This feature article was originally published in the June 2023 issue of Reliable Plant’s digital magazine. Reliable Plant brings its readers the latest news, technical advice, and best practices in the reliability and maintenance world today.
It’s amazing how many organizations still operate under the saying, “We have always done it that way, so that’s how we do it today.” While this philosophy may have worked in the past, it has proven less effective in today’s fast-paced, data-rich environment.
Companies are being held accountable for their decisions and must defend their choices with data. This requires tools to capture an enterprise view of what is happening across your asset base to make accurate predictions based on risk and probability.
Risk can be assessed in several areas:
- Environmental measures
The organization’s strategic objectives determine how these areas are measured and what’s critical for the future of the business.
Building Trust for Decision Making
When building trust and ownership within an organization, having transparency about how and why decisions are being made is critical. True leaders have a synchronized approach: they solicit feedback from colleagues while focusing on making the decisions that drive the best business outcomes. While this may sound like a relatively easy task, sorting through all the options and perspectives can be a challenge.
Every stakeholder has their own agenda, which may not always align with the corporate strategy. The goal is to understand their needs and use a consistent, quantitative approach to assess investments that illustrates how projects contribute value to the organization. Achieving buy-in through a data-driven approach ensures everyone understands why decisions are made and drives collaborative discussions about the best plan for the business as a whole. Breaking down silos is part of the culture shift towards a shared vision of excellence.
Getting everyone on the same page and working towards a common goal requires trust. Trust, when earned, allows a company to:
- Make transparent decisions
- Focus on innovation
- Be authentic
- Confront business issues
- Improve accountability
When data is unavailable, decisions often come down to who has the loudest voice or the most influence in the room. This can result in less-than-desirable outcomes. Decision-making is the most visible example of a company’s use of power, and it can both build and destroy trust.
Evaluating long-term planning decisions is challenging to do in spreadsheets, which can’t provide an enterprise view of all assets and projects or dynamically update when there are shifts in budget or priorities. This can lead to a lack of transparency over why funds are allocated to specific projects over others, and why certain investments are prioritized while others are deferred. Using spreadsheets also increases the risk of manual errors, leading to inefficient planning, suboptimal decisions, and, eventually, stakeholder doubt.
When people lose faith in the process, old patterns re-emerge, and employees can become focused on securing company budgetary dollars to advance their own projects or personal agendas.
To avoid these challenges, many successful organizations use a value framework to assess the benefits of all investments on a common economic scale. These frameworks create internal alignment by allowing stakeholders to understand why decisions are made and how they support the company’s mission.
Furthermore, they create transparency with how a company is investing its time and resources based on risk and value, allowing leadership to defend capital planning decisions while simultaneously building stakeholder confidence.
The result is a value-based decision-making methodology that helps organizations align investments with their strategic objectives and quickly adapt plans to maintain optimal business performance.
Asset Investment Planning
The right platform can help organizations harness the massive amount of available data for more efficient and transparent decision-making across organizational boundaries. Asset Investment Planning (AIP) software enhances tactical and strategic decisions relating to OpEx and CapEx budget allocations across all time horizons and provides the ability to create optimal investment plans based on risk and value.
A robust AIP software solution allows organizations to develop transparent 5-, 10-, 15- or 20-year capital plans. Projects are scored based on a predetermined set of criteria, and measures can be adjusted in real-time as organizational priorities and budgets shift.
AIP is different from Asset Performance Management (APM) and Enterprise Asset Management (EAM) software solutions. APM systems support short-term asset planning and analyze “real-time” information to monitor equipment health. EAM systems serve as the asset’s system of record to track information on equipment, inventory, and labor costs resulting from predictive and preventive maintenance activities.
APM and EAM systems primarily provide short-range data for asset planning. AIP solutions can use this data to predict the future performance of the asset base and create optimal long-term investment strategies that account for shifting business priorities, regulatory requirements, and operating constraints. The real magic happens when all three systems are working together in unison, driving the business towards a more proactive culture.
Many of us are familiar with the ISO 55000 asset management standard. At its core, ISO 55000 states that assets exist to create value for the organization and its stakeholders. When seeking ISO 55000 certification, many organizations develop a policy stating their commitment to asset management as an overall business strategy. This showcases the leadership’s commitment to maintaining the health of their assets and maximizing the value to the business.
Using a value-based decision-making methodology in combination with a robust AIP solution that supports the principles of ISO 55000 enables organizations to create investment plans that yield the most value from their assets while balancing cost, risk, and performance.
Modern leadership involves inclusion, sharing information, and building a high level of trust. The lifeblood of the modern digital economy is being able to make decisions that are backed by data. Business analytics and big data have expanded into billion-dollar industries because they integrate all of this into the decision-making process.
Companies that don’t organize their decision-making criteria through a structured framework, and in a robust solution that enables optimization, will find themselves at a significant disadvantage as the competitive landscape continues to grow. Organizations that understand the significant impact of the right tools and methodologies will be successful in leveraging data to drive continuous improvement.
To learn more about how value-based decision making can help your organization create transparent, data-driven asset investment plans, please download this white paper.