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Reliability Roadmap SeriesVolume 1 Issue 1

A Strategic View ofEnterprise Asset

Information Management

Compiled and edited byTerrence OHanlon, CMRP

Publisher

Reliabilityweb.comRELIABILITY Magazine

Uptime Magazine


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Downloaded from Reliabilityweb.com on the web at http://www.reliabilityweb.com

Copyright 2005 NetexpressUSA Inc. All rights reserved. 2

Table of Contents Page

Introduction by Terrence OHanlon, CMRP, Reliabilityweb.com 3

Enterprise Asset Management (EAM) - Why functionality is notenough by Dave Loesch, Oracle

4

Best-of-Breed Versus Integrated EAM for Asset-intensiveIndustries by Ian J. Wray Vice President, Indus International

22

Enterprise Asset Management (EAM) vs. Best-of-BreedComputerized Maintenance Management Systems (CMMS) byDave Slagle, Wabash Alloys Corporation and Scott Hollowell,Asset Management Solutions, LLC

27

Visionary EAM by Richard MacDonald, SPL WorldGroup, Inc. 34

Focus on the Bottom Line, Not on Software by Brian Maguire,Ivara Corporation

44

CMMS Best Practices by Terrence OHanlon, CMRP 48

Summary by Terrence OHanlon, CMRP 60
http://www.reliabilityweb.com/http://www.reliabilityweb.com/


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Introduction by Terrence OHanlon, CMRP, Reliabilityweb.com

For the past several years, we have been conducting research into enterpriseasset management (EAM) systems. These systems are also referred to ascomputerized maintenance management systems (CMMS). Although there isa major difference in scope and definition between an enterprise assetmanagement system and a computerized maintenance management system,our area of interest focuses on information technology that is dedicated tothe management of physical assets across an entire enterprise, regardless ofthe name or title bestowed upon it by marketing professionals or industryanalysts.

There are major shifts taking place both in the increased corporateawareness of the need for effective and efficient asset management and inthe capabilities of enterprise asset management systems that are part of anintegrated suite of enterprise resource planning (ERP) that enterprises use to

manage all company activities including finance, human resource and supplychain.

Previously, most enterprises found that specialized best of breed were amore logical choice to manage asset information because features,functionality and usability were generally superior. Most recently the gapbetween integrated suite applications and best of breed is shrinking.

The intersections of these factors were the drivers that caused us to compilea report from several industry experts to examine these issues morecarefully. Although several of the contributors have vendor specific agendas

to press, and make very strong points (usually in their own favor) we cautionyou to use your own decision tree as a reality check. We have attempted tokeep a vendor neutral viewpoint as the Reliability Roadmap is not intended tobe a supplier guide.

We hope that you will get value from the first of what we hope will be acontinuing series designed to guide your journey to reliability.

- Terrence OHanlon, [email protected]


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Enterprise Asset Management (EAM)Why functionality is not enough

by Dave Loesch, Oracle Corp.

http://www.oracle.com

Summary

Maintenance departments often own the evaluation and selection ofthe Enterprise Asset Management (EAM)/ComputerizedMaintenance Management System (CMMS). Maintenance can drivethe decision or is allowed to own a stand-alone system. However,larger economic forcescorporate governance, globalization, thepace of technology change etc.are drawing maintenance into theenterprise information paradigm. These forces are driving a major

shift in what applications will be available for maintenancedepartments to buy and deploy.

Table of Contents
http://www.reliabilityweb.com/http://www.oracle.com/http://www.oracle.com/http://www.reliabilityweb.com/


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The Application Software Market A Short Primer

Component Software The First Tremor in Application Software

The Decline and Fall of Point MarketsPoint Solution Vendors The Challenge AheadEAM: The Only Constant is ChangeEconomies of Scale A Battle a Point Vendor Cant WinIntegration The Achilles Heel of Point SolutionsInterfacing The Long and Winding RoadUpgrades The gift that keeps on givingSummary

List of Figures

Figure 1 Point market leader revenue trajectories

Figure 2 EAM market history

Figure 3 EAM technology components

Figure 4 EAM integration - Suite

Figure 5 EAM Integration Point Vendor


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The Application Software Market A Brief History

Software applications for business emerged in the 1970s when mainframeswere used for financials, human resources (HR), payroll and other back officefunctions. The number of business applicationsfrom spreadsheets tomaintenance managementexploded in the 1980s and 1990s. One analystestimates over 10,000-business application software packages have beendeveloped.

Throughout these three decades, software economics were remarkablysimilar. Companies formed around a new idea and the best developmenttalent was recruited. When combined with good management, the newmousetrap providers often attained market leadership. Although integrationand deployment cost were considered, the main driver in application softwaremarket was functionality.1

1For this paper, functionality is considered to include the depth of the businessprocess support and the applications usability.

Competitors often engaged in games of functional leapfrog. Company Awould ship feature 1 and Company B would announce the same function inits next release. B would raise with a new set of features so A wouldretaliate. (And, so on.) Although companies liked to be first, they werent shyabout copying (or re-naming) competitor functions. To insure customerswould fund new development, vendors aggressively marketed support

(maintenance) agreements to

Application software markets remained largely feature/function driven, butthere were indications the best product didnt always win. Many still feelVisiCalc was a far superior spreadsheet than Excel, but VisiCalc has beenrelegated to Trivial Pursuit while Excel owns over 90% of the market.Although not an application, the desktop operating system is perhaps thebest example. Most users admit that Macintosh had a far simpler and morerobust operating system than Windows. (Remember the quip? Windows 95 =Mac 88!) Once again, market power beat out functionality and today

Windows owns nearly 95% of the desktop market.

Application software companies often ignored these signals because theyonly seemed to apply to the Redmond behemoth. (As long as Microsoftdoesnt get into our market, we can focus on adding function!) However, theenterprise application software market has reached a watershed. Althoughusers require functional systems, attention has shifted to integration, ease ofdeployment, total cost of ownership, and the support ecosystem. (That is,


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the availability of bolt on products and systems integrators/consultants todeploy the technology.) While application software products must satisfyusers business requirements, companies cant ignore how their businesssystems interoperate or how much the technology infrastructure costs tosupport.

Component Software The First Tremor in Application Software

In the early 1990s, it was popular to discuss how application software wastransitioning from an artisan craft (i.e. highly specialized programmers whocreated their own unique masterpieces) to a mass production model whereindependently software components would interoperate seamlessly. Insteadof monolithic software programs developed by the same company, software

applets would share information and automate business processes. Theautomobile industry was a common analogy. In early automobile

manufacturing, there were hundreds of vertically integrated companies.Instead of using Allison transmissions or Fram oil filters, each companydesigned and manufactured every component from tire to engine. As we allknow, the automobile industry realized the inefficiencies and adopted

standardized parts that could plug into multiple manufacturing platforms.More than a few technology watchers expected software to evolve alongsimilar lines.

Much of this speculation was based on object-oriented technology.Developers could build software objects (purchase order, work order,inventory item etc.) while standards (OAG, IPC, ISA etc.) would insure the

objects could share information. While object oriented remains a populardevelopment paradigm, the promise of interchangeable software componentshas not occurred.

Despite the failure of component software, many market watchers still seeparallels between application software and the automobile industry. Just asthey used to talk about the Big 3 in the automobile industry, applicationsoftwares Big 3 might turn out to be Oracle, SAP and Microsoft. While Tier2 and Tier 3 suppliersincluding integrators and bolt on productscannotdevelop offerings that are interchangeable across all of the Big 3, these

companies do develop products and services specifically for the Big 3platforms. (i.e. Oracle, SAP and Microsoft products or practices.) Applicationsoftware may not have embraced standardized parts in the same manner asthe automotive industry, but similar dynamicsparticularly in economies ofscale and aftermarkets--are playing out in remarkably similar ways.


