Context
On any given day, around the world, the business functions of Commercial and Finance quietly tick along.
Commercial seeking to get the best outcome from a contract, challenging variations, claiming extensions of time, and sometimes playing bad cop on behalf of the organisation they represent.
Finance typically plays a controlling, compliance, and reporting role to ensure liquidity is maintained and juggling the appropriation and settlement of OPEX and CAPEX.
What if we could reposition (and perhaps repurpose) their roles, achieve mutually sustained value with little effort? Rubbish, you say?
Every organisation on earth is trying to convert demand to value. It does this with capability, and capability is the coordination of activities or an organisation using both physical (tangible) and non-physical (intangible) assets. I will repeat this in the opposite direction (bottom up)…Every organisation has assets that form capability, and capability is how an organisation delivers its services. It really is that simple!
Commercial is primarily interested in the value “from” an asset, whereas finance is interested in the value “of” an asset. It’s should be a healthy tension but a tension that often leads to friction as each role starts to believe their existence is more important than the other. An “asset manager” is interested in both perspectives, but is also considering the combination of value today (actual) and value in the future (Potential). Guess what! We are all asset managers!
Asset Management vs the Management of Assets
An organization typically begins its asset management journey focused on the “management of assets” (in particular physical assets) and maintenance. This view is common and will be evident in the way in which an organization is structured and how decisions are made. An organisation that is focused on the “management of assets” will often have a delegation of authority which is based on the $ (opex or capex).
An organisation that is focused on asset management is in a position to push decision making downward without fear of increasing risk, cost blowouts or hits to performance.
The pivot to becoming an asset management organization starts with a conversation. A conversation that that is centred on value, mutual value for customers, suppliers and the coordination of internal capability within the control and influence of an organisation.
Lifecycle is the conversation!
A lifecycle is simply that. Whether it’s a Human Resources lifecycle “Hire to Retire”, a project lifecycle, an investment lifecycle, a service lifecycle or in particular an asset lifecycle. An asset lifecycle doesn’t start with the assets in mind; it starts with the solution and the value of and from that solution to stakeholders.
The concept of lifecycle also expands to the “whole of life” consideration of an asset. “Whole of life” will be different for each organisation, as their accountability and responsibility will depend on whether they are accountable for end-to-end service delivery (therefore, all assets that support those services, not just the assets they own). If an organisation is only there to support part of the lifecycle, maintenance, operations, or, in terms of materials (supply chain), will also have a varying view on what good looks like.
If we can reposition the roles of commercial and finance to be part of the conversation earlier in the asset lifecycle, we can shift them from being simply focused on compliance and control to one of assurance (i.e. confidence in outcomes).
If the commercial team understands what a contract or project means to the end customer in terms of value, the consideration will shift to the contract supporting the outcome, rather than being the outcome in its own right.
If finance understands the scope and horizon of a solution (in terms of value to the end customer, and the internal capability to get there), they can consider innovative funding sources,/scenarios, cash flow considerations and whole-of-life management.
Summary
Asset management is all around us, and to reinforce “you and I are asset managers”. It doesn’t matter what role you play in an organisation, you are part of your organisation’s capability and capacity, and you are making asset management decisions.
Whatever your field of work, acknowledging you are an asset manager and developing your skills will advance your career and provide greater value to the organisation you represent.
Repositioning Commercial and Finance as active contributors early in the asset lifecycle unlocks greater value, reduces friction, and shifts their roles from control to assurance. By embracing lifecycle thinking and aligning around shared outcomes, organizations can transition from simply managing assets to practicing strategic asset management. This shift not only enhances internal capability but also delivers more sustainable, customer-focused outcomes.
#AssetManagement #CommercialStrategy #FinanceTransformation #LifecycleThinking #StrategicAlignment #WholeOfLife #ValueCreation #OrganisationalCapability #AssuranceOverControl #IntegratedDecisionMaking #ISO55001
