by Julian Watts, Director, Infrastructure, Assets & Places, KPMG Australia
Julian Watts explores the role of a Chief Asset Management Officer in the infrastructure sector, and how the position can create a more holistic approach to asset management by bridging the gap between senior executives and on-the-ground asset operations.
Organisations that leverage physical assets to provide a service operate in increasingly complex environments, requiring senior executives to have their finger on the pulse of the asset base.
This is driven by technological advances and continually changing ways of working, but also, the need to demonstrate operational excellence (maximising shareholder value), and mounting pressure to comply with Environmental, Social and Governance (ESG) expectations in order to secure capital and long-term investor confidence.
It is perhaps timely then, to consider the necessary interdependencies of asset management across organisational business units, the impact of these on strategic outcomes and the need for a holistic vantage point, bridging the gap between the Board and business
A heightened licence to operate
While alignment with ISO55001, the international standard for Asset Management, supports an overarching asset management strategy at the organisational level, competing business unit priorities and incomplete understanding, or lack of transparency, around organisational interdependencies of outputs, in practise, hampers maximisation of stakeholder value.
Further changes to modern organisational design, with vertical separation between the asset owner, custodian and operator, sees a trend for each workforce role to have a subsequent requirement to hold ISO55001 certification to demonstrate their relevant competency.
Compliance thus shifts from desired state, to a mandatory part of the business model.
What is the role of the chief asset management officer?
The role of a Chief Asset Management Officer (CAMO) is one of translation. That is, the CAMO is an interconnector between organisational senior executives, to translate and prioritise business unit KPIs and budgetary requirements with a holistic view of asset outcomes.
This enables companies to maximise economic value and asset lifespan, along with clearly articulating risks associated with productive capacity (including resources required for operation).
This role delivers an enduring asset function beyond the asset lifecycle, and continually delivers desired outcomes for interested parties in line with overarching organisational goals.
Relationship with the C-Suite
The C-Suite executive is designed around the objectives and maturity of the organisation it serves. For example, customer-centric organisations benefit significantly from the insights of an experienced Chief Customer Officer to inform campaign direction and achieve the desired brand position, while the transformational expertise of the Chief Data Officer is critical to those requiring advanced data architecture and cyber security.
Common to all, however, is the need to acquire and manage assets. As organisations transition from early stages of asset procurement, to a realised portfolio of fully operational and maturing assets, the role of the CAMO comes clearly into view.
The CAMO serves to optimise C-Suite outcomes, with insights gained from the respective specialties applied to better inform asset decisions.
The table below outlines where the CAMO would interface with other executive roles from an asset-centric lens, in a way that cannot be delivered by an traditional executive alone.
Three reasons why you need a chief asset management officer
At the most basic level, informed asset decision making leads to sound investments, improved cash flows and effective tax management practices. Of course, to optimise investment decisions, a high degree of technical knowledge of an organisation’s physical assets and their interdependencies is required.
1. Singularity of focus to align assets to the business and operating model
Organisational business units need to be operating and reporting optimally and would benefit from the CAMO’s management of key assets, in alignment with organisational objectives.
The CAMO should be closely connected to business unit leads, allowing clear identification of key data points indicative of current state, and likely future asset performance, maintenance requirements and useful life.
Coupled with critical understanding of the overarching organisational strategy, competitive, regulatory and compliance environments, the CAMO is a conduit for proactive resource management (including training and upskilling), timely capitalisation of investment opportunities, the adoption of new technologies, and clear communication of asset transition timelines and obsolescence management to both Board and business units.
2. Optimising business risk exposure and opportunities from physical assets
Absenting such oversight, key elements of the decisionmaking process risk being unconsidered or excluded. Further considerations of market demand and the impact of technology investment, corporate governance and asset risk management processes are instrumental to organisational performance.
For instance, the automation of asset management processes affords increased efficiencies, ranging from the strategic sampling of large asset bases and early identification of asset degradation and site hazards (and associated cost savings).
This will lead to quantitative measurement of carbon offsets, likely to be a mandatory component of future regulatory reporting as investors, supply chain managers and customers become increasingly socially conscious.
3. Driving consistent customer centricity through asset delivery and operations
From the customer perspective, a holistic view of organisational assets and the allocation of capital leads to reduced risk of downtime and service interruption, supply chain and inventory optimisation and enhanced brand permission.
The latter, not only in terms of product, but the timely upskilling of resources and employment opportunities, as organisational asset requirements change.
Bringing it all together
The CAMO forms a pivotal role within asset intensive organisations. Rather than conflicting with, or overlapping, existing C-Suite roles, the CAMO offers a fundamental opportunity for organisations to evaluate whole-of-business objectives and align asset investments with the broader organisational strategy and compliance frameworks.
Successful firms of the future will be those with the transparency of process to ensure optimal allocation of resources and capital, reducing asset risk and downtime to realise maximum return on investment.
KPMG Australia’s new business unit: Infrastructure, Assets and Places
Infrastructure, Assets and Places will bring together strategic, commercial and technical capability from across the firm, assembling a single group of 450 specialists.
The group will work with clients to meet their challenges at any stage of the asset lifecycle and deliver projects that are environmentally sustainable, socially impactful and drive economic growth.
The team will also draw on the full range of capabilities from across KPMG to meet broader advisory needs as well as deep sector expertise in areas including real estate and places, transport, social infrastructure, energy, mining and defence.
For more information, please visit: http://www.kpmg.com/au/iap