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The Decline and Fall of Point Markets

Point solution vendors establish a value proposition based predominantly ona single premise: software functionality. They secured customers becausethey understood the business and built tools for a specific problem. Pointvendors have built businessesin some cases approaching one billiondollarsthat are dedicated to the premise that having best in classfunctionality is enough justification to implement a stand alone system.

Several market forces have converged to undermine this strategy. First,many business applications have been around for three decades and most ofthe intellectual property has entered the public domain. Employees haveswitched jobs; new companies have formed (and closed) scores of times;detailed functional specs are not only available on the Internet, but aspublished books. Second, companies rarely deployed all of the functionalityfrom these best of breed systems. Studies by companies like IBM and

others reveal that customers use about 25-30% of the functionality availablein a software application. Third, companies have started to look more closelyat the relationship between cost and return from their software applications.In many cases, the application software packages did not deliver theexpected return on investment (ROI). Companies realized that the best(functional) product did not guarantee ROI. Fourth, the technologyinfrastructure need to maintain the proliferation of point solutions hasconsumed enormous amounts of financial and human resources. One Fortune100 Company reportedly made a global ERP award based on the fact thatthey were spending $100M a year evaluating ERP systems alone! Finally,global competition also undermined the point vendor strategy. When yououtsource manufacturing to China and your customers are on threecontinents, a companys information system can no longer operate inisolation. While its a given that you need world-class supply chainfunctionality, its equally as important that your systems seamlessly shareinformation across the enterprise as well as interoperating with the externalsystems of suppliers and customers. While point solutions pride themselveson their stand alone stature cloaked in an aura of superior function, itsan untenable solution in a global market.

In the 1990s, software providers started to realize customers were interestedin more than functionality. Customers needed applications that seamlesslyshared information, but did not explode IT costs. Vendors like Oracle, SAP,

PeopleSoft, Baan, Microsoft and others began to assemble applications intoEnterprise Resource Planning (ERP) suites.

With few exceptions, suite vendors followed the same path for developingtheir ERP suites. Most started with financials and added discretemanufacturing and order management. Next came process manufacturingfollowed by supply chain, customer relationship management (CRM) and


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enterprise asset management (EAM). The trajectory of each point marketincluding what happened to the market leaderis remarkably similar:

Financials & Discrete Manufacturing

The first point market to dissolve was financials. In the 1980s, there werecompanies that developed only financial systems (Coda, Cedardata,Dynamic Business Systems, Cyborg et al.) These companies were drivenout of business by the ERP companies (Oracle, SAP, PeopleSoft, JDE etc.)who integrated financial systems with discrete manufacturing and ordermanagement.

Process Manufacturing

The next point market to fall was process manufacturing. Companieslike Ross, Datalogix, and Marcam made early impact deliveringmanufacturing systems specifically built for process manufacturing(lots/status/grade; catch weights; concurrent unit of measure, etc.) Afterthe acquisition of Mapics, Marcam even exceeded $200M in annualrevenue. Today, both SAP and Oracle have fully integrated process-manufacturing solutions and all of the major process specialists have beenabsorbed by other companies (SSA acquired Infinium; Invensys absorbedMarcam; Chinadotcom acquired Ross etc.)

Supply Chain Management

In the late 1990s, supply chain was the next killer app. Companies likei2 and Manugistics racked up impressive customer wins and stunningrevenues. i2 was the recognized market leader and nearly reached $1B inrevenue. Today, the Big 3 all have embedded supply chain products andi2s top line has plummeted 60% to $375M.

Customer Relationship Management (CRM)

Siebel was the acknowledged market leader and in 2001 exceeded $2B inrevenue. Like financials, process manufacturing and supply chain before it,the future of the CRM point market became clear when SAP, JDE,PeopleSoft and Oracle all announced their own CRM products. Siebel hassuffered an i2-like decline, seeing top line revenue drop to $1.3B.

Enterprise Asset Management (AM)

The first EAM commercial software package was shipped in the early1980s. First generation (green screen) leaders were companies like TheSystem Works, Flour Daniel, Tera, Systems Coordination et al. Thesecompanies delivered sophisticated and integrated maintenance (asset andwork management), materials management, purchasing and accountingsystems (mainly invoice processing although a few vendors developed full


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blown AP and GL systems). These green screen systems dominated themarket until MRO Software (then Project Software and Development)launched a new paradigm with the delivery of its Maximo 3 client/serversystem. Indus (after evolving from Tera and merging with TSW),Datastream, and Mincom joined MRO as EAM market leaders in theclient/server world.

ERP companies also started to explore the EAM market. In 1991, Marcamacquired ShawWare, a Canadian provider of CMMS. Pivotpoint (nowMapics) acquired Sofwave. By the mid-nineties, SAP and JDE wereshipping adaptations of their discrete manufacturing systems aimed atmaintenance.

In 2000, another discontinuous event shook the EAM market: theemergence of Web-based systems. This time, Datastream took the earlylead with its Internet architecture. However, Indus, MRO and Mincom

quickly followed suit and a new participant, Oracle, worked with ALCOA todeliver a browser based solution in 2002.

In a story retold many times, the EAM market faces the same dynamicthat SCM and CRM before it. In 1998, Indus was the #1 EAM share leaderwith nearly $180M in revenue. Today, Indus EAM revenue has plungedbelow $100M. Mincom, once a $140M company, has also suffered aserious decline. Datastream reached $118M, but has remained stuck at$90M for several years. MRO has stayed the closest to its record revenuelevels (~$180M), but if $2B companies like PeopleSoft cant survive asstandalone entities, what chance does a company like MRO have?


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$1,200

$2,100

$908

$375

~$80$202

~$60$180

Siebel

i2

Marcam

IndusOracle

&

SAP

Shipping

Competitive

Products

NoComparable

Products

Available

From

Suite

Vendors

(2001)

(2003)(2002)

(2005)

(1995)

(1998)

(2005)1

(2005)2

1990 2000 2004

Figure 1All of the precipitous declines in point market leader revenues can be attributed to the sameevent: the announcement of a similar product in the offerings of suite vendors like SAP andOracle.

1Estimate. Indus does not report EAM revenues separately after acquiring several companiesrepresenting about $60M. (Total revenue = $143M)

2Estimate. Marcam has been acquired by Invensys and does not report process software revenues

separately.

Point Solution Vendors The Challenge Ahead

Although point vendors often start with a functional lead, the differenceserode over time. JDE and SAP started developing EAM products in the earlynineties. With its third major release (11.5.10, which shipped in November2004) Oracle has delivered an EAM solution that is equivalent to any fixedplant or facilities solution available. While point vendors seek to defend nichemarkets in specific verticals or through value added extensions, suitevendors have much larger R&D staffs (measured in the thousands comparedto the point vendors hundreds). Perhaps more importantly, suite vendors

deliver important technology components (business intelligence, workflow,document management, integration middleware, application developmenttools etc.) that insulate customers from technology shifts (e.g. client/serverto Web-based applications.) Because point vendors dont control (or eveninfluence) the technology stack, they (and their customers) must wait asthe new technology foundations are evaluated, tested and deployed. Suitevendors, especially technology companies like Oracle and Microsoft, areembedding more technology in their applications, which allows the customerto continue to use the same business applications across technology shifts.


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Integration

15 yrs. 10 yrs. 7 yrs.???

Mainframes Dept. Systems Client/Server Browser

60s/70s 1993 20001980

Functionality

Usability

Effective

AssetMgmt.

Evolution of EAM Systems

Figure 2

The trajectory of EAM software products through the major market shifts. Although integration andusability are constantly improving, functionality (the red line) drops each time a new technologyplatform emerges because the vendor has to re-develop the application. Because the product lifecycleof the technology platforms is shrinking, vendors have less time to develop the application andcustomers are often confronted with a new technology version that never matches the functionalityof the previous version.

