Asset Management is a term that is trending in industry publications, conferences, and yes, even marketing materials. But what is it? ISO-55000 defines Asset Management as “the coordinated activity of an organization to realize value from assets” (Note 1). It defines an asset as “an item, thing or entity that has potential or actual value to an organization. The value will vary between different organizations and their stakeholders, and can be tangible or intangible, financial or non-financial” (Note 1). Those are very broad definitions. How do you make them actionable? How do you realize value from assets? The answer is very simple and very difficult at the same time: good decision making.
If I’d known then what I know now
It’s a statement we’ve all heard and most of us have spoken (or at least thought) ourselves. It’s an acknowledgement that we didn’t get the outcome we wanted; or there were unintended consequences that we didn’t anticipate. It’s a statement of regret, and maybe one of blame. Sometimes we find ourselves writing off a loss as a unique collection of circumstances that will probably never repeat. Maybe a bad outcome alters our perceptions about who we trust inside our organization or out. Maybe it causes us to shy away from future risk taking.
Often in those moments we ask what could have been different. Could we have asked better questions or gotten better advice? Was critical information lost or buried in an avalanche of less important data? “Information is a source of learning. But unless it is organized, processed, and available to the right people in a format for decision making, it is a burden, not a benefit.” (Note 2). We are several decades into the ‘Information Age.’ We have magnitudes greater knowledge about science, engineering, human performance, and communication than the generations who first crossed oceans, cured tuberculosis, and put men on the moon. We have access at our fingertips to proven best practices in manufacturing, finance, maintenance, and corporate governance. Yet we still get incomplete information, or even worse bad advice, from those we rely on. As a result, poor business decisions are made. Let’s look at three common problems with how many organizations process information.
Sun Tzu asserted that wars can last for years and impoverish nations, but the outcomes can be determined in a single day. “This being so, to remain in ignorance of the enemy's condition simply because one grudges the outlay of a hundred ounces of silver in honors and emoluments, is the height of inhumanity” (Note 3). Put simply, an expensive spy is cheaper than the smallest army. We make decisions in real time, and we need accurate information about the current criticality, condition, and disposition of our assets to make those decisions. Without a well-maintained asset registry, the gap between your perceptions and the actual state of your assets will grow over time. The tens of millions of dollars spent on facilities, equipment, automation, and materials will be at risk from bad data. Maintaining an accurate asset registry is far less expensive and time consuming than repairing a neglected one. And in the mean time you will make better informed decisions.
“Adventure is just bad planning” (Note 4). All company assets have a lifecycle. That lifecycle could be defined by the space limitations of a facility, the quality of a maintenance program, or the energy efficiency of a piece of equipment. It could be the expiry date of a patent or a lease. It takes maturity to make decisions based on the lifecycle of an asset and not just our short-term desires.
This can apply to what we choose to eat for lunch or a major capital investment. If we have a corporate culture geared to look at the long-term costs and values related to our assets, we will ask different questions, request different information, and get different advice. We will have better planning and less adventure in our decision making. We will still make decisions based on immediate needs, scarcity of resources, or external pressures but with a lifecycle view, we are far less likely to be surprised by unintended consequences.
“In those days Israel had no king. Each man did what he considered to be right” (Note 5).
Diversity is a strength. Diversity of experiences, perspectives, beliefs, and abilities can drive innovation. A motivated, engaged, diverse group of professionals can propel an organization to success - but only if they are unified in purpose. Different business areas, sites, departments, or even shifts can have competing priorities and goals that will influence (intentionally or not) how they make decisions, what information they think is important, and what they advocate for. It is critical that an organization have a clearly defined mission, a well-articulated set of guiding principles, and a strategic plan that ties their business plan directly to those principles and mission. Without a clear line of sight from every decision to the company mission, from the production floor to the boardroom, then the competing values of different areas of your organization will keep stakeholders at odds. The results are misunderstanding, miscommunication, and mistrust.
Eating the Elephant
Correcting any of or all these problems requires genuine commitment at all levels. Culture change is not easy, and most culture change initiatives fail for lack of intentional, engaged executive support or organizational understanding. A program for culture change must be managed like any capital investment. It must have quality plans. It must have the correct level of resources and funding. It must have the proper people in clearly defined roles to execute it. And it must have sustained executive support.
ISO-55001 Asset Management and its predecessor, PAS-55, have their roots in highly regulated industries and government agencies. Their concepts have been proven around the world for decades in all sizes of organizations and a vast array of commercial settings. ISO-55000 works. It is a flexible, scalable system that tells you what to do but gives you the freedom to decide how to do it. It is not ‘software as a solution’ or another quick fix program. It can be implemented by personnel already in the organization, one piece at a time, and grow as your organization matures. A properly executed asset management system will break down silos, ensure that the correct stakeholders provide input to decision making, and facilitate the flow of quality information throughout an organization.
The real question is this: Are you too busy to fix your organization’s asset management problems?
“The adoption of ISO 55001, ISO 55002 and this International Standard enables an organization to achieve its objectives through the effective and efficient management of its assets. The application of an asset management system provides assurance that those objectives can be achieved consistently and sustainably over time.” (Note 1)
About the Author:
John Hughes, CAMA, CMRP has 30 years of experience as an asset management specialist in several industries. His roles have including project coordinator, construction manager, facilities manager, maintenance lead, building automation system programmer, maintenance planner, and industrial mechanic.
Questions? Contact John at email@example.com
Note 1 - ISO-55000 Asset management — Overview, principles and terminology.
Note 2 - Pollard, C. W. (2011). The Soul of the Firm.
Note 3 - Sun Tzu. The Art of War. Chapter 13:2.
Note 4 - Roald Amundsen – first man to reach both poles.
Note 5 - Bible, New English Translation. Judges 21:25.
Graphics in this blog are courtesy of Andrea M. Hughes.