Extend Asset Life and Maximize ROA / ROI.

Transcription

1 . ISM WorldTour 2008

2 Agenda Introduction Asset Intensive Industry Challenges Analyzing Where You Stand Patterns and Trends of Asset Managemen Where Do You Start? Focus on Asset Intensive Industries 2

3 Asset Intensive Industry Challenges ISM- WorldTour IBM Corporation

4 What are Asset Intensive Industries? 4

5 How is Asset Management Aligned with the Various Industries? Maintenance, Repair and Operations (MRO) Spending MR Spending O Spending Banking Process Manufacturing % of Procurement Insurance Retail Education Hospitals Government Utilities Transportation Discrete Manufacturing Service Intensive Asset Intensive For Illustrative Purposes 5

6 A History of Asset Management Necessary Evil Paper Systems Corrective Maint. Freq. based PM s Past New Technologies PdM Software Systems Change PM Freq Can Change Bottom Line Looking at Root Causes Mature Software Systems Focus on Components Maturing Organizations Looking at Lifecycles Upstream Improvements Wireless Technologies Software Adjusts to Business Self Diagnostics Communicating Assets RFID Technology Future Wearable Computers Product Improvements 6

7 Today, Many Enterprises are Challenged with the Same Types of Pressures in Different Ways. Ageing and under performing assets Outsourcing / new business models Competitive environment Environmental / green agenda Poor reliability and utilisation Real Estate and Facilities Plant and Production Security, safety pressures Shareholder Expectations Mobile Assets Infrastructure Technology Changes Capital constraints Information Technology Globalisation Overhead costs 7

8 These Same Challenges Are On People and Organizations They Often Ask How Can I to Improve My ROA / ROI become world class with more efficient and cost-effective operations? CEO ensure compliance with regulators? obtain more intelligence about the condition of of our assets? Production Management CFO implement best practice organisation and processes across the enterprise? improve the productivity of our field-force?.transform our relationship with our suppliers? reduce total cost of ownership over the asset lifecycle? know if if we have the right assets and inventory? Maintenance Management CIO improve reliability and safety performance? reduce unplanned outages? improve customer feedback? make more timely decisions? 8

9 What is the Importance of Asset Service and Maintenance to Enterprises? Nearly all organizations say effective service and maintenance practices are very or extremely important to their organizations financial success, yet only 7% are completely satisfied with their service and maintenance performance. 9

10 Who needs Enterprise Asset Management? In IBM s interviews with hundreds of CEOs, they said: they must achieve... and want to innovate their Revenue growth 2006 Products/ services/markets Cost reduction Asset utilization Operations (processes & functions) Risk management Business model 20% 40% 60% 80% 100% 20% 40% 60% 80% 100% Hint: Effective Asset Management is fundamental to success IBM Global CEO Study 2004, multiple answers permitted IBM Global CEO Study 2006, point allocations 10

11 The Perfect Storm Most Enterprises v Face Today Consolidation The Perfect Storm is bearing down on asset intensive companies Globalization Technology Changes Disparate Legacy IT Systems 11

12 Analyzing Where You Stand and Improving It ISM- WorldTour IBM Corporation

13 Best-in-Class Reap Significant Benefits Best-in-class companies also consistently reported improvements in their top key performance indicators over the past two years. A much higher percentage of best-in-class organizations have realized advances in these KPIs than have average and laggard organizations 13

14 What are Some of the ROA / ROI Benefits Realized by Enterprises that address Asset Management? Manual Operations Reactive Maintenance Cost Intensive Stand Alone Autonomous Sites Automated Operations Predictive / Preventive Cost Controlled Integrated Solution Corporate Standards 1. Strategy 2. Organization/Management 3. Data Management 4. Maintenance Tactics 5. Materials Management 6. Planning and Scheduling 7. Key Performance Indicators 8. Reliability Center Maintenance 9. Autonomous Maintenance 10. Process Re-design Tactics Process Re-Design Reliability Data Planning & Management Scheduling Strategy Autonomous Maintenance Measures Materials Management Management Quantum Leaps Continuous Improvements Control Leadership Business As Usual Continuous Improvement Quantifiable Benefits Towards Savings / ROI: Labor Utilization up by 10-20% Asset utilization up by 3-5% Increased planned maintenance by 50-80% New Equipment purchases down by 3-5% Lost warranty recoveries down by 10-50% On-hand inventory needs down by 20-30% Inventory carrying costs down by 5-20% Asset acquisition costs down by 5-10% Tangible Benefits: Reduced risk of non-compliance Support for Sarbanes-Oxley compliance Improved regulatory/safety compliance More accurate data for improved decision making Improved work planning/coordination Improved information on vendor performance and equipment use Improved customer satisfaction 14