Whenever a new technology appears (green screen, client/server, browseretc.), the EAM vendors have to start product development over. Thecustomers suffer through a multi-year process of waiting for the vendor tobuild into the new system what they had learned to rely on in the previousgeneration.

A further complication is the compression of technology lifecycles.Mainframe-based CMMS first emerged in the mid-seventies and remained onthe market for about fifteen years. Departmental systems (green screen,VAX/IBM-based etc.) appeared in the early eighties and lasted about tenyears. MRO shipped the first EAM client/server system in 1993 and by 2000all major vendors had adopted browsers. Although no one knows how longbrowsers will last, we can be sure that a new technology will emerge and, ifhistory is a guide, it will probably be in something less than seven years.


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The Only Constant is Change

Futurists have noted how the pace of change in our new information societyis accelerating. One of the more popular observations is how the sum ofhuman knowledge is doubling at something less than seven years.

The EAM market has experienced its own knowledge explosion in the formof decreasing technology lifecycles illustrated in Figure 2. While maintenanceusers tend to look past the underlying technology, many companies know thetechnology foundation is vital. For example, most EAM client/server solutionsinvolved 3rd party products that allowed users to tailor the system (e.g.change field labels). All EAM point vendors rely on 3rd party products fordocument management (check in/check out, version control etc.) andworkflow (e.g. safety approvals in a Process Safety Managementenvironment). Integration middleware and business intelligence tools arealso supplied by 3rd parties.

While the point vendors are adept at concealing the source of many of theseproducts through private label agreements or orchestrated salesdemonstrations, the implications must be understood. More than one EAMpoint vendor has suffered through a partner exit. (e.g. Identitech/Indusand Gupta/MRO.) Technology does matter to the user when a new release isreleased and the customer has to take a step backward.

The suite vendors are increasing adopting similar strategies when it comes toapplication technology: they build it themselves. Suite vendors simply cant

afford to build applications on technology that may disappear and strandtheir clients. While SAP addresses some of these technology elementsthrough its NetWeaver product, Oracle and Microsoft are particularly focusedon delivering the technology stack as part of their application solution. Byintegrating workflow, document management, application development tools,business intelligence, integration middleware and even the database with theapplication, the customer is isolated from the disruption created whentechnology changes and smaller companies are driven from the market.


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USiYesASP

WebsphereYesApplication Server

MicrosoftYesDatabase

WebmethodsYesIntegration

iPlanetYesSecurity

FileNetYesWorkflow

HummingbirdYesPortal

CognosYesBusiness Intelligence

Point VendorsOracleSolution Component

Common EAM Technology Components

Figure 3Most EAM projects require the above technology components. Whereas point vendorsmust investigate, develop, and test joint solutions with the third-party suppliers, suitevendors generally build the components themselves. Most importantly, the developmentand support of these components is provided by the suite vendor and not a third partycompany, which insulates customers from bankruptcies, strategy shifts, and marketevents over which they (or the point vendor) has no control.

Because technology change is a constant, EAM customers are at risk withpoint vendors that dont control the underlying technology. Suite vendors notonly have the development staffs to devote to foundation technologies, anintegrated technology and application allows customers to continue use theapplication through the technology shifts. (What large enterprise could affordto make an overnight replacement of dumb terminals with PCs?) On theother hand, point vendors have to completely re-construct technologypartnerships when the market changes. This forces them to aggressivelyincent customers to move to the new product so they can generate new sales.

Economies of Scale A Battle a Point Vendor Cant Win

Although point vendors tout their ability to deliver more functionally richsoftware, the economic reality is they are considerably overmatched in termsof development staffs and resources. The largest development staff amongEAM point vendors doesnt reach 400 people. On the other hand, suitevendors R&D departments approach 10,000 developers. Point vendors willcommonly dismiss this comparison because all of our developers are focusedon maintenance and the suite vendors developers are working on HR,financials, and other non-maintenance applications.


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While this is a common observation in sales cycles, viewing information asdepartment silos reveals a fundamental weakness of the point vendorstrategy. If you are interested in Asset Lifecycle Management, dont you wantaccess to all departments/systems that affect the asset? (Can you reallymanage assets with access to depreciation schedules?) If you want to moveasset management into the language of business (Forrester Research June30, 2004), doesnt EAM need to interoperate with other business systems?Doesnt maintenance want to leverage technology and resources that exist inother parts of the enterprise? (Are tracking training and certifications in HRreally unrelated to maintenance?)

Another challenge facing point vendors involves multiple product lines. Everytime a software company creates a new code line, they must spreaddevelopment resources (programmers as well as QA, documentation, releasemanagement, QA etc.) across all supported products. Most point vendors willclaim they support one code line, but the reality is much different. Forevery product being supported (i.e. the vendor is receiving support

revenues), a software company needs developers (bug fixes, troubleshootingetc.) Furthermore, every vertical package (transportation, nuclear etc.)requires additional resources.2 Maintaining multiple products also affects thevendors ability to service customers. For each iteration sold by the vendor(IT, nuclear, oil/gas etc.), implementation and support resources arerequired for each version.

2MRO has separate code sets for IT asset management; T&D utilities; transportation and other vertical

segments. Indus maintains several products including Passport, EMPAC, InSITE, Wishbone andBanner. Datastream continues to invest in MP2, 7i, MaintainIT Pro, and Tire Tracking.

Point vendors simply cant keep up with the much larger and better-fundeddevelopment staffs of the suite vendors. They cant leverage advances thatcome from other markets (e.g. HR) and they dont control the technologythat not only insulates the customer from market shifts, but also addssignificant value to the applications power, performance and usability.Finally, point vendorsthe companies that can least afford to divert limiteddevelopment resourcesmust build and support the integration to the suitevendors applications (HR, purchasing, GL etc.).

Integration The Achilles Heel of Point Solutions

With global supply chains and high-speed networks, the world is indeed asmaller place. Competitors can emerge overnight and costs can be slashedby an order of magnitude through the intelligent use of technology andpeople. In turn, competition encourages customers to be more demanding.They demand customized service at a lower cost with shorter lead times. To


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meet these requirements, suppliers need visibility not only in their own valuechain, but into the customers as well.

All this requires tighter information integration at all levels of theorganization. You can no longer afford to have the order management

system upload orders to the production system daily. Maintenance capacitydemands can no longer be managed through infinite capacity models. Thetime lags introduced through disparate IT systems can cripple a companyscompetitiveness.

Suite vendors are uniquely qualified to deliver what customers require:integrated, real-time information. While almost every point vendor has a

prebuilt integration kit to suites like SAP and Oracle, these products aregenerally limited to communicating monthly general ledger charges. Moresophisticated options are availablee.g. allowing a suite vendors purchasingsystem to accept maintenance requisitionsbut they add to the cost and

complexity of the project. Furthermore, point system integration cannotmatch the integration offered by a vendor who builds the entire solution. Forexample, Oracles eAM system has over sixty integration points to the E-Business Suite. (Figure 4) This includes basic touch points like inventory,purchasing and the general ledger, but also includes projects, manufacturing,property management, supplier portals etc. Not only are these integrationswarranted to work out of the box, they are automatically preservedthrough software upgrades.

Another limitation of point solutions is the time lag introduced by theinterface to the ERP system. Although it is technically possible to have real-time communication between separate applications, the cost and complexityof the hardware and network infrastructure is so great that is almost neverdeployed. This means almost all interfaces are executed through monthly,weekly or daily batch uploads. Introducing time lags into your IT systemstranslates into higher inventories, more equipment redundancy and lowercustomer satisfaction.

