The new ISO 55000 standard identifies four fundamentals of proper asset management: value, alignment, leadership, and assurance. Of those, some of the biggest challenges are related to poor alignment—and some of the greatest successes come from getting it right.
Historically, asset management has not been well aligned. It has been implemented in multiple silos within an organization, with splits between asset type; operating and capital expenditures; and emergency, planned, and preventive work groups. Each group had its own ideas and almost no coordination, kind of like four people trying to move a box by each pushing on one side. Recently, organizations have embraced the first step of alignment by centralizing their asset management function. Centralization brings everyone to the same side of the box, but there is still more to do.
1. Alignment flows from head to foot:
It’s important to align an organization’s asset goals with our corporate goals. Taken out of context, the optimization of assets is a simple matter of minimizing cost and risk over the complete asset life cycle while delivering service. Yet our corporate goals don’t focus solely on risk and cost. If we ignore this disparity, then optimizing assets will inevitably sub-optimize the enterprise. To pick the right approach, organizations must prioritize actions based on the impact they will have on the enterprise’s overall goals. This alignment has to be described in the overall strategic asset management plan and used to prioritize the activities described in individual asset management plans.
2. Well-aligned, incremental changes transform us:
One of the prime causes for the failure of a transformational initiative is the attempt to make too many changes at once. In learning about asset management, organizations will often discover there is a significant separation between their current asset management system and their target state. Naturally, this tempts the organization to throw everything out and start over with new systems, new processes, and new structures. This drastic approach is almost impossible to align, and like using a wrecking ball to renovate a building, it results in undesired consequences. A series of small changes, however, can change everything if they are aligned toward a greater goal—and small changes allow organizations to remain operational throughout a transformation. Instead of drastic change, organizations should focus on a series of opportunistic, smaller adjustments that are aligned to move them toward their target.
I recently worked with a mid-size electric distribution company that was in the midst of a massive transformation: replacing their work management software, implementing enterprise asset management planning, and switching their geographic information system (GIS) platform. During a delay in the acquisition of the work management software, they hit their annual capital planning cycle. They took advantage of the delay to implement new software for generating their asset management plans. To ensure they met the delivery deadline for the plan, they limited the scope of the change by retaining the logic from their previous plan and using their existing data. They leveraged the success of that small project into a standardized representation of all inspections, planned operational work, and unplanned work. Now, as the new work management system finally comes online, they find themselves much better prepared, with a comprehensive corporate plan and shared understanding of the work they do.
3. Small adjustments matter:
In golf, if you switch your grip, a ball that was once dribbling along the ground suddenly soars through the air. In yoga, if you shift your weight, a pose that once seemed impossible becomes natural. In asset management, organizations often focus on the macro scale, unifying the responsibility across the organization or overhauling their technology. These definitely can help, but smaller alignments can deliver large gains at lower risk.
For example, deciding on a single language and scale can be transformational. In one organization I worked with, they were using four scales to discuss and rate asset conditions: pipes were rated 1 to 5; roads were rated 10 to 1; bridge components were scored A to F; and facilities were rated from 1 to 0. Switching them all to one system helped them find synergies between pavement, pipes, and bridges and allowed them to compare everything from ice rinks to storm watermains.
4. Sometimes the best teacher is a mirror and an unobstructed view:
Transparency in asset management planning is essential to move toward evidence-based decisions and to deliver on the principle of assurance. In addition, it has alignment-associated benefits.
Recently, I worked with a major water utility that moved from eight different sources of asset truth to one unified view. They did this to speed up their asset management planning process, but it also uncovered a number of alignment issues, including two redundant, unassociated maintenance treatments. These treatments were being performed by different teams based on different objectives but basically had the same effect on asset health. If one team did one, the other team’s assessment provided no additional benefit. By aligning them, the utility saved more in the first year than their investment in the alignment.
ISO 55000 highlights the importance of aligning financial reporting with asset reporting. This alignment is a revolutionary change. To asset managers, traditional financial reporting is like a funhouse mirror, distorting the representation of assets by oversimplifying depreciation and ignoring risk. By aligning financial and asset reporting, these distortions are removed. All stakeholders will benefit from this transparency into the health of utilities and public sector organizations. Of all the alignments, this may be the most difficult to implement since it must bridge the chasm in most organizations between the financial group and asset management. However, it has the opportunity to deliver on some of the greatest benefits by giving the organization a clearer view of the impact of asset management decisions on corporate health.
Alignment is almost magical. It makes the impossible possible. As you approach your asset management challenges, keep a careful eye on your alignment and you are more likely to end up achieving the benefits in efficiency and effectiveness that ISO 55000 has the capacity to provide.
Ian Woodbury is the CEO and founder of Riva Modeling Systems. In addition, he maintains his role as chief software architect.