What is Asset Investment Planning (AIP)?
An Asset Investment Planning (AIP) application is a newer approach to capital investment planning that enables organizations to use data-driven insights to drive decision-making and investment planning over the long term.
Traditional Approach to Long-term Capital Asset Planning
The ability to develop optimal investment strategies for meeting performance and risk level targets over the long term is crucial in high capital industries. To be successful, organizations with a significant asset base need to find effective ways to forecast using enormous volumes of asset data, and integrate multiple, sophisticated management policies into a global strategy.
Over the past two decades, many asset-intensive organizations have been investing in enterprise asset management (EAM) systems and, more recently, asset performance management (APM) tools to help improve asset performance, reduce operating costs, and enhance maintenance planning. However, when making important asset investment decisions, many organizations still use a combination of home-grown capital planning tools and Excel spreadsheets.
The main limitations with current approaches to asset planning is that they provide organizations with only a static view of the state of their assets. In addition, spreadsheets can quickly reach their data cap and asset inter-relationships based on procedural code are very difficult to manage.
Increase the Value of Existing Systems
There is a better way. An Asset Investment Planning (AIP) application is a newer approach to capital investment planning that enables organizations to use data-driven insights to drive decision-making and investment planning over the long term.
Designed for asset-intensive industries, AIP solutions can incorporate asset condition, asset criticality and the impact of time in their analysis of alternative investment scenarios. This decision support system allows organizations to assess trends, maintain or improve required levels of service, and make more informed investment planning decisions. And, unlike Excel spreadsheets, there is no limitation to the amount of asset data an AIP solution can manage.
One of the main reasons of adopting an AIP solution is that organizations can use data already contained in their EAM systems and APM tools to plan when and where to invest capital in their infrastructure over the long term. By using data from their existing asset management systems to develop strategic investment plans, organizations can improve efficiency, reduce costs, and, even experiment with alternative revenue streams.
Why Adopt an AIP Solution?
There are a wide variety of benefits associated with adopting an AIP solution. One of the top benefits is that AIP allows organizations to move away from the traditional, reactive approach towards a long-term, more strategic asset management roadmap for infrastructure spending. This results in more effective resource planning and a better understanding of which investments are ideal over the long-term.
By extracting data from asset management systems and leveraging business analytics, AIP solutions are a crucial tool for helping organizations justify planned capital expenditures on infrastructure. This approach to asset management provides a repeatable, credible, and highly-accurate methodology that relies on data for planning infrastructure spending, thereby reducing the possibility of human error and bias in large capital investment decisions.
Asset-intensive organizations can also use AIP applications to:
- structure their decision-making policies and processes to provide knowledge and information that is useful both vertically for a wide range of stakeholders, including senior management and operations staff, as well as horizontally across departments, including finance, public works, and engineering,
- optimize CAPEX/OPEX spending by producing ‘what-if’ scenarios using data-driven analytics and complex computer modeling to analyze different strategic approaches and make accurate decisions affecting asset maintenance and policy,
- better prioritize renewal and maintenance activities,
- synchronize multiple projects for optimal returns,
- explore different revenue opportunities for a specific business unit, service, or product by determining ways to improve service levels in that area.
Investing in AIP
AIP is the next logical step in the evolution of strategic asset management tools for organizations in high-consequence, high capital industries. By using an AIP solution to analyze different scenarios and options, optimize investments, and quantify risks, organizations can make informed and accurate long-term capital investment decisions and increase the probability of meeting their objectives, all in accordance with client-driven and modifiable decision-making policies.
DIREXYON’s Unique Approach to AIP
DIREXYON is a unique financial modeling and predictive analytics solution for complex, long-term strategic asset investment planning that allows our clients to effectively digitize their institutional expertise and make clearer, data-driven asset investment decisions. Contact us to learn more about the solution.