Another limitation of deploying multiple business systems is data quality. Youenter customer orders into Order Management System A. The masterproduction schedule in System B accepts an upload of orders from SystemA and allocates people and material for the necessary work. But, thecustomer changes the Order and now the order backlog is different inSystems A and B. Which system is right? The user of a particular systemmost often decides the right answer. With multiple business applications,the manufacturing system isnt going to get notified until its update by theorder management system. The ripple effect of these data silos is magnifiedas you traverse the systems for inventory, maintenance, purchasing,transportation etc. One of the biggest challenges in an environment withmultiple systems is knowing where to get the right answer. However, awell-architected suite solution integrates all enterprise information andinsures a single source of truth.


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Enterprise information architectures built on a multiple point solutions neithersupport real time information integration nor a single source of truth. Asyour competitors strive for better customer service and faster response timesbuilt on seamless information sharing, companies that rely on point solutionswill find themselves managing a more costly technology environment withinaccurate or out-of-date information.

Interfacing The Long and Winding Road

Companies that can live with the time lag and data quality of a point strategy,still face the challenge of building the interfaces between the various systems.The EAM system needs to interface to the financials system to post labor andmaterial charges and process invoices. (Corporate governance requirementswill necessitate the implementation of even tighter controls.) EAMinteroperates with supply chain systems for inventory and purchasingmanagement. Companies seeking to manage the entire asset lifecycle or

integrate maintenance with the enterprise will want to interface EAM to thefixed assets register, capital projects, manufacturing and other systems.

Call it integration, interfacing or flat file transfers, the process is basically thesame. Information stored in one system has to be extracted and uploaded tothe other. Since the tables, fields, and programs of the respective pointsystems are built by different developers working for different companieswith different perspectives and objectives, the systems must be translatedand mapped to each other. (e.g. the fixed assets definition of a location maybe different than the maintenance departments.) Someone has to mapSystem A to System B and make sure the right information is being

transferred. They also must insure the information being transferred has acompatible format (data type, length etc.) so information is not truncated orlost in the transfer. The interface designer also has to insure each systemsvalidation rules are enforced. Are there checks in one system for purchaseorders over $10,000? Does one system restrict all work orders to a set ofvalid account codes? The data constraints must be understood in eachsystem and the interface must enforce these rules otherwise the process willfail.

Most software developers can design and build a simple interface in ten-to-fifteen days. (About $20K.) An example of a simple interface would betransferring a fixed asset to a maintenance (EAM) register. (Assuming the

interface is a simple one-to-one transfer and no scrubbing logic is introducedto decompose the fixed asset into maintenance-specific components.)

At the other end of the spectrum are complex interfaces involving hightransaction volumes and touch multiple points. For example, consider acustomer that has selected an EAM point solution to interface with itscorporate ERP system. The EAM system manages maintenance labor andmaterials and the ERP system manages purchasing and accounts payables.


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An MRO item is received and updates the EAM inventory system. From thereceiving transaction, the ERP purchasing system has to be updated as wellas the accounts payable system (if three way matching is required). Acomplex interface like this will likely cost $75-100K.

ERP-EAMOver 60 Integration Points

Product &Maint WO

TransactionsCosts

Updates

WO Updates,Catalogs EAMEAM

ProcurementProcurementProcurement ManufacturingManufacturingManufacturing InventoryInventoryInventory ProjectsProjectsProjects ServiceServiceService

SuppliersSuppliersSuppliers

Changes to CapitalizedAsset Depreciation

Service RequestLinked to

WOR / WO

WO Materials,Reqs Linked toWO & Workflow

CustomersCustomersCustomers

Time &Attendance

Time &Time &

AttendanceAttendance

Receiving

Project / Task,WO Costs

AccountsPayable

AccountsAccountsPayablePayable

GeneralLedgerGeneralGeneralLedgerLedger

AccountsReceivableAccountsAccounts

ReceivableReceivableFixed

AssetsFixedFixed

AssetsAssetsProperty

ManagementPropertyProperty

ManagementManagementHuman

Resources

HumanHuman

ResourcesResources

PostingIntegration

Chart ofAccounts

WOBilling

DepreciableAssets

Requisition & PO Changes, AP-to-PO Matching & Reconciliation

Employees &Skills

MaintainableAssets

TimeEntry

Figure 4

All point vendors have some form of standard ERP integration product that costs anywherefrom $35-75K to license. This standard integration kit addresses only a limited number offunctions (e.g. posting work order costs to the general ledger), which in many cases are oneway (sending requisitions to purchasing, but not updating the work order with deliveryinformation.) Figure 5 below illustrates the most common touch points in these standardadapter kits.

Although the point vendor will emphasize the standard nature of their suiteadapters, there is no way to implement these products out of the box.Every software implementation involves parameter settingHow are workorders numbered? Can work requests be entered without an asset number?Are jobs costed at a standard or employee rate?which determine howinformation is processed. It is impossible for a point vendor to develop astandard integration template and automate these parameter settingsbecause each customer installation is different. Although you will spend $35-75K on the point vendors adapter license, in every case there will be timeand materials professional services required to get the interface intoproduction. In a simple environment (e.g. posting work order costs to thegeneral ledger), the professional services required may only a few weeks. Inmore complex interfaces (maintenance, purchasing, accounts payables etc.),


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the services required can be two-to-ten times the adapter license. (One pointsolution vendor routinely instructs customers to budget $100K for interfacingto Oracle even though it offers a standard adapter.)

Point Solution Integration ModelLimited Transactions with Less Visibility

PointSolution

PointSolution

ProcurementProcurementProcurement ManufacturingManufacturingManufacturing InventoryInventoryInventory ProjectsProjectsProjects ServiceServiceService

SuppliersSuppliersSuppliers CustomersCustomersCustomers

Time &Attendance

Time &Time &

AttendanceAttendance

AccountsPayable

AccountsAccounts

PayablePayableGeneralLedger

GeneralGeneral

LedgerLedgerAccounts

Receivable

AccountsAccounts

ReceivableReceivableFixed

AssetsFixedFixedAssetsAssets

PropertyManagement

PropertyPropertyManagementManagement

HumanResources

HumanHuman

ResourcesResources

Figure 5Point solution standard integration toolkits (e.g. Datastreams Databridge, Indus OracleAdapter, MROs Oracle Adapter etc.) focus on posting on work order costs to the generalledger. Some offer touch points to purchasing (sending a maintenance requisition to the

suite vendors purchasing system) while none offer standard interfaces to enterpriseapplications like manufacturing, projects, property management or accounts receivables.

Upgrades The gift that keeps on giving

Even if a customer effectively constructs all the interfaces needed to shareinformation internally and externally, the challenge of keeping these systemssynchronized through upgrades/new releases still remains.

Software companies average one major release per twelve months. In fact,the package vendors value proposition is almost entirely predicated on

software updates. After all, if the vendor doesnt regularly issue new releases,how do they justify support fees? If customers cant rely on vendorsupgrades, wouldnt it be better to build their own system?

Although vendors minimize the impact of upgrades on daily operations,software upgrades require software re-installations, data conversions, anduser training. Interfaces to other systems must also be redeveloped, installedand tested. And, of course, normal operations are disrupted, which often


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results in IT and line of business overtime and additional contractor fees.Now consider the upgrade landscape if you have an ERP (i.e. financials,manufacturing etc.) and an EAM system. Since each vendor is likely targetingone major release each year, a customer that wants to stay current on bothproducts faces two major upgrades each year.

Most annual upgrades take about ninety days to plan for and implement.(Some can take six months or longer.) If you signed up for two majorupgrades each year (one EAM, one ERP) you could consume at least half theyear upgrading/re-implementing software.

