Financial controllers and budget managers need to determine how the limited funds available in a tight budget should best be deployed for the maintenance or replacement of the firm’s existing capital asset base.

 Each firm usually relies on a narrow subset of its capital assets to underpin its future profitability,  or even its ongoing existence.  Central IT platforms and core manufacturing process items are good examples.  

Under-investment in these  can be problematic. Their failure can cause a loss of output, either directly from the assets themselves or from downstream activities that rely on them.  Equally, the firm’s competitive position can be harmed if the assets become inefficient, obsolete, or unresponsive to changing market demands.  

Unfortunately, the assets that are most important to the firm may compete poorly in its budgeting and business planning processes against new projects with a lower future value -  simply because the latter have a higher profile.  Capital asset management is often the less glamorous of a firm’s activities. 
                     

CAIO is a decision-support tool that helps a firm identify the annual funding that should be allocated to that specific group of the existing capital assets that are critical to its future profitability.   It provides a standardised approach for comparing the relative worth of different investment proposals, and is especially useful if competing proposals relate to assets that are distant from each other or even located in different countries.   

 It can therefore be a defensive planning tool that links the need for future investments in an asset to the most realistic expectations about its future outputs, and this may be vital if the firm is being confronted by a down-turn in business activity.
 

CAIO also has the capacity to assess the risk profile of the market in which the firm is trading when it identifies the optimal investment level for an asset (see Business Risk Survey). 

An optional module is available that allows the user to factor in influences on its future performance that are either internal to the firm or external.  This does so by capturing a consensus by key groups in the firm about which issues should be addressed in its investment regime, and when major re-investments should occur.  Alternatively, the module can offer a more sophisticated and broadly based business risk profile by including the participation of external technical experts or the firm’s key stakeholders in the review.