

• Asset tracking: Track and manage IT assets, configurations, and resources, gaining visibility into their lifecycle, statuses, and relationships.
• Monitoring: Connect with third-party monitoring tools to track system performance, trigger alerts, and convert issues into service requests.
• Service request management: Provide a customizable request portal for users to submit service requests, with automated workflows and SLA tracking.
• Documentation: Integrate with Confluence to offer easy access to knowledge base articles and documentation for service teams and end users.
• Performance reporting: Use customizable dashboards and reports to track KPIs, service desk performance, and customer satisfaction.

• Maintenance tasks and upgrades: Automate recurring maintenance tasks and integrate them with ITSM processes to ensure timely system upgrades.

Integrating Jira Service Management with your enterprise systems will improve collaboration among your business, IT, and development teams and ensure they use your assets to their fullest potential. Teams can work together seamlessly through shared workflows and real-time updates. By centralizing asset management in Jira Service Management, businesses can better track asset lifecycles, reduce maintenance costs, and make data-driven decisions.