Furthermore, upgrade pain is not limited to major releases. Everyapplication is regularly patched to improve system performance and resolveproblems. Its not uncommon to apply several patches to a major applicationeach year. Between two applications, a customer might need to apply apatch once a month. Although a patch is not as complex as a major upgrade,they often cause unforeseen problems. Consequently, even minor patches

require testing before going into production. And, since vendors dont testpatches against another vendors product, the chances that the interfacescontinue working through even a minor patch is low.

Point vendors often do have certified interfaces to ERP systems thatvalidates their product is tested against the ERP system. However, there areseveral aspects of the certification process that customers should consider:

1. Point vendors test against the last generally available (GA) versionof the ERP system. That means certified interfaces generally lagthe current version by at least one major release. Adopting a point

vendor strategy all but guarantees you will be running yourbusiness on older technology.2. Interfaces are certified against in a vendors development lab.

Rarely, do these lab environments resemble a productionenvironment. (Hardware, network, applications installed,configuration settings, number of users, size of data files etc.)Furthermore, ERP systems have several parameters that allow thesystem to be configured to meet a customers unique requirements.For these reasons, certified interfaces never work out of the boxat a customer site. They will have to be installed and tested beforebeing placed into production.

3. The more comprehensive your interface strategythat is, the

breath and the depth of touch points as well as the frequency ofthe information exchangethe less certified the generic interfacecan be.


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Summary

Customers can no longer afford multiple islands of information. Thats whyERP vendors like Oracle and SAP have developed product offerings not onlyfor EAM, but Customer Relationship Management (CRM), Supply ChainManagement (SCM), Warehouse Management Systems (WMS), ProductLifecycle Management (PLM) and other markets that have historically beendominated by point vendors. Once an ERP vendor commits to a pointmarketas Oracle did in 2000 to EAMit is very hard for point vendors tocompete. Not only do the suite vendors have larger development staffs anddeeper and broader enterprise functionality, they also provide much of thetechnology infrastructure, which isolates the customer from technology shifts.

Product lines, development resources, and software market trends may seemremote to a maintenance department just interested in managingtradespeople and keeping equipment available. However, EAM systems are

major projects that play a significant role in defining maintenances futurecapabilities. In many cases, customers use their EAM system for ten years ormore. Customers cant afford to make a major commitment to one vendoronly to have them exit the market, retire a product, or otherwise disrupttheir use of a mission critical business system.


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availability and performance has a direct impact on customer satisfaction. Itneeds to start at the very first step in the production process, and not let upall the way through the service organization.

Inefficient maintenance practices can interrupt production schedules to thepoint at which the most sophisticated supply chain planning becomessuperfluous. In asset-intensive industries, production equipment has to befully utilized with as close to 100% up-time as possible to obtain a sufficientreturn on investment.

Broadening the focus from simple maintenance to operational excellenceis the key to having the greatest impact on the bottom line. But it is certainlyno small task. Whether a company has upstream or downstream operations,or both, the management of assets is a complex and daunting task, withmyriad cross-departmental and cross-organizational inter-relations anddependencies. To achieve operational excellence, organizations mustsimultaneously attain top performance in cost control, safety and compliance,

and production performance and reliability.

Go Deep

While ERP vendors tout a host of capabilities related to asset management,companies need more than check box solutions. For industries that areprocess-intensive and/or highly regulated (i.e., requiring compliance with theSarbanes-Oxley purchasing control mandate, OSHAs Process SafetyManagement regulations for mechanical integrity, environmental regulations,and other reliability requirements, etc.) a greater level of depth is crucial.

Asset reliability, availability and safety, as well as the management of spareparts inventory and in many cases, contract services labor are each areasrequiring close scrutiny and thorough process integration across the rest ofthe enterprise.

What were really talking about here is squeezing the most benefit out ofevery asset, every investment and every resource the company has at itsdisposal. Practical solutions which have the greatest impact on cost-savingsand service improvements win. Period. And in most cases, superficial ERP-based approaches will simply not prove practical.

For example, you cant outline an effective maintenance strategy without

knowing how and for what purpose an asset was built and as importantly,how it is actually being used. As a simple case in point, the engine in yourcar might have been designed and built to run optimally at 65 miles per hour,and the suggested maintenance schedule reflects this. If you regularly driveat 120 miles per hour, it is only reasonable to expect that you will need tomodify the maintenance schedule to maintain the expected performance. ERPsystems are not good at providing this type of asset relationship andcontingency data.


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EAM best-of-breeds can offer real-time and deep visibility into theperformance of an operation with the contingency right metrics to givebusiness managers the basis for making higher quality investment andresource allocation decisions, such as: Which assets are giving us the highest return over the entire lifecycle? What additional information do we need to direct and control ouroperations? What spares do we need in inventory to keep critical operations running? Who are our most productive and valuable service personnel and how canwe get others to match their value?

Likewise, instant and deep visibility into the performance of an operationprovides the basis for making higher quality cost reduction decisions: Which assets are costing the most over the lifecycle and should be retiredor replaced? Which assets are declining in performance and should be rebuilt or

modernized? What reports and information can we do without? What are the non-critical and least used spares that can be eliminated frominventory? Who are our least productive service personnel and what training do theyneed in order to improve their value to our company?

Since operational managers seldom have the luxury of compiling a historicalanalysis in order to support the next decision, decision support tools must beable to do this automatically and still function in real time (i.e., traveling atthe speed of business as one logistics supplier puts it). A major focus of new

generation solutions from EAM providers is the ability to collect real-timeasset performance information and dynamically use this information to sendinstant guidance or feedback to Operations. Actively sharing and proactivelyusing this information accelerates decision-making and ensures higherquality decisions.

This real-time, cross-process integration is related to a further differentiationbetween integrated and pure-play EAM approaches. This is in the ability ofeach to optimize specific sub-processes that ultimately factor into acompanys degree of operational excellence. The Purchase Order process is aprime example. 70 to 80-percent of all PO activity is related to spare partsinventory. While the dollar amounts are higher in raw materials procurement,

the volume of transactions, paperwork and process time is higher for spareparts. True EAM solutions offer specialized capabilities to simplify andautomate this massive and time-consuming process. Easing vendormanagement and purchasing takes a serious chunk of operational drag out ofthe equation.

There is also the growing trend towards outsourced maintenance and itsimpact on Operations and cost. For example, major plant facilities follow an


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annual or semi-annual process called Turn-around Maintenance, where theplant shuts down for rebuilds on major equipment. Depending on the size ofthe plant, this can involve an influx of several hundred contract workers, andthere needs to be a system in place to manage the time, cost and process ofthis new temporary workforce. Since downtime equals loss of revenue,shaving just one day off the turn-around schedule means massive value tothe company. ERP systems are not designed to adequately address theseneeds.

The impact of regulatory requirements has already been mentioned, but itbears repeating because safety is a huge concern across a variety ofindustries. Ensuring safety and proving it via a process audit trail requires deep capabilities in workflow and document management. Pure playEAM can act as the system of record in ensuring workers are properlyeducated and trained, and that policies and procedures are enforced.

A final area for consideration is in bridging the gap between failure prediction

and asset management. Best-of-breed EAM solutions do a much better job ofhelping customer optimize their maintenance mix to move from breakdownrepair to preventative maintenance and predictive analysis. The greatestopportunity to drive breakthrough performance improvements and minimizeoperational costs is with the marriage of EAM and diagnostic technologiesthat monitor and collect data on asset and process conditions and predictimpending failure. This is not a new concept, but advances in Web-basedconnectivity have fundamentally improved the value proposition. Proprietary,closed solutions, however, thwart this value. Each of the major automationand ERP vendors has their own proprietary framework for integrating EAMwith process controls. Since most businesses operate many different brands

of assets and enterprise applications, it would be a logistical nightmare tomanage all the separate and distinct application and technology interfacesthat would be required to fully support such a fragmented approach.Fortunately, there are pure EAM vendors who have embraced open, Web-enabled standards promulgated by organizations such as MIMOSA and theOPC Foundation.

