A Solid Foundation is Paramount for Strategic Asset Management

Utilities need to establish a strong foundation before implementing Strategic Asset Management - this will go a long way in avoiding unnecessary obstacles.
Published: Tue 28 Jan 2014

Before utilities adopt Strategic Asset Management, various challenges need to be overcome in order for the process to run smoothly.

Transforming the corporate culture

Departments must be integrated so that the various views of company assets are shared and understood across the board. For instance, field crews and maintenance staff focus on the maintenance and upgrade of assets; system operators focus on the availability of an asset and its ability to perform reliably; system planners focus on the future implementation and maintenance of assets; financial planners see assets in terms of finance; and executives work to avoid corporate risks attached to assets.

All of these departments need to work together, creating a holistic approach towards the organisation’s goals. Management will need to coordinate this transformation across all levels. By painting a bigger picture, staff will get to understand their individual and departmental roles and responsibilities and how these will contribute to the organisation’s objectives.

As departments begin to co-ordinate their efforts and work towards achieving the same objectives, the full benefits of Strategic Asset Management can then be realised:

  • Portfolio management will focus on sustainability and viability for the future


  • At the system level, assets will be monitored for performance, cost and risk optimisation

  • Life cycle optimisation of assets from deployment to disposal

Get the right skills, processes and technology

In order for asset management to really work, a commitment must be made to employ the right people, processes and technology:

  • The right skills-Asset managers must possess an actuarial analytic skill when assets are being analysed. The condition of an asset should be assessed according to its statistical remaining life and risk factors. This skill is often not found in a utility setting and will need to either be developed or employed.

  • Processes must be institutionalised-These processes have to manage assets in a complete life cycle.

  • Optimization of costs, performance and risks must be accounted for throughout the whole process. This life-cycle approach will cross traditional business boundaries often found in the utility. This may lead to conflict but, for asset management to work, the boundaries must be eliminated.

  • Encouraging long-term views-Decision makers should be encouraged to adopt a long term view which complements the life cycle approach towards asset management.

  • Technology-Data from each department will need to be amalgamated with the help of a technological solution that will support efficient communication and data sharing between the various departments

According to Gartner, the introduction of an effective Strategic Asset Management programme has the potential to reduce company IT costs by up to 30%. A typical return on investment can occur within the first year.

As soon as the utility recognises data as a valuable asset, the efficient management thereof becomes paramount. As JD Hammerly, CEO and co-founder of the Glarus Group, points out: “The business value locked within the explosion of smart grid data will enable transformation of the electric industry.....The future belongs to big analytic applications analysing big data.”

Further Reading

Smart Grid News-Strategic Asset Management-a primer for electric utilities [pdf]