Insights from the “Asset Management for the 21st Century—Getting Ready for ISO 55000” Seminar, May 2013, Calgary (Part 1 of 12): This blog is based on a series of interviews with John Woodhouse from the Woodhouse Partnership (TWPL), who delivered this well-received seminar. It is part of a blog series brought to you by Norm Poynter and Paul Kurchina, designed to inspire and educate by sharing experiences with the SAP Enterprise Asset Management Community.
Asset management has become one of those slippery phrases in business, a term that corporate leaders use and claim to be focusing on, with little consensus around exactly what the term means, let alone what best practices might entail. While CEOs may think they have people who are on top of managing their company’s assets, claiming to be doing something is a far cry from actually doing it well and being able to demonstrate it. What’s resulted is that asset management is interpreted very differently in different businesses and industry sectors, and is performed with greatly varying quality and effectiveness. But good, consistent, and coordinated asset management is integral to long-term business success, so simply assuming it is under control, or pigeon-holing it into a niche responsibility, simply isn’t a credible option any more. Asset management processes involve all aspects of the lifecycle, and need ‘lubricating’ with the right data, good cross-disciplinary collaboration, and competent risk management.
Fortunately, consensus has been emerging around what comprises good practice in asset management. Standards are being set and now it’s up to executives to understand them.
At this year’s SAP-Centric Enterprise Asset Management event there was a very good panel discussion by asset management experts focused on whether or not companies should seek compliance with ISO 55000 … the answer according to panelists was a resounding yes.
Here is some of what they said:
“If companies do not pursue some form of a documented Asset Management Strategy (PAS-55, the developing ISO-55000 standard), the regulatory agencies and insurance companies will eventually increase their cost of doing business to a level that will make the company unprofitable.” –Terry Wireman, Vesta
“Start with PAS-55 compliance as preparation for ISO-55000 compliance when it finally comes out. When your PAS-55 compliance business gaps are bridged then pursue certification or shift to ISO-55000 compliance then certification.” – Robert (Bob) Williamson, Strategic Work Systems
“International standards and best practices are most effective when you build them into your business processes and they are visible within your day to day business data and controls ” – Joseph Grobler, Reveal USA
In May 2013, John Woodhouse of The Woodhouse Partnership Ltd (TWPL) delivered a well-received seminar on asset management, entitled, “Asset Management for the 21st Century – Getting Ready for ISO 55000.” The seminar examined ISO 55000, the new international standards for asset management that have been developed over the last 3 years. We’ve taken the best insights from that seminar and turned them into a series of blogs that will be helpful to not just CEOs, but to all C-Level executives and other management personnel who are under pressure to improve their company’s asset management.
” Optimized whole lifecycle Asset Management is no longer a ‘nice idea’ – it’s an expected business norm. So a system for proving it and sustaining it is vital.” – John Woodhouse, The Woodhouse Partnership
In the second blog, “ Why Asset Management Should Be This Year’s Obsession for CEOs ”, we set the table for Woodhouse’s larger examination of the science of asset management. Drawing from the key asset management practices that have been refined into the ISO 55000 standard, Woodhouse delves into how asset management can help CEOs overcome a number of challenges, including departmental silos, short-termism, and the frustrations or ‘temporary enthusiasms’ that are often associated with poorly implemented and un-sustained improvement efforts. The conclusion is clear: CEOs should focus on asset management as it can transform an organization and generate tremendous ROI when done well.
In “ Asset Management Requires Both Assets and Management ”, we explore Woodhouse’s crucial distinction between asset management and asset maintenance. Most businesses think they’re performing asset management when in fact all they’re doing is asset care (looking after the assets). Asset management involves establishing processes for which assets are worth acquiring and creating in the first place, how best to use them, how to look after them (maintenance), and when to replace or dispose of them – all considered in terms of delivering best total value-for-money. It’s a sophisticated, coordinated effort in which the performance, risks, and costs of an asset over its entire life cycle are taken into account, rather than just using an IT system to hold and accumulate asset data and to schedule work to be done.