Conclusion

Best-of-breed EAM vendors have a particular and deep focus on the specificcapabilities and business processes highlighted in this discussion. Forcompanies in asset-intensive industries, these capabilities are increasingly

merely the table-stakes required to compete. How effectively they areleveraged in driving operational efficiencies is what determines competitiveadvantage. When viewed in this light, the mile wide, inch deep approach ofERP vendors in adding on EAM capabilities is clearly insufficient. Real-timeand granular control of the sub-processes that constitute complete EAM (andsupport its role in driving productivity and service delivery up while keepingcosts down) wont come from the check box approach. It requires a deepfootprint and the industry-specific expertise that comes from extreme focus.


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About the Author

Ian Wray has spent the majority of his career researching how aggressivecompanies can most efficiently manage their assets, as well as determiningthe software solutions that facilitate best business practices for overalloperational excellence. Having joined Indus in the UK in 1995, Ian moved toAtlanta to manage product marketing for the EMPAC product. Currently heserves in the Indus Commercial Division.

Ian began his career as an engineer in the South African gold mines beforemoving into the asset management arena. For five years he served as aprogram manager at Paradigm Systems Technology, where he wasresponsible for the sales, marketing and implementation of the MainpackCMMS solution in the South African iron and steel industry. Ian then movedto the UK, joining Kvaerner as managing consultant. As a certified ReliabilityCentered Maintenance (RCM) facilitator, he specialized in marketing and

implementing RCM projects in many vertical industries, including food andbeverage, oil and gas, and metals. Ian earned a Bachelor of Science degreein mechanical engineering from the University of the Witwatersrand.


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Enterprise Asset Management (EAM) vs. Best-of-Breed ComputerizedMaintenance Management Systems (CMMS) by Dave Slagle, WabashAlloys Corporation and Scott Hollowell, Asset Management Solutions, LLChttp://www.assetmgmtsoln.com

EAM functionality is only achieved when the CMMS is linked to an ERP system.

The Gartner Group

Common Definitions

In the course of this paper, we will make reference to a couple commonterms for which a few definitions are in order.

ERP Systems These are known as Enterprise Requirements Planningsystems, which are computer systems that manage large elements of acompanies business, including Maintenance, Accounting, Manufacturing,

Payroll, etc. The primary ERP packages that most people know are; SAP JD Edwards Oracle PeopleSoft

CMMS Systems These are Computerized Maintenance ManagementSystems, and for a few of these software providers, they have been labeled

Best of Breed based on their market share, overall system functionality, orapplicability to specific industries. Some of these vendors include;

MRO (Maximo) DataStream

Indus Mincom

EAM Standing for Enterprise Asset Management, EAM is the new catchphrase in our industry, but is only really achieved when the Maintenancesystem is linked to the ERP systems in use by a given company.

Background

Over the past 10 years, Wabash Alloys has implemented both DataStreamMP2 and JD Edwards EAM products, as well as performed competitiveselections in which MRO Maximo, DataStream 7i, and JD Edwards EAM werecompared. This paper explores the decisions made by Wabash Alloys to

remain with JD Edwards EAM, and compares some points of view why EAM isbetter than a Best of Breed solution.
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Overview of Wabash Alloys

Wabash Alloys is a Secondary Aluminum recycler founded in 1948. Witheight production facilities in the US, Canada and Mexico, Wabash Alloys haswell over 7000 maintained equipment/Assets and employs over 125personnel in maintenance operations.

Wabash Alloys purchases aluminum scrap metals, recycles and refines themetal in furnaces, and produces aluminum alloys which take the form ofmolten aluminum metal, as well as aluminum ingots. Wabash primarilysupplies products to the automotive industry for use in castings of vehiclecomponents.

Wabash initially implemented the Datastream MP2 system in the early 1990s.This system was primarily only used at the main production plant, and usagewas inconsistent.

In 2000, Wabash Alloys purchased the JD Edwards Enterprise RequirementsPlanning (ERP) system to manage all corporate business systemsrequirements, including Accounting, HR/Payroll, Manufacturing, Inventory,Purchasing, and Maintenance. The system was originally implemented in2001.

At the time JD Edwards was implemented, it was decided that the systemwould replace the MP2 system in use at the plants. The originalimplementation of the maintenance functionality in JD Edwards was notentirely successful, having limited adoption by some of the plants, whereasothers continued to use MP2. The primary reasons for the lack of success

rolling out the system were attributed to the following factors;

Critical Maintenance team members retired in the middle of project The contracted Consultants were not familiar with Maintenance

Practices or all of the JD Edwards software functions Maintenance and Operations departments were not fully participating

with each other in the project

Business Decisions that Let to System Re-selection

Wabash Alloys continued to struggle with Maintenance systems usage untillate in 2002, when the decision was made to evaluate alternate CMMS

packages. The primary reasons that Wabash Alloys began to evaluatesystems were;

1. A corporate wide need to get maintenance costs under control2. Operations and Executives couldnt get accurate data from either MP2

or original JD Edwards3. A single system was wanted for all sites to improve consistency and

support


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A selection team was created with representatives from Maintenance,Finance, Inventory, and Operations to evaluate and select a new package.The packages evaluated were the current offerings from Maximo andDataStream. At this time, understanding that the initial JD Edwardsimplementation was not done properly, the selection team was also advisedto re-evaluate the latest release of JD Edwards EAM system.

Why JD Edwards Enterprise Asset Management was Chosen overMaximo and DataStream

After several months of software demonstrations and requirements analysis,Wabash Alloys decided to license the latest release of JD Edwards EAMproduct over the Maximo and DataStream products that were evaluated.This decision was based on the following factors;

Through head-to-head functional demonstrations, it was determined

that JD Edwards EAM was every bit as functional as Maximo Integration The JD Edwards EAM package offered full, out of the box

integration to Fixed Assets, Accounting, Inventory, Procurement,Human Resources, etc

Because Wabash Alloys already owned JD Edwards ERP Software,licensing the EAM modules were simply an incremental cost. Whencompared to the cost for the Maximo system, Maximo Licensing wasapproximately 5x more expensive.

Wabash Alloys has a lean IT department, so if Maximo were to bechosen, they would have to expend additional resources and incurtraining costs in maintaining the system from the IT perspective.

In the end, the decision to chose JD Edwards EAM was led by themaintenance and operations members, and was done based on no functionaldifference between JDE and Maximo, but added cost savings in other areas.

Progression of Maintenance Management Systems

One valuable illustration of CMMS to EAM functionality is illustrated by thediagram below. As CMMS has progressed to meet the methodologies thatdrive our maintenance organizations, CMMS vendors have createdfunctionality to support Total Productive Maintenance and Reliability CenteredMaintenance requirements. But as the World has become a global economy,

companies are finding it more and more necessary to have integratedinformation systems that allow detailed view of operational and financialinformation. If equipment and assets are used to generate the companiesrevenue, you cannot separate the CMMS function from the other businessfunctions and achieve Enterprise Asset Management. You must have EAM toremain competitive and make the business decisions regarding yourequipment and assets in todays world market.


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The Value of In tegration

The functionality of the Maintenance system, be it a CMMS or EAM solution,must meet certain basic maintenance requirements in the areas ofEquipment Information, Preventive Maintenance scheduling, WOmanagement, etc. What distinguishes packages such as JD Edwards, SAP,Oracle and PeopleSoft from the Maximo, DataStream, Indus, Mincoms of theworld is the core integration to the rest of the business software.

When we just take a look at the JD Edwards EAM system which WabashAlloys implemented, we immediately see that while the Work Order processis the hub of maintenance activity, integrations exist throughout the systemto other corporate functions.


