Implementing ISO 55000 best practices to your strategic planning
ISO 55000 is a key standard in asset management, providing the principles, terminology, and framework for developing a proactive asset management system. It helps organizations manage their assets throughout their life cycles to maximize value and achieve strategic goals.
Following ISO 55000 ensures a systematic approach to asset management, leading to optimized asset usage, improved financial performance, risk management, and sustainability, while enhancing accountability and overall efficiency.
Though it offers several benefits, implementing the standard can be a difficult proposition without the right tools.
Benefits of adopting ISO 55000
Utilities, municipal governments, public transportation, and any industry that owns and operates assets must consider adopting ISO 55000 to improve their asset management practices.
The benefits of using this framework includes: enhanced financial performance, improved risk management, more reliable service, and increased efficiency and compliance.
Enhanced financial performance
One of the key benefits of optimized asset management is the significant improvement in financial performance.
By strategically managing assets throughout their life cycles, organizations can reduce unnecessary costs and increase the return on investment. Efficiently allocated resources lead to lower operational expenses and smarter capital expenditures, ultimately boosting financial sustainability.
Improved risk management
Owning and operating assets comes with inherent risks, but a proactive asset management approach helps organizations better anticipate and mitigate those risks.
Whether it’s equipment failure, environmental concerns, or safety issues, managing risks more effectively ensures smoother operations and reduces the potential for costly disruptions or liabilities.
More reliable service
Consistently improving asset management practices leads to more reliable service delivery. By ensuring assets are well-maintained and operated efficiently, organizations can enhance service reliability, improve product quality, and boost stakeholder satisfaction.
Delivering dependable, high-quality services reinforces trust with clients, partners, and stakeholders, ultimately strengthening the organization’s long-term success.
Increased efficiency and compliance
Organizations face growing pressure to meet stringent regulatory and statutory requirements. By adopting a systematic asset management framework, companies can streamline processes and increase their ability to comply with these regulations.
This not only minimizes risks but also ensures that the organization operates at maximum efficiency, maintaining high standards across all operations.
What is strategic planning?
Based on ISO 55000, strategic planning can be defined as the process an organization uses to undertake strategic asset management planning, to establish asset management objectives and develop the asset management strategy.
The organizational objectives are normally first translated into asset management objectives, taking into account stakeholder requirements, applicable legal, regulatory and standards requirements and the projected demand for the organization’s products and services.
The asset management strategy is then developed to provide the long-term approach and processes for determining renewal, enhancement, and maintenance work volumes as well as the associated risks and costs.
The challenge of strategic planning
The challenge for decision makers becomes even greater as the sophistication of processes and technologies increasingly requires role specialization, which often results in silos where information flows inadequately due to the complexity for individuals to see the whole picture.
Moreover, corporate objectives are often stated in generic terms, making it difficult for asset managers and specialists to turn them into actionable items. Similarly, specialists often speak in a more technical language, with limited financial insight and perception of the impacts of today’s individual decisions on the sustainability of the entire network.
Since the achievement of corporate objectives is intimately linked to the performance of the assets under management, it is crucial for the organizations that the asset management strategy bridge the gap between high-level organizational plans and asset management plans.
ISO 5500 best practices in strategic planning
To implement a reliable and sustainable asset management strategy that is accessible to all stakeholders, using a solution that was designed with ISO 55000 requirements in mind is a major advantage. Because although the requirements describe what needs to be done to be successful, but lacks any guidance on how to implement them effectively.
Direxyon’s Asset Investment Planning solution bridges this gap by providing the practical tools and framework needed to implement ISO 55000 requirements effectively, ensuring that organizations can optimize asset performance, improve decision-making, and achieve long-term sustainability.
Now, let’s look at how Direxyon’s AIP enables organizations to implement the ISO 55000 requirements.
Consider activities beyond the organization’s planning timeframe
The only way to ensure long-term sustainability of strategic asset management plan is to consider the entire lifecycle of assets under management. A decision taken today might be smart but become inefficient on the long run. In fact, impacts of an investment are often underestimated because of the delay between the action and the consequence of actions.
Direxyon helps organizations to comply with this requirement by allowing the simulation of asset portfolio and generation of optimized asset investment plans over up to 200 years. And from this plan, on the short-term, can be extracted an optimized delivery plans that can be executed and managed over the planning timeframe.
Clearly document the process to establish its asset-related decision-making criteria
In order to easily maintain and most important, to document in transparent and accessible way the decision-making process, decision-making criteria should not be put down on paper and then stored in an obscure file that most people will not know exists and ultimately will not be leveraged as a reference.
To establish best practices, decision criteria shall be an integral part of the whole decision-making process, so that they can be challenged, tested, audited, and adjusted as part of an ongoing process. And moreover, it should be done in full transparency so that it becomes easy to justify decision to stakeholders.
Direxyon help organizations to comply with this requirement by providing the only available solution that leverages Decision Trees to formalize the entire decision-making process. Easily configurable trough simple drag-and-drop functionalities, it ensures self-documentation of the decision-making criteria and provides a clear and understandable way to digitize organizational expertise.