In “ To Optimize Asset Management, Define Assets as Systems, Not Components ” , we go further into Woodhouse’s point that businesses must tackle asset management from a systemic perspective rather than one only concerned with maintenance of individual components. CEOs are interested in how the entire system is performing, not just the functioning and costs associated with one part of that system (the equipment or ‘maintainable item’). Asset management must be able to look at performance and value realization at the systems level while recognizing that work and operational headaches mostly occur at the component level. An integrated asset management system links these levels together to ensure that what gets done is that which delivers the best value – as defined by the organization’s needs and priorities.
In “ Why Are We Surprised by Catastrophes ” , we probe one of the biggest failings of human beings: our incredible difficulty in dealing with, learning from, and preparing for low probability, big consequence events. Too often, when a catastrophic event occurs, businesses promise to learn from it and never let it happen again, only to let those promises fade as time and distance from the event grow – and a different major incident is encountered. Risk management is vital to proper asset management and dealing with threat of low frequency, high consequence events is an essential part of competent risk management. But these threats need special consideration – they are the game-changers and outliers that can override all other considerations. So we need to understand how asset management should take them into account.
The sixth blog in this series, “ Why Lust to Dust’ Should Replace ‘Cradle to Grave ” as the vision of an Asset’s Life Cycle” targets the idea that asset management should begin with the conceiving and design of an asset, not once it’s operational. With a “lust to dust,” approach, businesses get better at choosing the right assets in the first place, considering operability, maintainability, and sustainability (achievable lifespans). The DNA of the asset is already determined by the time it is in the cradle, and operations or maintenance can only make relatively minor adjustments in its behavior and performance.
“How Asset Management Can Be a Massive Victory for IT ” , shows how IT can and should play a crucial role in asset management, rather than impeding it as is too often the case. IT can support and link data processing, information management, control of workflow, and objectivity in identifying and solving problems, so that every facet of a business is operating more streamlined, thereby relying on the same set of information to make decisions. This type of integration is imperative to keeping asset management operating at the highest standards.
During his seminar, Woodhouse tried to clear up the misconception that installing EAM software equates to introducing asset management. “ Don’t Confuse an EAM (or CMMS) for an Asset Management System ” hones in on this idea. Asset management is much more than an EAM or CMMS solution; it’s a governance and coordination layer on top of the software and other ‘enablers’. It adds the organizational needs and business value perspectives to the mechanics of information collected and provided by an EAM system. And it represents the coordinating framework to determine strategic direction and ensure that assets are managed to deliver these goals.
In “ The Four Most Common Failures When Implementing Enterprise Asset Management Software ” , we get into the issue of intention. Successful asset management is predicated on a clear understanding of the intention of the system prior to implementation. It’s not enough to just install EAM software to make more efficient what was already being done before. Automating and streamlining inappropriate or ineffective activities does not yield benefits and often makes things worse. Woodhouse points to four main mistakes that businesses make when putting EAM software in place and offers ways to avoid these derailments.
The tenth blog, “ How Thinking of Assets as Systems Improves Asset Management Processes ” , is a more thorough exploration of a systemic approach to asset management. A systems-perspective provides insight that myopic concentration on individual assets cannot. Asset management thrives when those in charge of different business practices and individual asset performance collaborate and focus on the larger ambitions of the company.
In the eleventh blog of the series, “ Avoiding the Data Swamp in Asset Management ” , we hone in on how Big Data is causing Big Confusion for a lot of businesses. The reason: most companies just don’t know what to do with the majority of the data they’re collecting. So it just sits there. Businesses need to step back and rethink whether all this data needs to be collected in the first place. It’s a waste of resources to gather and store data that serves no purpose. Demand-driven data is what companies should strive for and we highlight Woodhouse’s step-by-step process on how to adopt this practice.
In the final blog of the series ( to be published late January 2014 ) titled “ What’s SAP EAM Got to Do with it ”, we discuss how SAP’s Enterprise Asset Management Solution supports ISO 55000. This is based on a presentation that was delivered by SAP’s Global Head of SAP Enterprise Asset Management Dr. Achim Krüger to the ASUG SAP EAM Special Interest Group earlier this year. No longer are assets managed by their physical components. Assets are managed by factors including cost, risk, and performance. Additionally, our technology, processes, and business models have changed; we need to have an asset management system that takes all of these factors into account. Krüger’s presentation elaborated on how SAP helps all of these factors.
We hope you enjoy this blog series and welcome your comments on these topics.