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System Diagram of the Integrated JD Edwards EAM System

Were you to try to make a Best of Breed CMMS the hub of this system, youwould have to write custom interfaces between the ERP and the Best ofBreed to achieve this same level of functionality.

The Risk of Interfacing

To achieve the same functionality of an Integrated EAM solution using a Bestof Breed solution, a company will have to establish upwards of 70 interfacesto the ERP systems. Interfacing is never as reliable or effective as nativeIntegration.

Additionally, interfacing your CMMS to your ERP creates a condition calledVersion Lock whereby if you intend to upgrade either system later on, thiswill necessitate examination and possibly re-programming of the interfaces.This costs time and money, and will often cause companies to remain on out-dated software rather than undertake the upgrade costs.

Another risk to interfacing CMMS to ERP solutions is that many Best of Breedvendors will not take responsibility for the coding of this interfacing, andmost will not allow this portion to be part of their services contract due to therisk. Whoever performs interfacing must intimately know the CMMS systemand the ERP system or risk system integrities in each.


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In the end, if your company chooses not to interface the CMMS, or worse yetyour interfacing efforts fail and are abandoned, then not interfacing theCMMS to the ERP negates the strategic value, and reverts to a stand-aloneCMMS, not an EAM system.

Cost of Installation/ Support

Some of the costs that need to be considered in evaluating the decision toutilize a Best of Breed vs. an ERP EAM package include;

Cost of licensing the CMMS software package Additional Hardware required for supporting CMMS software IT Support to Install and maintain the separate CMMS system Additional End user training.

The Functional Arguments

There will always be arguments that are raised against the ERP EAM vendorsto try to engender support among maintenance people for the Best of Breedsolutions. Some of the common arguments are;

ERP Systems cant be as functional as Best of Breed solutions ERP isnt as user friendly as Best of Breed solutions ERP is more of Accounting Software than a maintenance system

In the past, before EAM, some of these arguments might have been true.But as JD Edwards, SAP, Oracle started releasing next generation EAMsystems at the end of the 1990s, the landscape significantly shifted. Below

is a Gartner Group evaluation of CMMS and EAM systems, where you willnotice that JD Edwards, SAP, IFS, are all ranked better than most CMMSsystems in the core maintenance functions. The fact that they are alreadyintegrated makes them even better.


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Gartner Evaluation of Maintenance System Functionality

Author Information

Dave Slagle is the Director of Information Technology at Wabash Alloys andhas been involved with both MP2 and JD Edwards EAM systemsimplementations over 10 years.

Scott Hollowell owns Asset Management Solutions, a consulting firmspecializing in the implementation of JD Edwards, PeopleSoft, and OracleEAM solutions. Scott has helped hundreds of customers implement EAMsystems over the last 10 years.


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Visionary EAM by Richard MacDonald, SPL WorldGroup, Inc.

http:/ / ww w.splwg.com

INCLUSIVE ASSET MANAGEMENT

Capital assets are a tremendous investment not only in direct cost, but in

their impact on the success of the organization. For this reason, asset-drivenorganizations such as utilities, universities, manufacturing plants, andrailroads all share the same central challenge keeping their assets runningoptimally, reliably, and for as long as possible.

Efforts to improve asset management and reliability are dependent on anorganizations cultural and technological environment. An environment thatappreciates and encourages the pervasive influence of asset management isbest equipped to achieve notable improvements.

Culturally, the asset management discipline has not been as recognized andappreciated for its strategic capabilities. Too often, assets are taken forgranted until they fail, then repaired or replaced without adequate scrutiny.A more strategic view of asset optimization looks at the bottom line, forexample whether repairs are the optimal resolution, or if the infrastructure isapproaching obsolescence or the cost of repairs greater than the currentvalue of the asset. It assesses how a failure could have been prevented, andhow to increase performance, productivity, and asset life while minimizingdowntime. When asset management is made a strategic focus of theorganization, everyone benefits. However, achieving this focus may requirea substantial cultural change.

The right technology will facilitate and expedite cultural change and steerasset management to the forefront of the organization. The ideal softwaresolution will provide real time visibility into inefficiencies that occur inprocesses and performance, and where improvements are possible. An idealarchitecture will allow EAM to cross traditional boundaries and stimulateprocess improvements throughout the business.

Companies striving to develop long range asset management as a corecompetency require a solution that will help them develop a better

understanding of each asset, its relationships and its total lifecycle. Theyneed the ability to make optimal business decisions based on timely, flexibleaccess to crucial information. They need work processes that facilitate assetmanagement and capture critical data that flows through to mission-criticalbusiness systems. And, they need enterprise-wide transparency for aninclusive view of operations and to improve the bottom line.
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Enterprise Asset Management (EAM) software is central to unlockingoperational transparency and improving maintenance and reliability. Thechallenge is finding the right EAM solution one that best meets with yourvision and expectations of asset management.

REQUISITE STRATEGY

Organizations are sending an unmistakable message that they want toreduce their number of large business systems. It is simply not cost-effective to support a multitude of vendor solutions on disparate platforms,each requiring complex and costly integrations and demanding a steeplearning curve. By consolidating to a more manageable number ofindependent applications, organizations can establish a competitiveadvantage by ensuring a lower total cost of technology ownership.

At the same time, they dont want to sacrifice flexible and richly functionalbest in class solutions. Achieving performance excellence necessitates best

of breed software, and reducing system overhead should not have to meancompromising on application capability or quality.

Attentive vendors focused on making their customers stronger are cognizantof this apparent contradiction. In response, the visionary are leading thenew era in asset management with a commitment to deliver a complete,single source and integrated suite of best of breed, industry-specific softwaresolutions. The emergence of comprehensive enterprise operational solutionsets provides lower cost, easily implemented, highly configurable solutionscapable of fostering maintenance and reliability improvements in companiesaround the world.

INTEGRATED SUITE OF BEST OF BREED PRODUCTS AS AN OPTIMALSOLUTION

Traditionally, selecting an asset management application required choosingbetween numerous point solutions or an enterprise system with an assetmanagement strategy at its core. Organizations are now ready for a newapproach. They dont want another niche application that furthercompromises increasingly fragmented business systems, and they dont wantor need an expensive ERP solution that is strong in financials but weak inoperations and maintenance.

Companies shouldnt have to make that choice they want, need, anddeserve the best of both worlds. A truly visionary solution providing the bestof those worlds is an integrated suite of best-of-breed products that caneither be purchased individually or pre-integrated. This approach provides amore strategic view of assets that unifies complementary business processes.It provides multi-directional transparency throughout operations, the callcenter, field workforce crews, and the top floor to ensure optimal assetmanagement, reliability, and customer service. The underlying objective is


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to tear down the organizational and system barriers and liberatecommunication throughout the business process.

An integrated view of assets encompasses all asset classes, whether in aplant environment or distributed, above ground or underground,continuous/linear, fleet, or facilities. This would alleviate the burden ofmultiple EAM applications supporting separate and distinct asset classes. Anintegrated view would also include all operational functions impactingconstruction, maintenance and the supply chain. The result is consolidateddata and timely management reporting, which is vital to reduce unplanned orprolonged downtime, errors and penalties, and to consider the full asset lifecycle, balancing operational and maintenance costs with capital assetplanning.

A single source vendor further assists by tearing down barriers betweendepartments as well as obstructions to the flow of information aboutoperational requirements and activity. This is accomplished by expanding

the view of asset management to include vital touch points with customer,work, outage, and distribution systems all integrated in real time.