Consider decision-making criteria to evaluate alternative competing options to meet asset management objectives
When formalizing decision policies, it is important to take into account all possible use cases and that for each situation, it is determined which options are possible and how the chosen option will be determined. In short, the objective is that any individual, faced with a given situation, can apply what the policy recommends with confidence, knowing that it is considered by the organization as best practice in that case.
And to be able to cover all possible situations, it also means planning for the unexpected. Therefore, decision-making policies should also be formalized for the case of unexpected events and what are the different competing options in such case as well the selection process.
Direxyon helps organizations comply with this requirement since, by leveraging combinatorial-stochastic analysis, decision policies formalized through decision trees can be defined so that it covers all possible situation, planned or not. And moreover, since decision trees are simply a list of user-defined criteria leading to an intervention, all decision-making criteria that are used to evaluate competing options are self-documented and easily understandable for any stakeholders, ensuring maintainability and sustainability of the process.
Consider all assets, portfolios, their boundaries and their dependencies
Since strategic asset management plans have to be aligned with long-term organization objectives, it must consider all assets under management. But more important, in order to produce realistic forecasts, the plan must incorporate all types of relationship between these assets so that the decision policies defined by the plan can be transformed into real actionable items.
Direxyon helps organizations to comply with this requirement through advanced hierarchical and cross-asset modelling capabilities that aim to link any asset or group of assets to any other assets or groups of assets based on any link factors (hierarchical, geographical, physical, logical, functional, etc.) Moreover, these links have the power to evolve dynamically during the curse of the simulation, which allows to simulate realistic network evolution and improvement.
Consider causes, effects and likelihood of adverse events occurring
A concept often misinterpreted and leading to major flaws in capital planning is the notion of adverse events. People often think that this requirement means that if an adverse event occurs, you should be able to take it into account and readjust your delivery plan accordingly in an optimal manner.
But from a strategic planning perspective, what it really means, is that your plan should already include possible adverse events, document the curse of actions if these events occur, and moreover, that your plan is optimized based on the fact that they can occur.
Planning for the unplanned means having the ability to calculate and forecast the probability of occurrence of adverse events, forecast the ranges of potential adverse events occurrence based on the applied decision policies, and include in your capital planning the resources (budget, workforce, etc.) allocated to unplanned works based on risk tolerance (probability to achieve targeted outcomes).
Direxyon helps organizations comply with this requirement by providing organization with a large range of advanced analytics and stochastic functionalities, leveraged by Monte-Carlo Simulation, that allows to forecast likelihood of adverse events, and generate them throughout the curse of the simulation. Then, through combinatorial-stochastic analysis, it is possible to account for the events as part of the decision-making process, resulting in realistic scenarios that can be optimized based on the entire ranges of potential outcomes.
Consider risks and assessment criteria within decision-making
Another concept that is often used in capital planning is the notion of risk. Because, in real life, adverse events occur or not. There are no fraction of failure nor average consequence to these failures. And moreover, the real consequences of event are often uncertain and could result in wide range of possible values.
So, when using risk as criteria for decision-making, we must consider and forecast the real impact, and that means to consider all possible outcomes. This is the only way to account for the risk tolerance of the decision-maker.
Direxyon helps organizations to comply with this requirement by bringing decision-makers beyond traditional asset management standards in terms of risk management. By leveraging the notion of Real Options, it gives decision-making the ability to evaluate strategies and select the most profitable options based on all possible outcomes. Through stochastic-combinatorial analysis, it allows to not only take into account the likelihood of adverse events occurrence, but also to generate these events so that consequences are applied entirely, giving real exposure to risk.
Consider decision-making policies that commit for long-term objectives, sustainable outcomes and stakeholder requirements
This requirement seems obvious at first sight, but it mandates to think beyond traditional asset management practices. To provide sustainable outcomes, a strategic asset management plans must not only consider how the organization is currently delivering its services, but how, and under which condition, it will deliver these services in the long-term so that they still achieve organizational objectives at lower cost by maximizing usage value of assets.
For example, population growth, depletable resources, increase/decrease in consumption, network consolidation and integration, technological changes (e.g. green energy), climate changes, etc., are all factors that may have an impact on asset sustainability and achieve stakeholders requirements.
Therefore, a major challenge for organizations is to quantify the impact of such external factors on the ability to deliver services on the short-, medium-, and long-term so that they can produce future-proof strategic asset management plan.
Direxyon helps organizations to comply with this requirement by providing the ability to model and simulate not only the actual network and its assets, but also to model and forecast demands and any other parameters such as financial, economic, environmental, health & safety, etc. Moreover, by creating a digitized version of the entire organizational asset ecosystem, it allows to include future assets as well and dynamically integrate their impact on for example reliability and resiliency to take better decision today.
Implement ISO 55000 with Direxyon
Direxyon’s AIP solution was built to ensure your organization can implement ISO 55000 effectively. By considering activities beyond your organization’s planning timeframe, you can enhance strategic foresight and adaptability. Our solution facilitates clear documentation of the processes needed to establish asset-related decision-making criteria, ensuring transparency and consistency in your approach.
With Direxyon, you can evaluate alternative competing options to meet your asset management objectives while considering all assets, portfolios, their boundaries, and dependencies. We empower you to assess the causes, effects, and likelihood of adverse events, incorporating risk assessment criteria into your decision-making processes.
For more information, contact us today.