15 Evaluating Your Asset Management Maturity Level Value -Fire fighting -Run to fail -Work Mgmt -Preventive -Spares parts IV IV -Reliability -Condition -Predictive III III Understanding Understanding -All Business Processes -Service Level Agreements -Service Management II II Competence Competence -One System All Processes -Asset & Services Management -Enterprise Wide Business Alignment II Excellence Excellence V Innocence Innocence Awareness Awareness amcoe Asset Management Center of Excellence Maturity 15

16 IBM Asset Management Solutions Helping clients maximize asset effectiveness and ROI Traditional Asset Classes Asset Strategy Plan Evaluate and Design Asset Lifecycle Create / Procure Operate Maintain Modify Dispose Real Estate and Facilities Land, Offices, Warehouses, Retail Space, Schools, Hospitals, Airports Plant and Production Mining, Textile, Chemical, Petroleum, Electronics, Food, Life Sciences, Power Gen Mobile Assets Military, Airlines, Trucking, Shipping, Railroad, Public Transportation Infrastructure Railways, Electric / Gas Distribution, Highways, Telecom, Water Information Technologies PCs, Networks, Routers, Applications, Auto Discovery, Service Desk Broad, best-in-class capabilities for managing all critical assets that drive the business: Manage all strategic assets on a single, unified platform: common UI, data layer, workflow Service Oriented Architecture, J2EE certified Industry specific solutions providing deep capabilities Deployed in a Single, Enterprise Wide Instance 16 IBM Tivoli - Maximo Asset Management 2007 IBM Corporation

17 The Value of Asset Management Reduce downtime Maximize output Improve planning & scheduling Manage risk Highest reliability Compliance Framework Maximizing Return on Assets Limited Resources Retain Knowledge Visibility Comply with Regulations Lowest cost Reduce Inventory Reduce labor costs 17

18 Some Patterns and Trends of Asset Management ISM- WorldTour IBM Corporation

19 Basic Asset Class Model AMcoe Asset Class Model Real Estate and Facilities Plant and Production Mobile Assets Infrastructure Information Technology 19

20 Asset Class Uniqueness Real Estate and Facilities Land, offices warehouses, retail space, schools, housing, hospitals Leases Tenants Building services Construction Grounds Typical Challenges Tenant / customer satisfaction Building service systems reliability Construction project / Asset coordination Outsourced maintenance Managing like assets across properties 20

21 Asset Class Uniqueness Plant and Production Typical Challenges Workforce management Asset reliability Maintenance tactics (PM, PdM, RCM) Data standards Detailed asset configurations Auto, mining, electronics, textile, chemical, mining, electronics, food Production plants Production lines Custom built assets Line equipment Utility services 21

22 Asset Class Uniqueness Mobile Assets Military, airlines, trucking, shipping, railroad, public Varying fleet types Unit uniqueness Leased assets Rotating components Commercial, Government Typical Challenges Delivering differentiated cost effective services Outsourced heavy maintenance Obtaining data from outsource maintainers Government / industry regulations Configurations need to account for component positions 22

23 Asset Class Uniqueness Infrastructure Electric, oil, gas, highways, roads, telecom, water, wastewater Linear assets Outage impacts large groups Remote locations Big expensive assets Commercial - Government regulations Typical Challenges Locating positions on linear assets Assets cover large areas Services outages critical and costly Outsourced maintenance Scheduling maintenance on off hours / periods 23

24 Asset Class Uniqueness Information Technology Computers, routers, networks, software, auto discovery, service desk Customer service Asset configurations Software version control Service outage impacts critical Networks Typical Challenges Customer Service Oriented (Help Desk) Assets of varying size, values and mobility IT unique needs (Networks, Routers, Servers) Electronics (versus mechanical) oriented Need to track and update software versions 24

25 Emerging Asset Management Trends: Convergence Operating Assets Asset Convergence IT-enabled operating assets Networked assets Assets with embedded IT Blurred service delivery responsibility IT Assets Is this an operating asset or an IT asset? Medical systems with Smart on-board home computer utility technology meter with for embedded data collection software and system control 25

26 Asset Management Trend: Convergence Operating Assets Benefits: Effective use of new technology Improved lifetime asset performance Lower operational risk IT Assets Is this an operating asset or an IT asset? Medical systems with Smart on-board home computer utility technology meter with for embedded data collection software and system control 26

