Complex asset ecosystems can still be best in class
This article was first published in Assets Magazine
In complex asset intensive ecosystems, alignment to a common vision and set of outcomes is crucial to realising the benefits of Asset Management best practice.
The terms ‘asset intensive organisation’ and ‘asset management best practice’ still mean different things to different people. Partly, this is due to the breadth of the ecosystem of the organisation or organisations contained within the scope of the Asset Management System. For some, one organisation is the asset owner, asset operator/delivery partners, end user and governing body whereby the application of best practice is under full control of the particular organisation and the ecosystem is quite simple; for others, the asset owner and operator can be different parties under a single governing body; a third case may see all three elements are undertaken by different parties; and, in the most complex ecosystems, there are multiples of each element. This is where the application of best practice becomes more tricky as the definition of what that is can vary greatly.
As you gain awareness of your ecosystem where should you be looking to develop Asset Management best practice
Parts of the more complex asset ecosystems are demonstrating greater awareness of asset management and have a growing desire to drive efficiencies through the implementation of best practice. The difficulty comes in the realisation that operating models between different parties vary significantly and therefore the application of best practice is nuanced; it needs to be adaptable to fit a particular ecosystem i.e. you cannot apply the textbook that was written for simple organisations to a complex ecosystem. Since complex ecosystems usually consist of more than one organisation, and may or may not have a single governing body, the different, and potentially conflicting, objectives/agendas need to pull together to achieve a strategic collective goal. The greater the number of stakeholders/organisations in the ecosystem, the greater the challenge in implementing Asset Management best practice and subsequently it becomes more difficult to realise benefits; and often good progress is undone by ‘different’ progress elsewhere in the system.
Through the myriad of processes and methodologies it is easy to lose your way and get bogged down in inconsequential or duplicated work that will not aide you in adopting best practice, so where should complex ecosystems begin when looking to develop Asset Management best practice?
Firstly, invest in understanding the ecosystem
Prior to any work in adopting best practice, it is paramount to take time to understand the organisation, or different organisations that are intertwined in the Asset Management System to understand the goals, identify synergies and find the ‘common ground’ upon which Asset Management best practice can be built. This also requires an understanding of the relative maturity of the organisation(s)
At one end of the scale, an organisation considered as ‘simple’ where the asset owner, operator, and user are the same under a common governance. An example would be a heavily regulated utility such as a water or electricity network where the goals are clear and there is a common control across the functions of the Asset Management System.
At the other end of the scale, a complex ecosystem may be characterised as such with the following criteria; multiple asset owners, multiple operators or users with varying priorities and goals, and/or an unclear governance arrangement. For example, a large Defence ecosystem with multiple independent organisations owning and/or sharing a plethora of disparate assets to achieve different or conflicting priorities.
Depending on where an organisation lies in this scale determines the level of activity required to drive towards asset management best practice to realise the benefits that brings, including; greater ability to manage risk, improved financial performance, greater efficiency and asset effectiveness and improved outputs.
In the diagram, we show where different levels of complexity and maturity can position asset management systems on a scale across four quadrants requiring slight differences in approach to achieve best practice.
An organisation (or parts of an organisation) may move up and down the Y-axis but is unable to move across the X-axis. If you are a complex ecosystem, it is imperative that you do not consider yourself as simple. The result of this would be expensive with no tangible results – you will always be chasing your tail. This is reflected in simple organisations considering themselves as complex where unnecessary time and effort will essentially be wasted.
Five steps to developing your Asset Management maturity
At PA Consulting, we believe that there are five key steps to aide in the development of your Asset Management maturity within a complex ecosystem, we have set these out below:
1. “Hello everyone, I am a complex ecosystem.”
The first step on the path to increased Asset Management maturity is a simple one – being open and honest with yourself and acknowledging that you are a complex ecosystem. It is not a case of simply scaling up a methodology from a simple organisation structure or ‘applying the textbook’ as this approach does not consider the interdependencies and alignment to common goals without which, you are setting up for failure. You must therefore understand that you cannot treat yourself as a simple organisation if you want to realise the benefits of asset management. Understanding your baseline will pay dividends in the future. Countless organisations fall short in this very first step and will waste money, resource and time trying to operate as a simple asset owner but with the complexity and nuance of a complex one.
2. All for one and one for all!
One of the key principles of Asset Management is alignment, or ‘line of sight’ from boardroom strategy to spanner. It is important for a complex ecosystem to set the accord, or common culture right from the start by understanding the line of sight across the entire ecosystem, not within the individual silos of particular asset owners. As an organisation increases in complexity levels – for example, a public organisation which encompasses large scale infrastructure and equipment procurement – this alignment must be considered across the supply chain and other areas of the ecosystem.
