White Paper

Asset Management PAS 55/ISO 55000 The

Sustainable Business Strategy for Operational
Excellence

21 May 2014
 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

Abstract
In 2002-2004 the Institute of Asset Management, in conjunction with British Standards
Institution (BSI) developed PAS 55, the first publicly available specification for optimized
management of physical assets. This has become an international bestseller, with widespread
adoption in utilities, transport, mining, process and manufacturing industries worldwide.

The 2008 update (PAS 55:2008) was developed by 50 organizations from 15 industry sectors in
10 countries. The International Standards Organization (ISO) then accepted PAS 55 as the basis
for development of the new ISO 55000 series of international standards. Because of the
standards 100% focus on business value, they are now being adopted by more and more
businesses and in fact, companies with poor Asset Management practices may well have
problems getting risk cover from their insurance provider.

The Maximo Asset Management software solution is widely viewed as the Enterprise Asset
Management market leader. It provides for a single version of the truth for all asset-related
information and support for all asset classes or asset types such as production assets, fleet or
mobile assets, facility assets, as well as IT or IT-enabled assets. The ability of the Maximo Asset
Management workflow engine to model and monitor processes and procedures provides a
communication mechanism for the user community and a secure data repository for all asset-
related information.

This white paper is based on a webcast presentation made to the Tivoli User Community
entitled: Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for
Operational Excellence

Terrence OHanlon, subject matter expert on ISO 55000 from Uptime Magazine and
Reliabilityweb.com, made the presentation. The webcast included a vibrant Q&A discussion on
business drivers and impacts for Asset Management and how Maximo Asset Management
supports the new standards.

Also involved in the post webcast Q&A were Eric Luyer, Global Marketing Manager for Smarter
Infrastructure Management, who has a special focus on positioning Maximo Asset Management
in the manufacturing industry segment and Mary Bunzel, IBMs Worldwide Industry Leader for
Manufacturing.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

Understanding Asset Management

Asset Management is not about managing assets

According to ISO 55000, an asset is a thing, an item or an entity that has actual or potential
value. Consider that these assets might include Maximo data or your maintenance technicians
and their knowledge and so on. ISO 55000 questions whether you are managing all of these as
you would a physical asset and sees Asset management as a coordinated set of activities to
realize that value.

So to use a paradox, Asset Management is not about managing assets, but about delivering real
business value. Organizations deliver business value by aligning everybodys understanding of
value and everybodys understanding of risk and balancing that to the profile thats been set.

Global demand for asset performance is outpacing available capacity and infrastructure due to
the fact that organizations have aging systems, old and traditional business practices and these
limit the tangible responses available to address this problem.

As well, major problems are arising related to an aging asset-base both labor talent and
physical assets - and there is a lack of understanding related to risk. On top of increased
demand, increased standards or growing expectations from existing assets, the expectation of
what organizations will deliver is going up almost on a daily basis.

Whether you are in a public or a private organization, you are facing increased scrutiny whilst
technology obsolescence is happening on a more rapid basis and businesses struggle to keep up
with the latest advances. Financial constraints are huge. Capital tends to flee where theres a lot
of risk and instead, go to places where theres not so much risk. An aging workforce and a skill
shortage all combine to create even greater challenges. The growing realization is that these
issues can be addressed through Good Asset Management practices.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

The Asset Value recipe the importance of risk

As discussed in the abstract, the PAS 55 Asset Management standard from the British Standards
Institute paved the way for ISO 55000, but here it lost an important element; Risk Management.
For what are seen as political and procedural reasons, risk was not covered in the ISO 55000
series of standards.

Without a robust Risk Management process, your organization is likely to miss the potential
value thats available from a more comprehensive or holistic way of looking at assets. So, in
addition to ISO 55000, you need a framework for Reliability to reduce your risk. Without it your
assets can struggle to perform and your machinery may actually punish you for mistreatment.
And that usually that happens at the most inopportune time.

The asset value recipe to deliver maximum value from physical assets is to combine the ISO
55000 Asset Management framework, the ISO 31000 Risk Management framework alongside
the concept of Reliability Leadership. The framework for this is expressed by the Association for
Maintenance Professionals (AMP) in the role they promote of a Certified Reliability Leader
(AMP CRL). Through this they seek to combine the delivery of asset performance value that is
aligned to the organizations AIM [see more on AMP CRL later].

The AIM, which relates to organizational objectives, is defined as a system. Executive

management creates the AIM for the system, which also could be referred to as a Strategic Plan.
It is a requirement of ISO55001 that everybody understands and is able to articulate the AIM.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

ISO 55000 in more detail

ISO 55000 is a set of three standards or documents issued by the International Organization for
Standardization which covers the terms and definitions around Asset Management. ISO 55001
lays out the requirements for an Asset Management system and ISO 55002 provides guidance
for implementing ISO 55001.

If your organization already follows ISO 9001 for quality management or ISO 14001 for
environmental management or ISO 50000 for energy sustainability, you already have the
managing system framework for ISO 55001. Over the next 12 months, the ISO is looking to
harmonize these standards at a high level.

