Enterprise Asset Management is the whole life optimal management of the physical assets of an organization to maximize value. It covers such things as the design, construction, commissioning, operations, maintenance and decommissioning/replacement of plant equipment and facilities. "Enterprise" refers to the management of the assets across departments, locations, facilities and, in some cases, business units. By managing assets across the facility, organizations can improve utilization and performance, reduce capital expenditures, reduce asset-related operational costs, extend asset life and subsequently improve return on assets.

The functions of asset management are taking a fundamental turn where organizations are moving from historical reactive (run-to-failure) models and beginning to embrace whole life planning, life cycle costing, planned and proactive maintenance and other industry best practices. Some companies still regard physical asset management as just a more business-focused term for maintenance management - until they begin to realize the organization-wide impact and interdependencies with operations, design, asset performance, personnel productivity and lifecycle costs. This shift in focus exemplifies the progression from maintenance management to Enterprise Asset Management and is embodied in the British Standards specification PAS 55(Requirements specification for the optimal management of physical infrastructure assets).

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.

Enterprise Asset Management derives from the early day engineering concepts of configuration management as used by NASA to ITIL configuration management to ITIL V3 service asset and configuration management. As such practitioners who are familiar with ITIL would find many familiar concepts and practices in enterprise asset management, Tools that focus on this area specifically are available in the marketplace from SAP, IBM and Oracle as well as many other smaller concerns.