Setting this common culture can be time consuming, but investment early will reap rewards later down the line. This sounds simple however, initially, a common language must be used, ensuring everyone is talking about the same thing in the same way and understands what they are talking about is essential. Ineffective communication will result in loss of time, money and resource without delivering the desired best practice goals.
Once you are communicating effectively you must be able to ensure that everyone can see the bigger picture that the organisation is striving towards – this is where ‘strategy to spanner’ comes in i.e. those who are operating assets are more effective when they understand why it is needed or how their actions impact the wider ecosystem. A great example is in data capture – if those capturing the data do not understand the importance of it or how it is used then it is highly likely that the captured information is of insufficient quality for the intended purpose; equally, if the intended purpose of the data to be captured is unclear, why waste time capturing it.
These first two key elements are followed by incentivisation and ensuring comprehensive command and control is in place.
3. Value is in the eye of the beholder.
Value is not simply defined as cost. A complex ecosystem must understand this and move away from over-simplifying value. Instead of defining value as cost, it must move towards the term performance - defining value as a balance between the unfortunate acronym of Cost, Risk and Performance (CRaP). Once value is understood an organisation may define the level of value it is seeking by setting clear Asset Management objectives that align to the ecosystems wider strategic objectives.
Good decisions are based on CRaP. We already have our common language from step 2, now, in step 3 we must use this language to help set a common definition of value. It is important that this is communicated effectively as different parts of this complex ecosystem (and different personalities) will see value differently. We need to be able to define and quantify value in a language that is translatable to not just those involved in infrastructure, you may be competing with other parts of the ecosystem for budget, so clarity and consistency from the outset is key; remember real value is realised through aligning to the strategic objectives and working towards collective goals.
4. To boldly go where no complex organisation has gone before.
At this point, we need to develop the vision for how you want your ecosystem to operate, with the understanding of the goals and objectives that you want to achieve. It is important to consider a variety of different elements when developing your vision for the future. In a complex ecosystem, stakeholder engagement early in the development is critical – especially as these organisations have likely been in a state of ‘change’ for some time to little or no clear benefit.
This goes back to what we previously talked about – setting a common culture. Now that you have this culture and you are all talking the same language, it’s time to talk to each other that way! This underpins the development of a digital ecosystem that builds sophistication, consistency and into the effective application of asset management best practice – but remember, people are at the heart of a successful Asset Management System; digital tools are a great enabler but do not remove the human element of a successful organisation.
5. “The long and winding (digital) road.”
Now that we have set our common culture, defined what we value within our organisation, and set up our operating model we can maximise our returns with the use of digital technology. Setting a roadmap to incorporating digital tools into our decision-making framework will enable greater value in the future driving consistency and further sophistication in methodologies.
It is important to stress that the use of digital should only be used at this stage, too many organisations are distracted by the use of digital far too early in their Asset Management journey and get bogged down in a swamp of data which confuses the ecosystem and paralyses it in a perpetual cycle of capturing and analysing data with limited insight and attempting to action it, resulting in poor, reactive or uninformed decision making.
We have seen examples of this in the transport sector where huge and expensive data capture programmes have been undertaken resulting in a vast amount of data stored in world leading systems of which only a small percentage is used to drive a different outcome for a given asset or asset system.
Simple and complex ecosystems can use digital technology to help make better decisions driving consistency and providing an audit trail that can provide further learning and continuous improvement. The benefit of applying digital technology is scalable, so the greater the complexity of the ecosystem, the greater the value opportunity in applying it.
In conclusion, complex ecosystems can achieve best practice! Starting with a simple admission that they are complex...:
The benefits of using Asset Management best practice are absolutely accessible to more complex ecosystems as long as the foundations are put in place first (see 5-steps above). No ecosystem is perfect and as soon as you believe you are a mature Asset Management organisation that is delivering best practice, then you are at risk of stagnating and missing the value opportunities ahead.
Continuous review of your practices is essential to ensure that you grow as an organisation and improve incrementally, flexing, and redefining value as your strategic objectives change. You should regularly reassess your ecosystem from step one and follow our processes to create clarity in your understanding. This should be conducted when you are beginning to feel complacent in your asset management processes, or at least every couple of years to ensure that you continue to develop best practice and reap the rewards.
Here at PA
Consulting, we help clients with complex infrastructure manage their
valuable asset base more efficiently and effectively through innovative
use of data, technology and people. Our diverse teams of experts combine
innovative thinking and breakthrough use of technologies to progress