27 27 Asset and Service Management Value Proposition: Enables organisations to manage the end-to-end services and business processes that keep the entire asset infrastructure efficient and aligned with the goals of the business, while maintaining regulatory compliance Convergence of IT and Operational Assets 1. Provide a single, SOA based platform to manage all critical assets 2. Manage all critical assets throughout their life, extend their life, and maximize lifetime ROI/ROA 3. Prioritize asset management initiatives to align with operating, financial and other objectives 4. Manage risk and comply with accounting, safety and environmental regulations 5. Achieve a more efficient work force and improve management of assetrelated parts and inventory Unique Combination of Asset and Service Management 1. Support operating objectives by defining asset-related service level agreements and by measuring/improving quality of service delivery 2. Achieve proactive performance management by knowing about impending performance degradation and by correcting through automation or with alerts for manual intervention 3. Establish and execute asset and service management best practices according to distinct priorities, ensuring optimal service for the customer and the business is the solution to deliver Asset & Service Management for all critical assets across the enterprise Transparent Compliance with Regulatory and Risk Management Requirements 1. Always know the current state, and past performance, of your assets 2. Establish standard asset management practices and know when and how they were performed, and by whom 3. Ensure that the processes for securing your assets and the information about them are in compliance with regulatory requirements 4. Gain the flexibility to continuously adapt your business processes and meet constantly changing business and regulatory requirements.

28 Where Do You Start? ISM- WorldTour 2008 Tivoli Maximo Asset Management 2006 IBM Corporation

29 You Can Start by Analyzing Some of Your Pain Points A Simplified Method List Your Top Five to Ten Pain Points Develop a Savings Scenario for Each Pain Point Gather Data Related to Each Savings Scenario Develop Cost Per Year Savings Calculation Estimate Savings % based on Known Facts and Assumptions 29

30 You Can Start by Analyzing Some of Your Pain Points Savings Scenario Cost Per Year Each Savings Scenario Equates to: Business Case Case Element ROA ROA // ROI ROI Calculations Benefits Realization Framework Justification and Documentation for Improvement Efforts 30

31 Industry Focused Solutions to Help ISM- WorldTour 2008 Tivoli Maximo Asset Management 2006 IBM Corporation

32 Maximo Industry Solutions Maximo meets the need of many industries out-of the box For some industries Maximo offers unique industry functionality Delivers more complete solutions and more rapid, lower cost implementations Delivered with out of the box Industry specific content, business processes Supports Industry specific regulatory compliance: FDA, NRC, DOT Transportation / Fleet Utilities (Transmission & Distribution) Spatial Asset Management Nuclear Power Generation Oil & Gas Life Sciences Pharmaceuticals Government 32 IBM Tivoli - Maximo Asset Management

33 Manufacturing Industry Shorter lead times require reliable assets Demand driven, Mass-customization ASSET MANAGEMENT becomes a critical business activity Quality Maximo provides data to manage Quality and supports OEE Maximo s track record In process industry Automation Lean/Six Sigma /TPM require reliable assets Maximo unlocks Asset constraints to achieve maximum Lean benefits extended enterprise needs enabling systems Service Management /Outsourcing Trend towards core business. Managing Risk & Compliance - Sarbanes Oxley, ISO, FDA, SHE Maximo manages all required data to meet regulatory compliance Maximo supports full Asset Life Cycle Product Lifecyle Management Maxmio improves cost visibility/ allocation, and analysis for cost reduction Cost Control Inventory: Pressure for stock reduction. Maximo improves equipment performance and manages stock to reduce cost 33

34 Maximo for Utilities Transmission & Distribution KEY Features Compatible Unit Estimating Compatible Unit Library Compatible Unit Administration Crew Management Assignment Manager for Crews Maximo Project Manager for Crews T&D Adaptor - MEA: Graphical Design, MWFM, CPR (Fixed Asset) IBM Maximo Spatial Asset Management Leadership quadrant in Gartner s Work & Asset Management MQ Active user group: Maximo Utility Working Group Power Generation requirements meet with base Maximo 34 IBM Tivoli - Maximo Asset Management

35 Nuclear Power Poised for the Nuclear Renaissance Key Features Increasing marketshare in North America and Worldwide IBM has established Center of Excellence for Nuclear Power in La Gaude, France Nuclear is becoming an environmentally friendly option Equipment Reliability Surveillance testing PM Sequencing Vendor Qualifications Quality and Technical Terms Commitment Tracking Clearances Impact Plans SNPM Workflow / Nuclear Content SNPM The Standard Nuclear Performance Model (SNPM) is a set of processes based on the results of benchmarking by Institute of Nuclear Power Operators, Nuclear Energy Institute, and Electric Utility Cost Group. Maximo has many of the these processes embedded. 35 IBM Tivoli - Maximo Asset Management