A perfect example is illustrated with an electric utility scenario. When workorders initiated in EAM are fed to a mobile workforce solution for crewscheduling and dispatch, prompt emergency response is triggered. Troublemanagement data shared with outage and distribution management systemsenables personnel to assess the impact of outages and network interruptionsin real time and quickly determine the source of the problem and thenecessary corrective action. Customer information and management systemintegration ensures call centers can provide optimal customer service

because they have the real time data to see what, when, and whereresources are available to accurately schedule or reschedule serviceappointments. Operational and functional information can then be feddirectly and accurately to enterprise financials. When a business intelligencesolution is incorporated, ready access to key performance indicators (KPIs)allows managers to drill down to operational details in real time.

Is ERP a Viable Alternative?

ERP systems try to be all things to all people, serving every industry andevery functional need in what is commonly represented as a total companysolution. ERP vendor expertise is in back office applications like financials,payroll, and human resources, and they tend to be weak in plant floor or

operational applications like EAM. Three primary risks associated with EAMmodules from ERP vendors include cost, functionality, and stability:

Cost: ERP allows little flexibility for companies seeking to makeasset management a core competency, which inflates their totalpackage cost. Companies are typically forced to purchaseprerequisite ERP software in order to implement an EAM module,because the EAM modules are rarely, if ever, implemented as stand-


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alone applications. To soften the blow, EAM modules may berepresented as a giveaway when an ERP system is purchased, whenin fact they cannot be implemented unless or until ERP financials arealready installed. Therefore, the acquisition and implementation ofEAM through ERP becomes a high-cost and time-consumingendeavor.

Functionality: ERP approaches functional areas like EAM from afinancial perspective, rather than an operational perspective, whichsatisfies CFOs but not necessarily the COO, who seeks excellence inmaintenance and reliability and capital planning. The real ROI is inasset management, not financials management, and ERP vendors aretypically not focused on the need of the asset management. EAM is

just one of a multitude of functional applications that an ERP vendormay provide, and EAM modules consistently fail to be built andprioritized as best in class applications. Without expensivecustomizations, ERP lacks the complete view of decision support

required at the operational and functional level, such as conditionassessment, operating parameters, and total asset lifecycle analysis.

Stability: As ERP vendors acquire each other and smaller pointsolutions and pool their competing products into a single corporatestrategy, the assurance of long term support and the predictability offuture functionality come into question. Even if competing EAMmodules are finally fused together, ERP customers will still be facedwith separate interfaces between each module and the weakenedability to execute total work processes from the EAM module.

Clearly, an EAM module from an ERP vendor will not return the benefits of abest of breed EAM application, particularly one that is pre-integrated toprovide highly developed operational capabilities pervasive throughout theorganization.

Are Best of BreedPoin t Solutions Sufficient?A plethora of vendors offer EAM and CMMS solutions, but few are generallyrecognized as best of breed. Those few offer highly functional assetmanagement capabilities in stand-alone applications with programmed hooksinto enterprise systems. Several issues are associated with EAM pointsolutions:

Cost: Best of breed EAM shares the same weakness as everyindependent application the presence of yet another technologyphilosophy, infrastructure, architecture, and series of complexinterfaces that must be re-worked with each upgrade. It is simplycost-prohibitive to support a wide diversity of application systems.

Responsiveness: Companies saddled with fragmented applicationsare less responsive to market dynamics. Improvements are


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discouraged because of the high cost of change, leaving companiesriddled with old and heavily modified applications.

Stability: With smaller vendors, there is greater risk of waveringmarket commitment and financial stability. Smaller players are at riskof falling by the wayside or being acquired by larger companies fortheir customer base, if not for their products which may be shelved orfundamentally altered. The general perception is that only thestrongest will survive.

Scope: Some best of breed EAM vendors are taking defensivepositions by acquiring other technologies. The success of this strategydepends primarily on customer demand. For example, EAM vendorsthat adopt information technology asset management (ITAM) solutionsmay receive a lukewarm response from companies that consider ITcapabilities to be superfluous. On the other hand, a vendor promotinga utility industry solution that lacks outage or distribution management

components is considered ill-equipped to stimulate maximum ROI.

Quality: The success of vendor diversification is also dependent onthe quality of product acquisitions. A harmonious blend of top quality,distinctive applications provides a complete operational businesssolution.

A better strategy is one that permits flexibility and is cost-effective onethat recognizes that companies want a modern IT architecture withstandardized, integrated, end-to-end application suites without sacrificingbest of breed functionality. A union of leading complementary products that

have little or no overlap in functionality achieves this goal, and yields astronger more viable company as a result.

HIGHLIGHTS OF A STRATEGIC EAM STRATEGY

Executing the vision of an integrated suite of best of breed products rewardsthe vendor and its customers alike. Having a single source vendor reducescosts, increases flexibility, and eliminates frustrations. The single platformand pre-integration provides a low total cost of ownership. Following are anumber of strategic benefits associated with this vision.

Complementary SolutionsAn enterprise operational solution set consists of proven, solutions thatcomplement, rather than compete with, one another. Each product in the setsupports current generation total asset care, and is scalable to the needs ofany size company, anywhere in the world.


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Flexible Ownership

Integrated best of breed products need to be available in an integratedapplication suite or stand-alone, because most companies may not yet beready for a wholesale system replacement. Forward looking organizationscan select products that meet immediate strategic requirements, and plug in

additional applications when the time is right. With this flexibility, companiesare not forced to acquire the full suite or assume unnecessary systemoverhead.

Industry Focus and Expertise

Assembling leading products that encompass all the critical operational needsof a given industry provides an end-to-end solution for strategic assetmanagement. Utilities are arguably the most complex, most demanding, andmost regulated of all the capital-intensive industries and they serve as anideal baseline for industry-specific asset management solutions.

The benefits of a utility vision translate readily and easily to manufacturingand other asset-heavy industries such as chemical processing, forestproducts, oil transportation and storage, hospitals, railroads, municipalities,and service organizations not just to electric, water, and waste utilities.This vision can be leveraged to support all asset classes, including plant, fleet,facility, and distribution assets such as pipes, wires, and networks.

The value of pre-integration with complementary business solutions is alsotransferable across multiple industries. Service organizations such astelecommunications, water, electricity, and government organizations benefitfrom EAM integration with customer care and billing systems. Any company

managing remote assets, for example schools, parks, roads, and collectionand distribution systems, can optimize scheduling and dispatch with a mobileworkforce management system.

Borderless Transparency

Transparency without borders means allowing information to flow freelywithin and among operations and service organizations all the way to thetop floor. It involves giving each user, from work planners and storeroomclerks to the COO and CFO, all the information they need to make decisionsand complete their job. It means having a process focus rather thandepartment orientation, and looking at the complete maintenance function

across and beyond organizational boundaries.

Such transparency is facilitated by having robust EAM functionality and pre-integration to complementary applications. This allows companies tomeasure performance in revenues, earnings, return on assets (ROA), andfield force utilization. They can monitor service performance from manyperspectives, whether the plant, call center, or field, and deliver on promisesto their customers, investors, and regulators.


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Operational Accounting

Visionary EAM solutions collect detail at both the financial and work processlevel, accounting not only for when dollars are spent but precisely where,why, how, and to what end. The ability to provide operational accountingdata that coexists with enterprise financials satisfies the needs of both theCFO and COO. By providing real time access to such information, companiescan make better decisions that pay back in extended asset life. Operationalaccountings counterpart is financial accounting an approach commonlyused by ERP vendors, but incapable of generating the immediate ROI ofstreamlining operations.

Top-Dow n Financ ia l Account ing

Too little, too late describes this approach. EAM applications spawned byenterprise software vendors are inadequate at the operational level. Financepersonnel need historical, aggregated financial information. As a result,product development is centered on financial needs rather than businessoperations. When a purchasing manager is prompted for an accounting code

before understanding where the part is needed, for what reason, and bywhom, a disconnect occurs. With financial accounting, managers might beable to track assets back to work, but theyre unable to compare workagainst similar assets or relate labor and

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