Increased competition, shareholder expectations, and new technologies making traditional methods obsolete – all of these factors mean that the need for companies to focus on innovation in their asset management has never been higher. Here, Steve Doran, Director of Infrastream, and Chair of the Asset Management Council’s Sydney Chapter, discusses balancing innovation with adherence to standards, how new technologies are helping move things along, and the risks companies face if they aren’t willing to think outside the box.

Steve Doran

Steve Doran

The need to innovate in asset management has become a necessity in order for asset managers to meet shareholder expectations for critical assets amid tightening costs and risk constraints.

Ahead of his keynote presentation Leading innovation in asset management at the Asset Management for Critical Infrastructure conference, running 16-17 August in Sydney, Mr Doran says companies responsible for managing assets need to address several risks when considering if they are willing to invest in innovation.

He says companies in a competitive commercial context need to identify and address the following types of risks when considering their focus on and investment in innovation:

  • Their traditional technologies becoming obsolete within broader engineering systems
  • More agile start-ups or offshore firms providing more cost-effective offerings for the same or better outcomes
  • Shareholder perception that they are not future-proofing themselves and therefore are not a sound investment
  • Sinking staff morale as their people are expected to deliver greater productivity without the tools to do so

Mr Doran has seen these risks firsthand from his 20 years of experience in asset management, including his current roles as director of an asset management consultancy, Infrastream, and Chair of the Asset Management Council’s Sydney Chapter. He has also helped implement innovative practices at Sydney Water, and through his certification as an ISO 55001 Asset Management Assessor.

Innovative tools of the trade

Mr Doran says companies who want to  innovate can look to new technologies that are changing the way assets are managed in Australia. He says new technology on its own is simply a capability or an enabler until it is used in a new way to generate outcomes beyond expectations and therefore becomes innovation.

Mr Doran believes the Internet of Things, combined with Big Data and artificial intelligence, are currently the most prominent technological shifts opening doors for innovation in asset management.

“Essentially, the innovative application of this in critical infrastructure is about assets talking to each other for the benefit or protection of people, in real time,” he says.

“Imagine water mains isolating themselves via stop valves at the moment a pipe failure occurs, self driving vehicles being remotely prevented from crossing a bridge showing sudden excessive flexion, or customers being informed on their devices of alternate commuting options as a rail line section warps due to extremely hot weather.”

Mr Doran also says the rise of nano-materials with incredible strength, non-corrosive capabilities, and low production cost are also changing the face of asset management.

“It is paramount that we incorporate this reality into planning and design now as we invest billions into infrastructure in Australia with a long horizon.”

Balancing innovation with standards

While investing in innovation can be rewarding for companies, innovation also typically requires some form of risk taking, or circumventing norms. This can be seen as direct opposition to industry standards which tend to minimise risk, and drive toward conformity.

Mr Doran says with the need to innovate, asset managers and owners “must take a position that standards can be challenged to varying degrees on a case-by-case basis.”

“While at one extreme there may be standards that are compulsory via legislation that should not be bypassed due to commercial risk exposure, there will also be many that are effectively only optional guidance or allow significant leeway,” Mr Doran says.

“Perhaps the most relevant example to us all as asset managers are the ISO 5500X suite of asset management standards. Earlier this year, due to my passion for innovation and role in the field of asset management, I performed an analysis of clauses throughout these three standards to determine whether innovation and ISO 5500X were ‘friends or foes’.

“Refreshingly the outcome of this analysis was that these standards do not restrain us from innovating. The ‘how’ we implement management of assets is up to us and the only real innovation limits in this case are preconceptions and misconceptions and the nature of our interaction with the key stakeholders around us.”

So what’s holding the industry back?

If the risks of not innovating are clear, and new technologies and practices are helping to facilitate companies to think differently about their asset management plans, one would think the path to innovation would be clear.

However, Mr Doran says there are a number of factors that keep the industry doing things the same way, which can be categorised as historic, cultural, and psychological at the personal level.

“Historic approaches in engineering: hierarchical organisational structures, and education that has followed long held theories with one right answer and success from repetition (for example in the way we build roads), all have the heavy effect of keeping us in familiar and stable paradigms.

“Culturally, as asset managers we take the minimisation or elimination of risk as being a bestowed responsibility and typically respect logic, rationale and critique rather than ‘out of the box’ questioning as being our dominant guides.

“Psychologically, we not only tend to follow familiar thought and action patterns and are blind to unconscious assumptions, but we have an underlying awareness that pushing a different line may be a ‘bad career move’ and that the outcome with innovative efforts holds no guarantees, or worse, leads to a self-defining personal failure.”

While these all need to be taken into consideration, Mr Doran says that companies do have the ability to overcome these factors and be more innovative in their asset management plans.

“The good news is that the strengths that are common among asset managers, such as systematic thinking, turning principles into working realities, and measuring success actually, enable us to be among the most effective innovators of all, if we are given an appropriate policy environment and adopt the right tools and frameworks.”

Laura Harvey is a fifteen-year veteran of trade publishing in the energy and infrastructure sectors. Currently she’s the Editor of Utility’s sister publication, Energy. During her time in the publishing sector, Laura has seen significant changes to the way the sector operates. What has remained constant throughout her career, whether she’s working on a magazine, a blog post, a video or an event, is her focus on connecting audiences with quality, engaging and thought-provoking content.

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