Uptime: Defining ‘Assets’ for ISO 55001
Bob Williamson | April 1, 2015
The new Asset Management Standard (ISO 55001:2014) is promoting an interesting array of ideas, concerns and discussions among maintenance and reliability professionals. In conference sessions and workshops over the last year, two themes have arisen:
• What exactly is meant by the term “asset” in the context of the new standard?
• What is the relationship between “asset management” and an “asset- management system?”
• These two topics recently prompted two additional questions about the softer-side of asset management:
• Are highly-skilled people an “asset” in the context of the new standard?
• Is a high-performing asset-management work culture a “value-adding asset?”
What’s the management system?
Before venturing into “assets,” let’s remember that ISO 55001 is a management standard for an asset-management system. Viewed another way, it defines the requirements for a management system for managing assets or a management standard for an asset-management management system. You read that right.
Contrary to the way we often think about maintaining our physical assets, this new management-system standard is not exactly about managing assets themselves, but rather managing “the value that the asset can provide to the organization” throughout the asset’s life cycle. (ISO 55000:2014; 2.4.2a)
The ISO 55001 Asset Management Standard requires identification of the organization’s value-adding assets and the opportunities as well as the risks to be managed. Then, a systematic approach must be established to manage these assets throughout their life cycle—from design through operations, maintenance and disposal and/or asset renewal—an asset-management system.
Unfortunately, the word “system” often conjures up something along the lines of a computerized information system. In reality, the “asset-management system” is almost invisible to the untrained eye. The “system” is comprised of the collective behaviors (responsibilities and accountabilities) of those who make decisions and take actions throughout an asset’s life cycle—an asset-management work culture to be sure. This system will, of course, use a host of business processes, hardware, information systems and software to achieve the organization’s goals.
Assets and asset management
“An asset is an item, thing or entity that has potential or actual value to an organization,” (ISO 55000:2014; 2.3). Given this definition, basically anything with actual or potential value for an organization is an asset. The key word is “value.” The Standard also states that “assets exist to provide value to the organization and its stakeholders,” (ISO 55000:2014; 2.4.2). Organizational objectives provide the framework for determining the value that selected assets provide.
Are highly-skilled people assets?
We tend to think about “physical assets” as relating to machines and facilities. But let’s broaden our thinking. At the recent SAP-Centric EAM Conference, several sessions addressed ISO 55000. One speaker introduced the “human asset” concept. In his preliminary musings about Germany’s highly successful football (soccer) team, SAP’s Achim Kruger noted that the team is a big business. Considering the organization’s goals, he said, the players are its primary assets. Aside from the debate as to whether the players are “items, things or entities,” their health, well-being and deployed skills have a significant value- or risk-impact on the organization’s goals.
Are high-performing work cultures assets?
The highly variable people-side of an asset-management system and the requisite work cultures are not clearly governed inside the ISO Standard. As stated in the documents, “Not all asset-management activities can be formalized through an asset-management system. For example, aspects such as leadership, culture, motivation and behavior, which can have a significant influence on the achievement of asset management objectives, may be managed by the organization using arrangements outside the asset management system,” (ISO 55000:2014; 2.4.3).
However, in the Standard, top management plays a fundamental role in establishing, reinforcing and improving the people-side of asset management. It’s called leadership. An asset-management system will not evolve without it. For the most part, an organization’s leadership establishes and maintains the work culture. The new ISO Standard characterizes the importance of leadership and culture this way: “Leadership and workplace culture are determinants of realization of value,” (ISO 55000:2014; 2.4.2c). Would that make a functioning “asset-management work culture” an asset with actual or potential value to the organization?
The people-side of asset management
The following parable illustrates the importance of people to any project:
When a home-builder received plans for a fast-tracked project, he quickly developed a schedule, estimated materials and costs. He gathered the tools and supplies he would need, and placed necessary orders. Within a few days, everything was delivered to the site. But because his regular crews were engaged, he needed to find replacements. Ten new workers arrived the next day and hit the ground running.
Despite their experience, these workers did not work well together. Some were highly skilled while others were lacking. Some had bad attitudes. The builder told the project leader that no matter how loud or how often instructions were communicated to this group, the house could not be built and business goals would not be met. The crew needed to be more of a team working toward the common goal of building the house.
The builder recognized that an essential part of the project was missing: the right people with the right skills, at the right time, doing the right things, with the right leadership at all levels to build the house according to the plans and schedule. Having never experienced this dysfunction with his normal crews, he realized that his business depended as much on the people-side of building as on the plans, materials and tools. In this case, the missing link was a plan for selecting, training, retaining, deploying and continually improving the collective abilities of these highly skilled people and their interdependent groups.
The builder began developing an overall strategic plan to assure that all the hardware, software and people-ware variables were addressed and his business would prosper. This would form the basis for his new house-building management system.
To properly manage an organization’s assets and establish a system to manage the value they provide, we must find ways to formalize all activities as a system. Leadership, culture, motivation and behavior, which can have a considerable influence on the achievement of asset management objectives, must be formalized as an integral part of it.