Simplify Asset Management for Better Results
The Seven Questions of Asset Management are the Key to Success
You have a lot of stuff to manage. This is true whether you are starting a new job, starting a new position with your current employer, or just trying to manage your life. Obviously, this can be overwhelming the more stuff you have or the more stuff you are required to manage.
Managing your stuff is called asset management. There is even an international standard for asset management, ISO 55000. That standard tells us that asset management applies to all aspects of our business and personal lives because an asset is described as an item, thing, or entity that has potential or actual value to an organization. The value of an asset can vary between organizations. Assets can be tangible or intangible and assets can be financial or non-financial.
Back to managing our stuff. Many things are complex, meaning they have multiple components. Fewer things are complicated, meaning they are difficult. Being complex does not necessarily mean that something is difficult. Do not let your professional or personal success be limited by a formal methodology. Seven key questions provide you the power to succeed.
Managing the Things We Value
Asset management is not a new concept because humans have been managing things we value since the beginning of time. There is really nothing complex or complicated from a conceptual standpoint. However, the formal practice of asset management has grown in sophistication over the past 40 years. From a business perspective, in many ways it has become a cottage industry for consultants and academics. It has also become a niche professional career track in organizations that embrace it. Complexity has replaced straightforwardness.
Different guidance documents provide similar but slightly different overarching fundamentals of asset management. ISO 55000 has four fundamentals overlain onto seven components of as asset management system. The Institute of Asset Management (IAM) uses a taxonomy with six groups of 39 total asset management activities. Whether it is four fundamentals matrixed with seven components or 39 activities, it is easy for any organization to be overwhelmed by the “what” to do when it comes to implementing an asset management program.
In the Beginning
My first professional ‘asset management’ project was in the late 1980s at a zoological park. The situation was dire — monkeys, lions, and tigers were dying because poor infrastructure systems that were not reproducing the animal’s natural environment. Our team called it an ‘operations management project’ because the term ‘asset management’ had not been created. We embarked on our journey with tools like Total Quality Management and fledgling principles associated with what would become Six Sigma. We failed miserably.
I was the youngest member on the team. Out of desperation I made a proposal to save the project and our team. We would back up, compile a list of everything owned by the zoo, call vendors to find out the value and useful life of each item, and evaluate the condition of what we had based on discussions with staff. Simple in concept and practical in application. Two sophisticated team members rejected the proposal outright but the other two agreed. Majority ruled. No one had a better idea and we were desperate. The approach succeeded.
I continued to solve important and unusual problems related to facilities, infrastructure, and in the environment. I discovered later that other like-minded, soon-to-be asset management professionals had come to similar conclusions that I had reached at the zoo — simplify. The approach was intuitive. More importantly, it worked.
The Seven Questions
The Seven Questions of Asset Management were developed in the late 1990s and at a time when the many layers of complexity had not been established. The Seven Questions of Asset Management are a product of the need (and urgency) to take practical applications from personal life and apply them to business problems.
They remain just as applicable now as they were then. More importantly, they provide a level of simplicity that is necessary for understanding by executives, senior management and beginner/intermediate practitioners. The seven questions are:
1. What do we own? (and where is it?)
2. What is it worth?
3. What condition is it in?
4. Do we need to renew or replace it?
5. When do we renew or replace it?
6. How much will it cost?
7. How will we finance it?
Whether your personal situation or a business portfolio, questions 1, 2, and 3 are closely related to collecting data and developing a foundation of the current state of affairs. Asset management has its roots in accountability. Taking account of who we are, where we are, and the value of it (whether tangible or intangible, financial or non-financial) is the first step to improvement.
Questions 4, 5, 6, and 7 address the ‘so what?’ and ‘when’. These questions really dive into more advanced concepts related to diagnostics and prognostics. Think of it on a personal level as human health and mental health and it facilities and infrastructure as equipment health. This is the fertile ground of financial experts, reliability engineers, maintenance engineers, business process improvement specialists, and personal coaches. These latter 4 questions provide the primary value related to managing the things you value.
In our personal lives, we often spend too much time planning to do something and too little time making tangible improvements. The same is true in many business organizations — we want to do something so we start an assessment, but we often stand down on action unless we are forced by external situations to do something. The same is true in the formal practice of asset management.
The first three questions of asset management are essential to what asset management is. Unfortunately, many asset management programs are driven sequentially from this perspective. Too many resources are expended on documentation and accountability, leading to a failure to provide meaningful short-term value to their organizations. Many asset management programs collapse under their own weight.
Practical Solutions
There are three practical solutions for getting better results from your program of managing the things you value. First, use the seven questions of asset management as your guiding beacon. Second, achieve value by partially addressing the first three questions and then creating value by addressing the next four questions — the process should be iterative, not sequential. Third, incorporate (and embrace) some uncertainty into the process to determine what provides the best bang for the buck for future activities.
Summing It Up
Whether personal or business, managing the many things you value have multiple components but managing them is not necessarily complicated. Unusual problems are best solved by getting back to the basics. Simplify by using the Seven Questions of Asset Management for better results.
