Opinions expressed by Entrepreneur contributors are their own.
Maintaining intangible assets is critical for businesses of any size or industry. From a small business with a few employees to a multinational enterprise, organizations must understand their intangible assets, their value, life cycles, transformations and their potential applications at different stages. Without this knowledge of the underlying assets, businesses would be unable to maintain their assets effectively, leading to waste instead of profit in a timely manner.
This need has become significantly more critical in the digital age, where knowledge-based SMEs are driving economies, and their underlying assets are more intangible than physical. Every day, we hear news about business acquisitions with astronomical dollar figures, many based on intangible assets like intellectual property and information. Intangible assets, unlike physical assets, are dynamic — they live, evolve and transform throughout their lifecycle.
The maintenance of intangible assets requires a robust, iterative management system to track their performance and ensure alignment with business objectives. ISO 55001 provides a framework to support this, enabling organizations to strategically manage intangible assets for long-term success.
Related: How Intangible Assets Affect Business Value
Digital businesses and intangible assets
Business assets enable the business objective. In fact, the business objective itself is an asset when it utilizes the capabilities of its stakeholders. There is a direct relationship between the business objective and the value of its enabling assets. As the business objective utilizes assets more, the asset’s value increases. Increased demand from the business objective can push the asset further away from it.
Businesses need the right competencies and infrastructure to utilize their assets. It is essential to map intangible assets and business objectives iteratively and consistently to ensure a timely understanding of their relevance to each other. This ongoing alignment helps organizations determine whether their evolving intangible assets continue to support business objectives and if those objectives still have the capacity to leverage the assets effectively.
Such a practice enables better decision-making regarding asset transformation or optimization, ensuring sustained value creation.
What is ISO 55001?
The dynamic nature of intangible assets demands a structured approach to asset management. ISO 55001 specifies requirements for establishing, implementing, maintaining and improving an asset management system. It applies to all types of assets and organizations, helping businesses manage assets effectively throughout their lifecycle, enhancing value creation and supporting the achievement of strategic objectives.
ISO 55001 provides a baseline framework to add structure to asset management practices. It enables organizations to initiate processes iteratively, from identifying their business assets as a portfolio to continually monitoring and improving asset performance.
Related: 8 Things You Must Do to Protect Your Assets
Intangible assets — evolution and transformation
The implementation of ISO 55001 as an asset management system leads to predetermined processes that can be initiated iteratively to identify business assets and ensure their continual performance. These processes are essential for the proper management of intangible assets, as their nature differs significantly from physical assets. Intangible assets evolve, and their lifecycle is marked by transformation. The management system’s iterative approach should empower organizations to understand this evolution and transformation.
To effectively manage intangible assets, organizations must first define their asset management objectives through the strategic asset management plan. This requires a shift in mindset, from focusing on physical assets to recognizing the dynamic and evolving nature of intangible assets.
Continual monitoring of asset performance is crucial to ensure consistency between assets and business objectives. The question remains: Does your asset performance still enable the business objective? Intangible assets, unlike physical ones, may evolve to a point where the business objective no longer has the capacity to utilize them effectively. This evolution triggers the need for transformation, potentially turning an intangible asset into a product for sale.
The complexity of valuing intangible assets
Valuing intangible assets is significantly more complex than physical assets. Their value must be determined based on their evolution and the business objectives they can enable at each stage of transformation. This complexity adds another layer to asset management, making ISO 55001 a critical tool for businesses navigating the challenges of managing intangible assets.
There are best practices that can be utilized in the valuation of intangible assets within a management system, as defined by organizations like the AICPA. These practices emphasize transparency, consistency and the application of rigorous methodologies. For example, following AICPA’s guidelines on fair value measurement ensures that intangible assets such as intellectual property and customer relationships are evaluated with precision. These guidelines encourage clear documentation, regular performance reviews and alignment with strategic objectives to maintain the reliability of asset valuations throughout their lifecycle.
Integration of ISO 55001 with other management systems
ISO 55001 follows the Annex SL high-level structure, which enables seamless integration with other management system standards like ISO 20000-1 (IT service management). Since they share a common structure, organizations can more easily implement and manage multiple management systems simultaneously, creating efficiency in governance and oversight. This allows for alignment between asset management and IT service management practices, promoting better control, risk management and continual improvement across different functions of the organization.
Related: The How-To: Protecting Your Intellectual Property As A Small Business
ISO 55001 offers businesses a critical framework for managing the unique challenges of intangible assets in the digital age. Its structured, iterative approach ensures that these dynamic assets evolve in alignment with business objectives, supporting value creation and long-term success. By facilitating continual monitoring and adaptation, ISO 55001 helps organizations not only maintain but also strategically enhance the performance of their intangible assets, ensuring they remain a key driver of business growth in an increasingly knowledge-based economy.
