New asset management guidance on financial and non-financial alignment
Alex Knight CEng FIMechE
Award-winning Engineer & Founder | CEO of STEMAZING | TEDx Speaker | Royal Academy of Engineering Visiting Professor | MAT Board Member | Mentor & Trainer | Diversity Advocate | Disrupting the status quo in STEM
Hot off the press! The ISO 55000 committee has produced a new Tech Spec to support implementation of good asset management, and it is out today! This guidance document focuses on alignment of financial and non-financial functions in asset management. It will help organisations wishing to further break-down silos between financial processes and activities (such as managerial costing and accounting) with other asset management processes and activities involved in managing the life cycle of assets (such as operations and maintenance).
ISO 55001 states "the organization shall determine the requirements for alignment between its financial and non-financial terminology relevant to asset management throughout the organization“.
Terminology is important. If you do not understand, and maybe even speak, the language of another function in your organisation then you may be interpreting and understanding important aspects of your assets differently. For example, you may be reporting the remaining life of the same asset differently as you measure its value from different perspectives; such as operational performance and reliability perspective versus depreciation on a balance sheet perspective.
Why does this matter? If financial and non-financial functions value the same asset differently – how can you optimise decisions about how to manage it over its lifecycle and agree on how to prioritise investment?
Understanding each others perspective and being able to communicate using a common terminology and single source of truth for information is key. This is imperative in our ever-advancing digital World, where we will rely on a single source of truth for data that enables data-led decision making across a business.
In many organisations financial and non-financial functions are poorly aligned, but alignment is necessary for better decisions. Alignment needs to be vertical (top-down and bottom-up) at different levels in the organisation, as well as horizontal (across all the different functions involved in asset management in the organisation).
How do you achieve this? Well, it involves a number of different elements which is why TC251 (the international committee for ISO 55000 asset management) created this specific guidance to help. It’s aimed at both financial and non-financial people to help them talk the same language, understand each others perspectives and align their decision making to aid better asset management.
What’s in the guidance document? It includes the benefits of alignment to support the case for making change; enablers for alignment to scope the change; and how to achieve alignment to support a plan for change, plus annexes with more detail on the elements mentioned in the “how to” section with examples. The document references internationally recognised good practice such as IFRS (International Financial Reporting Standards) and has been developed with input from experts in both asset management and finance.
To purchase a copy of the newly published guidance (this has been numbered ISO 55010), visit the online shop of your National Standards Body. For the UK this is the BSI Shop online https://shop.bsigroup.com
https://shop.bsigroup.com/ProductDetail?pid=000000000030359119
Associate at Arcadis
5yGood news Alex. Great stuff
Maritime and Construction Consultant
5yExcellent to see this document published. Looking forward to reading, learning and applying. Thank you committee!
Integrity, Kindness, Optimization, Alignment, Vision
5yAfter seeing and experiencing so much misalignment of these areas, it is great to see new work providing guidance & standardization. Typically they are a great example of silo’s. Not only organization & thinking are typically separated, but also objectives, data, and lifecycle management. Great job to those putting the work in, so many can benefit from this.
Asset Management (ISO 55000) | Asset Integrity | Reliability | Maintenance | Safety Critical Elements | CMMS/EAM | Electrical & Instrumentation | Facilitator & Trainer
5yThat was a much needed document. Thank you Alexandra Knight and all others involved in producing it.
Thought Leader, Asset Management expert and internationally recognised speaker and author.
5yGreat article Alexandra Knight thankyou. Alex has included the link to the BSi store for those in the UK. If you are looking for this in other countries it should be available via your local National Standards Body either now or in the very near future.