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Asset Management – Challenges for Defence Financials

Asset management is a buzz word for business. But like so many buzz words, organisations jump on the band wagon before really drilling into what it means for their people and the business itself.

For the defence forces, there are certain challenges in asset management, and we take a closer look at one in this article: finances.

Firstly, it’s important to realise that asset management looks different for different businesses. There are no two processes alike, and what works for one organisation won’t necessarily work for another. Certainly, within the defence forces, a complex body with competing demands and structures, a deft approach is required. Secondly, asset management should never be done as a knee-jerk reaction. Asset management works best when planned as a whole-of-business venture, one that will benefit its people first, then processes and procedures, and finally lead into changing the workplace culture, for its overall betterment.

With these two points in mind, let’s look at how defence can implement asset management with a focus on capturing costs against operating intent.

Defence traditionally is held within the government sector. Its finances come from the treasury coffers, and you’d imagine there would be rather stringent processes for the spending of it. ‘Defend every cent’ is one way to put it. Another way is through the lens of a relationship: one holding the purse, and another suggesting ways in which that money should be spent. Not unlike a regular household in the 1950s: the male spent his days working, the female at home, with or without children, and no money other than what her husband had given her for housekeeping. The female had a responsibility to her husband, in some cases she needed to report back how that money was spent, other times she needed to ask for more when additional, unplanned costs popped up. This was an ad-hoc way to manage a household. It’s not the way of asset management. It’s not the way for organisations to forge and grow and become more profitable.

Within defence, however, asset management looks different for land, navy and air. And this is where asset management gets tricky. What works for sea-worthiness may not work for air-worthiness. For any business implementing asset management, inconsistencies can undermine best efforts. For defence, however, inconsistencies are unavoidable, yet must be meshed into an infrastructure that is fit-for-purpose, embraces all services of defence, and is fluid, flexible, and impactful.

It is through planned infrastructure, setting in place accountability frameworks that take in the requirements of each service, where the costs effectively capture the operational components within defence.

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