When was the last time your Board discussed asset management? And what was said?

When we start working with new asset-intensive clients, we often ask the executive team what the Board is interested in when it comes to asset management. It provides us with a valuable perspective on what is viewed as a priority or potential risk as we initiate an asset management improvement program.

You might expect asset management to come up regularly, given these organisations rely heavily on assets to achieve business outcomes. But it can be surprising to learn how low it can sit on the Board’s radar. Typically, we find there is a culture of compliance within the organisation. Whatever the core business objective is, if the asset management function enables the organisation to achieve that objective, no further questions are asked.

It begs the question though: how much value is being left on the table if an organisation purely uses compliance as the benchmark? And what is the impact for critical commercial, public or government stakeholders?

Compliance is important, but it isn’t the ceiling

Compliance helps organisations meet obligations, manage risk and keep critical assets operating safely and effectively. For many organisations, it is also where asset management conversations start. The problem is when compliance becomes the end point.

When assets are central to how value is created and delivered, viewing asset management only as a function that keeps things running has limited value. It’s a narrow lens that can lead organisations to miss opportunities to improve performance, strengthen competitiveness, enhance decision-making and manage risk more effectively.

In our experience, clients often realise they have considerable value sitting on the table within asset management practices that are yet to be fully realised.

Yes, improvement takes effort

Progress requires both time and money. It doesn’t have to be onerous though. We take our clients on a journey of discovery when we initially start working with them.

Before recommending improvement activity, we want to understand the organisation, its assets, its current practices and the value that could potentially be achieved. There is little point improving asset management for the sake of it. Any improvement also needs to sit within a tolerance level for change, and move at a pace that can be supported by the organisation’s culture and resource capacity.

The focus should be on understanding where better asset management could add value to the organisation, whether that is financial, operational, safety-related, governance-related or linked to long-term sustainability.

Once that value is understood, the conversation typically changes.

The barrier to entry may be lower than you expect

Our goal is to leave our clients completely aware of the value they can create by managing their assets more effectively. In fact, we often find the thought of adding rigour is more onerous than the reality experienced by organisations.

Many initiatives can quickly provide a positive return on investment and perpetual value for the organisation, and the Board is often none the wiser. These improvements often start simply: better asset information, clearer reporting, a more structured review of current practices, stronger planning, or a prioritised improvement program that gives the organisation a practical way forward.

The opportunity sits not in fault-finding, but in removing the blinkers that prevent an asset-intensive organisation from fully exploring the value better asset management can create.

A high-level conversation worth having

For asset-intensive organisations, asset management should not only be discussed when there is an audit finding, a major failure, a budget issue or an immediate operational problem. It should form part of the broader business conversation.

• Is asset management helping the organisation achieve its desired outcomes?
• Is compliance being treated as the benchmark, rather than the starting point?
• What value might we be leaving on the table?
• Are we regularly putting asset management on our quarterly agenda?

If the Board and executive team are not asking questions like this about asset management, they may not have full visibility of the risks, opportunities and potential value sitting within the function.

That does not mean every Board needs to become deeply involved in technical asset management detail. But it does mean asset management should be understood as more than a compliance requirement.