Once upon a time there were procedures. These procedures were tied to the company’s overall business objectives, so it was important for the health of the company’s business for these procedures to be accomplished. If these procedures were not properly accomplished, there was a risk that something bad could happen to the company. These procedures were documented to insure employees could understand them and could accomplish tasks repeatedly and consistently. The various functional departments in the business could now prosper and all of the stakeholders would be satisfied.
However, next came the management optimization philosophies. Departmental managers liked these philosophies and started to determine how to develop them for their part of the business. These philosophies focused on point solutions for each department, so that the optimization of the individual department’s goals and objectives became more important than the overall business objectives. In fact, some departments made their goals and objectives proprietary and did not share them with the other departments in the same company. They then developed internal policies and procedures to be followed, rather than the overall good business procedures they used to follow. This led to the company being divided up into functional silos. This led to battles between the functional silos, since they all felt they were the most important “fiefdom” in the company. (consider: maintenance vs. engineering vs. operations vs. purchasing vs. sales vs. projects, and everyone was vs. accounting) Departmental managers tried to garner all available resources so their department would have the most people, which provided the manager with the greatest financial rewards. This led to the squandering of the companies resources and lower profitability. The stakeholders often took their investments elsewhere and the company’s overall valuation dropped.
How could this company be salvaged? It must take senior leadership developing a management system and enforcing this system throughout the company. But what is a management system, you ask? A management system is a collection of processes and procedures that all departments in an organization must utilize to support the company’s overall business objectives. This is nothing new for we are all aware of quality management systems, environmental management systems, risk management systems, project management systems, property management systems, etc. In fact there are existing management standards for most business functions in a company. Is it possible that all of these “management systems” turn out to be contributing to the very problem we are trying to solve? Unfortunately, this has proven to be the case for most organizations.
Now we have the opportunity to try again. This time it will be with an asset management system. ISO-55000 was published in January 2014. It is a second generation standard, building on the principles and concepts found in PAS-55, which has existed for a decade. As an ISO standard that is late to market, those deciding to implement ISO-55000 can learn much from the history of implementing previous ISO standards.
Companies that have been successful implementing ISO-9000 and ISO-14000 understand that these standards require the development of processes and procedures. These same types of processes and procedures will need to be developed if they are to be successful with ISO-55000.
Where will companies start with ISO-55000? The definition for asset management says we should focus on deriving value from the company’s assets. In my opinion, it should have said “Maximum Value”. Why? If not we risk developing asset management processes and procedures that are going to optimize the various “fiefdoms” that already exist in companies. From purchasing always buying “low bid” spare parts to engineering developing “non-standard” asset designs for plant equipment, each department will develop its own processes and procedures. These processes and procedures will be optimal for the department, but will negatively impact the overall value the asset will deliver for the organization’s stakeholders.
To be successful implementing ISO-55000, organizations will need to take a holistic view of the value an asset can deliver during its lifecycle. They will need to have this value proposition for the asset very clear in mind. Then, they will have to develop the processes and procedures that will maximize the value they will derive from the asset. If maximum is not the focus then they will be at a competitive disadvantage when another company with a more competitive focus moves into their marketplace.
Once this value proposition is understood, a line of sight document needs to be developed hat clearly shows how each functional department in the company affects the value that the asset can deliver throughout its life cycle.
If this is not done, then we might want to start buying fencing material – we will need it to protect our fiefdoms and territory during the new asset management war. Oh – we might also want to start recruiting more employees, it will likely have an impact on our future compensation.