According to the IAM’s Asset Management Anatomy (2011) “…as organizations are being forced to deliver more for less, they have managed to develop, up to a relatively high level of maturity, certain capabilities within the field of Asset Management, in order to deal with their shareholders, regulators, customers and investors”.
In fact, the discipline of Asset Management is nowadays emerging as the ‘mainstream' expectation for experienced organizations contrary to the former theory that was focusing on protecting the value of an asset rather than on creating added value from it. Asset Management is about to become the formal publication of ISO 55000/1/2.
The traditional way that treats an asset as a passive product of delivering services is gradually discarded and replaced by a more holistic strategy, which considers assets as a measurable component of organizational planning.
But what is Asset Management, after all?
Asset Management draws from both business and financial management and also from technical, engineering, operations and maintenance management. Most people associated with Asset Management, demonstrate competence in a variety of professions, such as engineering or finance, and even have additional specialist expertise in a narrower field such as maintenance or auditing.
The term “Asset” refers mostly to infrastructure, buildings, property and facilities, but as well as to moveable assets such as machinery, physical equipment, vessels and even software.
More specifically, and as far as property is concerned, Kaganova (2006) defines Asset management as the process of decision-making and implementation relating to the acquisition, use, and disposition of real property.
On the other hand, the draft ISO definition of Asset Management is: “the coordinated activities of an organization to realize value from assets”; while the draft definition of asset is “something that has potential or actual value to an organization”.
Accordingly, Asset Management is believed to be more of an art and a philosophy and less a one-dimensional science. The asset managers are like the anatomists who have a working knowledge of the whole body but at the same time they develop deeper knowledge and expertise in a chosen specialty.
In many cases, Asset Management is confused with Asset or Facilities Maintenance, which is in fact a valuable element within the entire process of the management of an asset, but it is just one piece of the puzzle. It is impossible to determine the right approach to maintaining assets without considering the other strategic dimensions (business objectives, budget constraints, investment alternatives, sustainability needs, etc).
It is therefore crucial to distinguish the notion of operational asset management, which is the day-to-day activity that ensures the provision of assets over their life-cycle in order to operate efficiently and effectively, and the strategic perception of asset management that deals with strategic-level decisions relating to an organization’s business needs.
The backbone of an integrated Asset Management System is the clear connectivity between the organization strategic plan (business plan) and the on-the-ground daily activities of individual departments (HR, CSR, IT, portfolio & strategy planning, engineering, procurement, operations, maintenance, performance management, etc).
Asset Management is the continuous effort for optimizing a business’ asset portfolio in a corporate world that also continues to change and adopt new business cycles, technology and even radical business theories. The focus on efficiency (cost of the portfolio), effectiveness (performance of the portfolio), engagement (satisfactions & brand image), and sustainability is the strategic business’ alignment that can guarantee delivered added value.
Michail Kokkonis, MSc Real Estate, BEng MechE - Real Property Asset Manager & Consultant