36 Oil & Gas Drilling Deep for More Production Key Features Super Majors Exploration & Production LNG Global & Regional Refiners North America Africa Vietnam National Oil Companies Upstream & Downstream Multiple Segments of the Energy Value Network (upstream, mid-stream and downstream Asset Specifications Failure Codes Location Details Condition for Work Prioritization Matrix Regulatory Compliance Incidents / Problems / Defects After Action Review Root Cause Failure Analysis Solutions / Improvements Benefits / Losses Knowledge Management Explicit knowledge Codified and transmittable in formal language Tacit knowledge Know how e.g. skills of a craftsman Cognitive dimension mental models, beliefs 36 IBM Tivoli - Maximo Asset Management

37 Transportation Key Sectors Key features Asset History Asset Alias Fuel Import Primary Meter PM Enhancements Repeat Repairs Aviation Education Fleet & Logistics Government Rail Utilities Configuration Manager Focused on airline engine manufacturing, airlines, and rail Linear Asset Management Management attributes of linear assets Rail, highway, pipeline, powerlines 37 IBM Tivoli - Maximo Asset Management

38 Government Assets for the people, by the people. Maximo for Government New: Dec 14, 2007 Government has poor visibility and no control of assets. Government also has increased accountability for personal property and increased focus on asset performance and mission readiness. US Contractors must meet new property management regs (FAR part 45 rewrite) US Government (DoD & Civilian) must meet requirements for real and personal property management (EO 13327) Governments must comply other regulations that rely on sound property practices (US- FISMA) State & Local Governments need support for compliance with Key Features Government Contracts Personal Property Unique Identification (UID) Compliance Two new applications Government Contracts Personal Property Regulatory Requirements President s Management Agenda GAO CFO Act FAR/DFAR DoDMemo dated 12 May 2005 Improve accountability, accuracy, and reliability regs such as GASB 34 and IBM Tivoli - Maximo Asset Management

39 Why IBM? Unified Solution Only vendor that can manage all asset classes on a single, unified architecture, combined with service desk, change and configuration management. Industry Expertise Ease of Configuration and Upgradeability Deep industry knowledge across a broad spectrum of asset intensive businesses - Oil & Gas, Utilities, Transportation, Life Sciences, Nuclear Power, Government, etc. Built-in configuration tools allow for easy, on the fly changes to UI, workflows, processes, reports. Configurations readily upgrade from one version to the next. Software Asset Management Only vendor to provide Software Asset Management for both distributed and mainframe environments and help manage complex license entitlements. Leading, standards-based technology Web-architected platform built on J2EE with advanced business process management; based on SOA, web services and XML. Built ground up on the ITIL framework Supports 7 ITIL processes out of the box: Incident, Problem, Change, Release, SLA, Configuration, Availability. Breadth of Service Management offering IBM offers full breadth of end-to-end asset and service management solutions that operate on a common web services infrastructure. 39 IBM Tivoli - Maximo Asset Management

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42 Key Challenges for the Energy & Utility Industry Regulatory Compliance CLIMATE & ENERGY Mandated reliability standards with severe fines for non-compliance Energy Policy Act of 2005 Climate is driving Carbon cap and trade programs Aging Workforce States are mandating renewable portfolio standards Smart meters and intelligent grid projects or pilots are in progress Aging Infrastructure Average Plant 33.7 years old Climate change issues will drive increased investment in energy and information technologies IDC Energy Insights January

43 Key Challenges for the Chemical & Petroleum Industry Energy Prices Impact Cost Operational Efficiency Competing for less reserves Aging Assets/Aging Workforce 2008 Security Conference Monday, March 3 - Wednesday, March 5, National Safety Conference Wednesday, May 7 - Thursday, May 8, Reliability & Maintenance Conference Tuesday, May 20 - Friday, May 23, 2008 Reliability, Safety and Security 43

44 Key Challenges for Healthcare & Life Sciences Globalization Consumerism Aging / Chronic Illness Expensive New Treatments Emergence of New Technologies Market Drivers / Change Agents Rising National Health Expenditure Growing New Drug R&D Cost Stagnating GDP Growth Health Premium Increase Price Inflation Increasing Economic Pressure on Healthcare Business & IT Innovation Standards Adoption Changing Business Models Value of IT IBM Business Value Series www-ibm.com Healthcare 2015 Pharma 2010 Adoption of New Business and IT Models 44

