Within the multi-site building environment, addressing the day-to-day operational issues of each facility while simultaneously achieving financial objectives at the enterprise level is a balancing act that would make a circus performer nervous. The key to success in this dynamic and challenging environment is simple – at least on paper – “plan your work; work your plan”. A strategic facility asset management program can provide the multi-site facility team the framework to unlock incredible value. This is the first in a series of six articles aimed at outlining how to build and implement the right plan for your organization.
Although the “right” Strategic Asset Management (SAM) program varies from business to business, I believe that every program should include the following five key elements: strategic, operational, technical, analytical and organizational. When properly integrated, these five elements are extremely powerful in optimizing portfolio performance. This series will take a closer look at each of these five in detail – the first of which is the strategic element.
Be Strategic – Don’t Simply Fight Fires
One of the biggest challenges I see facilities executives facing today is finding time to get out of the daily operational grind of fixing broken stuff and responding to frustrated tenants. Getting your head above water long enough to think and act strategically is no doubt difficult, but you MUST find a way.
The objective of the strategic component of a SAM program is to proactively develop, fund and execute initiatives that improve operational and financial performance into the future.
Let’s start with a retail scenario. Your company is aggressively pursuing an initiative to launch a new product that will significantly increase sales from each facility in the portfolio. This initiative requires a new display with power and lighting requirements that are incremental to each facility. Each building may or may not be able to handle the new load, but across the portfolio, the program will certainly result in a significant increase in energy consumption.
At the same time, finance has challenged you to reduce the corporate energy budget by 5% in the coming year. What should you do? Responding to these challenges requires some important work.
- Can each facility support the new load and how do you develop building specific designs to support and implement the new display within the schedule required?
- How can you offset the increased load while simultaneously addressing the 5% task on the energy budget?
- How to do all of this without losing sight of daily operations?
This is where having the right technical, analytical and financial resources to execute the strategic component of a SAM program comes into play.
Communication is Key
Establishing, funding and executing a pipeline of forward-thinking initiatives that drive sales, improve operations and reduce costs is not easy – and it has everything to do with the facilities executive’s ability to communicate. You’ve no doubt read and learned about how big data, commissioning, energy retrofits and the like can drive significant savings. The challenge? Implementing those programs is not free. You have to spend something to save something more – and you must confidently and convincingly build support for those programs to get them off the ground. Let’s revisit the retail display scenario.
The effective facilities executive might respond to the situation by presenting senior leadership with something like the following:
- A recommended implementation plan for the display project including a bottom line summary of the near term and long term costs over an expanded timeline (5-10 years)
- A programmatic resource plan that outlines the need for, and costs associated with, either: new headcount, use of temporary external support, or a clear understanding of what work must be deferred if existing internal resources are redeployed to accomplish the work. Costs associated with the recommended staffing plan are presented in terms of how they impact the overall financial return of the display initiative
- Lastly, the presentation should include a menu (with recommendations) of initiatives that can offset the increased energy consumption and move the organization toward the 5% financial task. Each initiative should be presented from a financial perspective outlining how the savings offset the implementation costs (see preceding bullet point) with a return on investment acceptable to the organization
If done effectively, this message communicates a no-nonsense, objective approach to simultaneously addressing both challenges. It brings storytelling visibility to the trade-offs and tensions that face the facilities team. It keeps the conversation financially driven, fact based and non-emotional. It will build confidence in the facility executive’s ability to deliver meaningful results and be a trusted steward of the organization’s human and financial resources. Over time, it will become much easier to build support for future strategic facilities related investments.
The strategic component of the asset management framework is all about developing, funding and executing proactive initiatives that meet both operational and financial objectives. It’s about deploying the right resources to get out of the day-to-day firefight to prepare for the future.
What are you doing in your organization to advance strategic facilities initiatives?
Stay tuned for the next article in the series which will dive deeper into the 2nd element of a strategic asset management program – operations!