ISO 55000 sets the definitions, the terms and requirements for the managing system framework
and the guidance, but it doesnt tell an organization how to perform Asset Management or how
to deliver value and reduce risk. In fact, it specifically excludes technical standards and
guidance. Value from your assets is seen as being delivered by the decisions and processes that
are made in managing the risk opportunities around requiring, operating, maintaining and
decommissioning your assets.

As shown above in the ISO

55000 diagram to the right,
Asset Management objectives
are a coordinated set of
activities that help your
organization realize the
amount of value delivered
from the assets. They are
subdivided into interacting
elements that allow the
organization to achieve those
Asset Management objectives.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

Risks and decisions

Understanding risk

Every organization must have a formal understanding of risk in order to make good decisions.
Organizations of all types and sizes face internal and external factors and influences that make it
uncertain whether theyll achieve their objectives or not; the affect this uncertainty has on an
organizational objective is risk.

All activities of an organization involve risk and this is managed by really understanding it,
identifying it, analyzing it and then evaluating whether the level of risk should be modified by a
risk treatment in order to satisfy agreed risk criteria. This is the standardized process required
by ISO 31000 or your organization may have its own process for managing risk.

Decisions drive value

Asset Management, together with Risk Management allows asset owners to scale and apply
solutions that are appropriate for the asset challenges that they are facing. To make

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

improvements and improve value they must have the most effective of decision making tools to
ascertain if such as maintenance or renewal is the best option.

Decision Support, especially using good Information Management techniques, allows you to
make the least bad sacrifice, to suffer the least from what you choose not to do, because
everyone has to work in constrained environments. If you are creating decision criteria on how
much to spend and when to spend it; then we talk about Asset Management. You need to make
effective and efficient decisions to drive value.

As shown in diagram above, a study was made of the decisions around driving value from assets
and only 9 of those decisions were related to actions taken directly on an asset; 27 of those
decisions were made around or about an asset. Examples include operator motivation or
maintainer training, decisions about operating load or duty cycle. These make a huge difference
on the value derived from an asset. Decisions to in-source or outsource certain functions are not
things you do to an asset, those are things you do around an asset.

Research has suggested that only 25% of the decisions made to drive value from an asset are
related to actions performed directly on that asset and that culture is often the biggest, single
challenge for implementing Asset Management. It is leadership that creates culture and it is
leaders who make decisions. On that basis, leadership is one of the most important elements
that you have to focus on in Asset Management and leadership is now a key aspect in the new
Asset Management standard, ISO 55001.

Regardless of how good your reliability strategy is, its your organizational culture that delivers
its performance. Culture is built from within and its cultivated by leaders, who AIM at engaging
employees and team members in delivering reliability and asset performance for the
organization.

CONNECT TOP MANAGEMENT DECISIONS TO THE ASSET BASE

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

So what you can learn from this is the importance of connecting top management to the asset
base and how the ISO 55000 standard provides for this. This is achieved through an Asset
Management Strategy, an Asset Management Policy and an Asset Management Plan and these
are written documents designed to be used around a reliability leadership culture.

This is very significant because in your organization, top management may already think they
have all the aspects of Asset Management, but, as defined by ISO 55001, its a very rare
organization that truly is driven by strategy, policy and plan for delivering value from their
assets.

The organizational objectives are the real reason the organization is in business and these are
typically focused on providing the maximum return on investment to the stakeholder and
theyre derived from the corporate business plan. On that basis, its very important that you
align your Asset Management activities to the AIM of the organization.

ISO 55000 requires a line of sight connecting the companys asset-related policies and
objectives to accomplishing the companys organizational objectives. Line of sight means they
can connect it directly, they can explain what their plans and activities are as directly related to
the main organizational objectives.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

As per the above diagram, Asset Management can be used as an opportunity for this line of sight
to force vertical thinking about optimizing value delivery from the assets in your organization.
Assets are not just about running efficiently or running effectively, theyre about delivering
business value and some assets are more important than others in that regard.

Top Management in your organization defines what value is and what risk is. Operational
Excellence in the Asset Management level means assuring that value can be delivered through
the asset portfolio thats deployed.

Reliability Leadership assures that those assets will deliver their intended function in alignment
with that value delivery and at the Asset Care or Maintenance level execution is assuring the
delivery of the capacity from those assets.

Align functional silos

As well as the top down view of line of sight, Asset Management can also be used to align and
force lateral thinking across your organization. Typically, organizations experience conflict in
terms of sub optimized performance metrics from operations versus maintenance, they forget
that such as human resources are a very important part of the Asset Management value delivery
chain; i.e. poor staff retention means loss of knowledge means loss of an asset.

Purchasing and supply chain are also extremely critical as is Finance. The advantage of having a
strategy, policy and plan as defined by Top Management in regards to Asset Management allows
for all of these functional silos to be aligned for value.

