Historically, educational institutions have found it difficult making the connection between asset performance and business success. Nowhere is this more apparent that with real estate assets. Few institutions today actually track, measure and manage the performance of real estate assets with the same intensity as enrolments, grants and funding. For most institutions, real estate tends to be regarded by users as free and their usage is not adequately accounted for. Asset performance in relation to service delivery is disconnected from other performance measures. Those responsible for real estate decisions – Facilities Leaders – are rarely part of the “corporate” strategic decision making process. Facilities Leaders are typically expected to provide the necessary resources to make any strategic move possible – without much ability to shape or mold the strategy itself. This “model” lends itself to downstream mis-alignment of resources.
Over the past few decades, institutional portfolios have grown as a result of student demand. Physical site limits have restricted on-campus growth necessitating expansion in off –campus locations – either through new physical space or via new technologies required for elearning. By default, Facilities Leaders have been thrust into the world of commercial real estate whether they wanted to be part of it or not and are now looking for ways to manage these high dollar asset to deliver peak performance for their institutional stakeholders. One approach that is gaining attention is Integrated Campus Asset Management or iCAMs.
iCAMs is the process of matching assets to service delivery strategy over time – how a university deliveres its “products and services” to its “customers”. Many Leaders will claim that the already do this. Most do to some extent, but most fail to integrate asset management across all organization lines, and therein lies the problem, as well the potential for greater savings. True iCAM brings together all departments and groups with a defined asset need to develop a cohesive and sustainable set of business strategies that maximises asset usage, thus minimising demand and reducing costs.
Most institutions that undertake iCAMs do so after a experiencing a critical turn of events. In recent history, they discover the cost of holding, using and maintaining assets could cause their institution to literally go broke unless fundamental changes are made. For example; a university system may discover the costs associated with under-performing facilities and assets will force increases in its revenue generating base (fees, indirect taxes, etc) beyond the ability of this base to absorb those increases without negative consequences to the institution’s ability to attract and retain students, grants and research partners, etc. This results in a downward spiral that is very difficult to reverse.
Institutions find that holding old, underutilized, under-maintained or unnecessary asset caused the price of their services to rise to meet the demands placed on these assets. This is usually a startling discovery as most institutions do not have a good handle on the real estate needs and even fewer have a good handle on what assets they own and how much they really cost to operate.
The iCAM Process
The iCAM process –using an IWMS platform can solve a variety of asset problems, including:-
- Reducing demand for new assets by the adoption of non-assets solutions to service delivery.
- Maximising the service potential of existing assets
- Lowering the overall total cost of asset ownership through the effective use of life-cycle costing techniques.
- Ensuring a sharper focus on results by establishing clear accountability and responsibility for assets at the user level.
But getting started on the road to improving asset performance is tough. To be successful, the Chancellor’s Offices must institute a five-step process to accomplish iCAMS:-
- You must know your asset base (supply). iCAM is impossible to undertake without a high level asset inventory. Every Campus should know what assets it holds, what department uses those assets and how, and what it costs to finance, operate and maintain and dispose of those assets. IBM TRIRIGA’s integrated approach to asset management means that decision makers have instant access to highly detailed asset information.
- You must determine the service delivery requirement of each and every department (demand) now – and for the foreseeable future. All organizations require assets – human and real – to provide service. iCAM requires an organizations to quantify what is required to deliver services for each department. After examining the asset supply and future asset demand, you can begin to pinpoint asset gaps and develop strategies designed to improve current asset performance and accurately address future assets needs – thus effectively reducing the total cost of ownership. Your IWMS system should be capable of presenting data as Dashboarded metrics that can instantly pinpoint supply/ demand gaps and allow decision makers to craft strategies based on real time data.
- You must institute cross functional planning to put business strategist and facility/ real estate managers at the same table. Asset management decisions cannot be made in isolation. They must be consistent with “corporate” objectives and integrated into other key management strategies. They should be included in the over-all framework of decision making. Service delivery strategies and best designed by concurrently examining asset and non-asset solutions (see figure 1).
Figure 1: iCAM Philosophy for Higher Education
To achieve the best solutions for the University involve employees in the planning process from disciplines such as facilities and real estate, human resources, finance and administration, technology, and line of business process managers/ owners. This group should look at the opportunities to improve asset performance by altering the mix of assets used and explore solutions that may not required asset ownership or use. It is recommended that the University create an asset management umbrella framework (business infrastructure planning group) that can integrate multiple departmental demands into an executable strategy and create an asset accountability structure.
4. Institutions must push service delivery-driven asset management down to the departmental level. In rare instances, some universities do hold individual departments and users accountable for asset usage. Most universities simply assign departments a portion of the whole organization real estate asset costs as a fixed cost. This has been the effect of mandated legislation of OMB-A21 (US only). While this legislation allows finance groups that degree of granularity they need to back charge against grants and so on. It does not capture the true cost of ownership. No wonder few organisations look for non- asset solutions in developing service delivery strategy. Organisations must be held accountable for how real assets are uses and maintained. Planon allows users to track asset performance in real time and make informed decisions that can be defended.
5. Institutions must follow standard asset management practices to real results. Principals of asset management derive from common sense are based on life-cycle approaches. The basic assumption is that assets should exist only to support service delivery. The five standard principles are:
- Asset Management decision are integrated with strategic planning
- Asset planning decisions are based on evaluation of alternatives which consider the life-cycle costs, benefits and risks of ownership.
- Accountability is established for asset condition, use and performance
- Disposition decisions are based on analysis of methods which attract the best available net return within the framework of fair trading.
- An effective control structure is established for asset management.
These principles should be incorporated in the operational methodology of your iCAM/ IWMS solution.
The potential for improved performance is tied directly to the ability for the University to match asset requirements with service needs. The challenges of implementing iCAM within an institutional environment cannot be underestimated. It required extensive cross- functional knowledge from its internal champions, a high level of interaction among the various departmental and operational functions and a fully integrated asset database.
The payback to universities of implementing iCAM is the increased accountability of asset use, the reduction in the total cost of ownership of assets and the redeployment of increasingly scarce capital to more strategic projects that increase the long term viability of the institution. This should make its pursuit a must!
(c) 2012 Tony Stack, SLCR MScFM
About the Author
Tony Stack is the current Business Solutions Manager for IBM Australia. Previously, he was the Managing Director of BeyondFM in the USA, providing real estate , facilities management and operations strategic advisory services to over 250 major universities and colleges in the US, Canada, UK and Europe. Tony has architected a number of iCAM/ IWMS solutions for major multi campus institutions. He can be contacted at email@example.com