45 Key Challenges for Automotive Manufacturing Responding to market demands in a timely manner. Increasing complexity in product development due to proliferation of new models and of increasing software and electronics content in the vehicle. Management of global supply chains and global product networks Warranty costs driven by electronics and software issues Flexibility of existing production facilities Location of production capacity (primarily in mature markets) not aligned with global demand (new markets) Aging workforce and skilled labor Regulatory and industry compliance Supply Chain challenges Price & Cost pressures Product Quality and Manufacturing efficiency 45

46 Key Challenges in the Industrial Sector Macro-economic Changes Globalization Competitive Pressures Challenge to respond to market demands in a timely manner Brand Erosion Commodification, Price & Cost pressures Changing Customer Requirements Aging workforce and skilled labor Warranty costs driven by electronics and software issues Flexibility of existing production facilities Product Quality and Manufacturing efficiency Location of production capacity (primarily in mature markets) not aligned with global demand (new markets) New Business Model Pressures Regulatory and industry compliance Supply Chain challenges Workforce effectiveness and collaboration Management of global supply chains and global product networks 46

47 Key Challenges for the Transportation Industry Increasing asset reliability and availability, as these affect the customer experience Improving asset performance to reduced the impact of rising fuel costs & reduced funds Capturing actual asset costs for labor, materials, tools & services Optimizing inventory levels & reducing costs Recovering warranties Managing with an aging workforce Capturing accurate data to drive condition based PM programs Addressing the needs of a large variety of moving assets while consolidating solutions Minimizing risk with new systems 47

48 What are enterprise assets? 48

49 Asset Management - Business Oriented Improved return on assets can be generated by: delivering optimum economic production, controlling costs, and/or making the best use of the organisation's capital base. Drivers: Price Product quality and reliability Revenue Return on Funds Profit generated Capital employed Costs Fixed Working Quantity Process and equipment availability and productivity Cost control/reduction Equipment/fleet size Spares/Stockpiles Asset management focuses on where the greatest leverage is for the particular organization 49

50 Who Needs Enterprise Asset Management? Any firm with a Fixed Asset to Revenue (FA/R) ratio of 0.5 can benefit from EAM. The higher the ratio, the more EAM is the key solution Consulting Example: Oil & Gas or Electric Power Generation Balance Sheet: Property, Plant & Equip. = $750,000,000 Income Statement: Revenue = $500,000,000 Therefore Fixed Asset to Revenue ratio is = 1.50 Industry Fixed Asset / Revenue Ratios Heavy Construction FA / R: 2.5 Food Transportation Heavy Metals IFA Chemicals Oil & Gas Pulp & Paper Aggregates Concrete asphalt - stone Utilities EAM Value Add & Solution Priority & User Count Defense Mining Communications High Zero Some Large HUGE! Focus on Purchased Materials Low Low Focus on Equipment Availability & Utilization High 50

51 Aging Workforce Business Drivers: Maximize Workforce Productivity 45% 40% 35% 30% US Employee Age Distribution Oil & Gas Utilities Manufacturing Airlines Telecom All Industries Maturing baby boomers are followed by a much smaller group of generation Xers, making potential replacements increasingly difficult to find and hire Energy and Manufacturing median age higher than average Spike in percent of employees Labor replacement and knowledge retention issues Leading companies improving and standardizing business processes and deploying IT to reduce the need for additional labor 25% 20% 15% 10% 5% 0%

52 Survey on Changing Workforce Demographics What approaches are being used in your organization to transfer the knowledge of maturing workers? (Select all that apply.) Mentoring 60% Document/knowledge repositories 46% Mature workers used to deliver classroom content Fostering the development of communities of practice Lessons from mature workers captured and embedded in existing learning programs 30% 29% 29% Expert systems/artificial intelligence Capturing of audio/video interviews of retiring employees Other 3% 2% 2% We are not using any approaches 22% 0% 10% 20% 30% 40% 50% 60% 70% Source: ASTD/IBM Learning and Changing Workforce Demographics Study. n=237 52

53 Other Emerging Trends: Consolidation Application Consolidation Consolidate applications and vendors for superior asset management Leverage one solution across the enterprise Benefits: Lower software and implementation costs Lower infrastructure complexity Lower operational risk Production Equipment Facilities Transportation Assets IT Hardware and Software 53