The thing that all Asset Management programs have in common is that they are about making
the best possible decisions. You do that through Reliability - enabling Asset Management
decisions. Asset Management decisions enable Reliability decisions. It is vital that you
understand this fundamental concept.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

Reliability in detail
Where change succeeds

According to numerous pieces of research, approximately 70% of change efforts and new
strategies fail to create a sustainable result. This is in fact a paradox because most of the
strategies and techniques about Asset Management and Maintenance Reliability have been well
known for more than 30 years. The need is for organizations to better understand the root
causes of the high failure rate of technical only implementations and in doing this, they must
realize it is very important to not to view ISO 55000 as purely a technical implementation.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

The best way forward

Bridge the Capex and Opex gap

During capital projects is when you should be managing asset lifecycle value for the future
operate and maintain phases, bridging the value believed to be between the CAPEX and the
OPEX phases. Organizations need to spend a little bit more time, energy and effort to get the
asset information right and recognize the impact of future maintenance.

More time is required for managing asset information at the beginning of a project, so that
maintenance plans can be loaded and all spares are going to be in place. Once the reliability and
maintainability is ensured this will pay big dividends during operate and maintain phases of a
lifecycle.

Truly recognize the importance of leadership

Within ISO 55000, a leader is anyone who helps another person, a machine or a gadget do a
better job, meaning that there is leadership at every level of your organization. It doesnt mean
only the CEO or Reliability guru or the asset management expert. There is a need to engage
everybody in the organization as a leader.

Organizations need a roadmap to create the future and for this they need to make a
declaration, to work with commitment, act with integrity and then actualize it by taking action.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

Understand the Asset Management and Operational Excellence connections

This can be likened to the same principles of the Capex Opex bridge. Organizations need to
understand how value is delivered and how to address problems or repairs when value is
below expectations at every phase of the asset lifecycle. That is about connecting Asset
Management with Operational Excellence to maximize business value.

Recognize the breadth of the impact

Of course there are the economic reasons for doing Asset Management, but it also enables
environmental sustainability and social responsibility. When considering your organizations
environmental promises, Asset Management can truly enable achieving these as well as your
intentions for social responsibility.

You can use Asset Management to bring together these three aspects of your corporate strategy,
can consider them as people, planet and profit, managed properly regardless of what the
economic situations are. Aligning the organizational objectives of environmental stewardship,
social responsibility and economic prosperity can be achieved through effective Asset
Management.

Understand the value of a Certified Reliability Leader

A recent initiative related to leadership and reliability and maintenance engineering saw the
Association for Maintenance Professionals and Terrance OHanlon get together to build a

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

Certified Reliability Leader certification and associated body of knowledge; the aforementioned
AMP CRL.

The first of three values is that a CRL understands the need to be able to communicate in
regards to Asset Management and Reliability at all levels, from explaining it to the CEO to the
newest junior recruit. Reliability Webs Uptime Elements framework enables this to happen.

The second is to assure full acceptance that Asset Management is a never-ending journey. There
is no final destination to reach since the goal is always constant improvement, no matter what
level you get to.

The third is about recognition of community, both internal and external. Inside the organization
its about ensuring there are empowered leaders and empowered people delivering the results
for the organization. On the outside, its about being highly active in external community. Tivoli
User Community (TUC) is obviously a good example of an external community where you meet
peers who face the same challenges that you do and share what you did to overcome those
challenges and inspire each other.

Take a consistent facilitated approach

ISO 55000 and ISO 31000 provide guidance to a consistent, facilitated approach to making
reliable asset decisions that balance risk and opportunity, for your acquisition decisions, your
operate and maintain decisions and your end of life decisions.

Audits ensure you are compliant with the standards and for this you need software to test, to
capture and refine those decisions; thats your asset information system. Finally, you need the
leadership to take the people on the aforementioned journey. Remember where to begin

All that has been discussed creates some major challenges when many organizations have
perhaps thousands of assets. The answer is not to try and do everything at once and start with
your critical assets, not all of your assets.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

Begin with a pilot opportunity and gain validity with this approach. ISO 55001 allows you to
create an Asset Management ecosystem on one asset system; you do not have to do your entire
company. This approach will allow use of the lessons learned as the next asset is chosen; this is
how youre going to make progress.

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 Asset Management PAS 55/ISO 55000 The Sustainable Business Strategy for Operational Excellence

Appendix webcast poll

During the webcast, the audience was asked to vote on the following questions:

How does your organization feel about standards - PAS 55 and ISO 55000?

Interested but not started: 50%

Interested and now exploring: 25%

Interested and have started adoption: 18%

Not interested at this time: 7%

Do you feel Maximo Asset Management will help enable PAS 55 or ISO 55000 in your organization?

Yes, significantly 45%

Yes to a degree 31%

Not sure yet 24%

How long has your organization been using Maximo Asset Management?

More than ten years: 37%

Three to ten years: 39%

Less than three years: 4%

Not using yet: 20%

These materials are property of the TUC, and should not be reposted, edited, presented, or
otherwise without permission from the TUC management team and the author/presenter of
the content. These materials are created by IBM employees and customers. They are
provided to the TUC for member use. If you are interested in contributing to the Tivoli User
Community, please email CommunityManager@tivoli-ug.org.

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