WHITE PAPER 5 STEPS TO THE BENEFITS OF EAM SOFTWARE

WHITE PAPER 5 STEPS TO THE BENEFITS OF EAM SOFTWARE

CONTENT WHAT ARE THE BENEFITS OF EAM SOFTWARE?... 1 1. CONSIDER THE REGULATORY ENVIRONMENT... 4 2. REALIZE THAT HUMAN RESOURCES ARE CENTRAL... 5 3. INVOLVE THE MAINTENANCE TEAM EARLY... 6 4. TAKE OWNERSHIP... 7 5. REVISIT THINGS SOON AFTER GO-LIVE... 8 CONCLUSION... 8 ABOUT IFS... 10

5 STEPS TO THE BENEFITS OF EAM SOFTWARE BY JERRY BROWNING BUSINESS CONSULTANT IFS NORTH AMERICA If you read sales collateral from software vendors, you probably have been told that enterprise asset management (EAM) software will help you improve the efficiency of work order input thus provide better data for asset lifecycle management. That it enhances mobility of maintenance teams and that it lets management spend more time making decisions. These are all great and appealing statements, but at least to me, they don t really provide a very concrete benefit that most people can get their arms around. As someone coming from a plant maintenance background, and having since spent quite a few years implementing EAM software, here are my thoughts on what the benefits of EAM software really are, in simple and straightforward terms. Once we outline these benefits, I ll lay out five specific ways these benefits may manifest themselves in your organization. WHAT ARE THE BENEFITS OF EAM SOFTWARE? A simple way to look at EAM is to view it like enterprise resource planning (ERP) for companies that invest a lot in building, maintaining and operating large and expensive assets. We expect a lot of the same benefits garnered from an ERP, only focused on engineering, constructing, maintaining and operating an asset from cradle to grave as opposed to managing repetitive manufacturing processes like materials requirements planning (MRP). A standard manufacturer will have a lot of revenue tied up in inventory, and ERP really started out as a way to make sure the right inventory was on hand at all times, that not too much inventory was kept, and to coordinate the manufacture and delivery of products. By providing visibility and control over these things in a centralized way, MRP and later when tied to a financial/purchasing package, ERP helped manufacturing executives make better decisions and helped the keep the inventory requirements of the floor fed material as requirements dictated. We may still have some inventory in an asset-intensive environment and we may be manufacturing something chemicals, ships, petroleum products, electric power, machinery, steel, food products, what have you, but a lot more of our cost is driven by the assets we operate. Thus said, our enterprise application has to be built around the cost and productivity not of inventory, but the plant equipment. 1

And that is exactly what EAM is a centralized management system where your maintenance, human resources, asset data, contract management and other functions are encompassed in a simple system used by everyone from the maintenance technician completing a work order or the purchasing clerk ordering a box of grinding wheels to the CFO overseeing total cost of operating an asset portfolio or group of specific assets. If we want to optimize asset planning and engineering, control asset cost, maximize productivity and mitigate risk management, EAM encompasses all of the data that allows us to do that. EAM has come through an evolution similar to the one that ERP experienced with its origins in MRP. I remember being excited when software vendors came out with computerized maintenance management systems (CMMS). I was later heartened to see more of the industry turning from CMMS to EAM, which tied maintenance and asset cost directly into finance and supporting functions like purchasing, supply chain management, human resources, document management and more. EAM lets you manage maintenance more proactively, and in the front office it becomes possible to make good decisions affecting productivity, quality, health and safety as well as asset lifecycle management (ALM). EAM can provide very granular data on the cost of maintaining equipment objects. This data can then be rolled up to reflect the cost and risk profile of large assets and asset portfolios. 2

With a CMMS, you schedule the maintenance on your equipment and might not try to track the cost against it. If you do, it s just manual entries of parts you purchased through your company s purchasing system which is easy to forget and requires maintaining two sets of records. Most of the time, you are just keeping records of work that needs to be done and a checklist of tasks involved in a given preventive maintenance job as well as documenting significant repairs. With EAM, however, there is additional value in tracking how much time is being spent on each piece of equipment as well as the cost of contracts, parts, equipment rental and other expenses tied directly to the ERP modules. EAM also helps you track the total cost of classes and groups of equipment when set up properly. This visibility has to start right on the plant floor with the technicians. If they are tracking where their time is spent, the labor costs of maintaining each piece, class and group of equipment (such as particular manufacturing lines or pipeline skids) is visible and can be managed. This obviously provides visibility and control over the cost of maintaining the asset. But, when EAM is properly configured, it can be used to document regulatory requirements, manage risk and handle industry-specific needs like asset integrity management in the oil and gas industry. In an EAM associated with strong ERP functionality, any purchasing or inventory issuing that you do against a work order goes against the cost of maintaining specific equipment or classes of equipment. Any labor that is expended will be attributed to the cost of maintaining the equipment. If technicians have to work at a remote site, it is possible to properly attribute expenses like hotel, fuel, and other incidentals. Apart from allowing more intelligent management of cost from a financial perspective, this data allows you to identify those problem children pieces of equipment that need to be replaced. Without adequate tracking, if a technician is spending 30 minutes, three times a week just to recalibrate a certain piece of equipment; it is probably costing more money in labor than management realizes as well as driving additional costs in lost productivity and scrap. If it is a relatively inexpensive machine, it is probably easy to make a case for replacement. It might make sense to spend a little more money on a different piece of equipment that is running stable and requires less maintenance that would cause fewer production disruptions and less scrap. EAM can facilitate hundreds or even thousands of individual decisions like this to support not just decisions on individual machines, but decisions about repair, replacement, refits, lifecycle extensions and decommissioning of entire production lines, plants, or groups of assets. The ability to roll up the many small data points into overarching visibility of entire classes of assets and asset groups is where EAM really shines. But the benefits of EAM are only as strong as the thought and commitment that goes into planning and executing the implementation. So here are five tips to maximum benefit from EAM. 3

1. CONSIDER THE REGULATORY ENVIRONMENT Regulation is always a significant factor in maintenance and asset management. A plant manager, CEO or board of directors all need to think about health, safety and environmental (HSE) requirements from a variety of regulators including the Occupational Safety and Health Administration (OSHA) and the Environmental Protection Agency (EPA). Senior executives may also have in mind ISO 55000 or PAS-55, asset management standards that investors and other stakeholders may be looking for as safeguards for their investments. Oil and gas companies will be required to document asset integrity with formal asset integrity management programs. That means asset health and conditions need to be documented, and the centralized data schema of EAM is essential to this. EAM will also facilitate compliance with regulations on carbon emissions by recording readings of emissions and providing documentation that various checks or maintenance processes have been completed. EAM can provide proof that certified technicians are performing work on assets as per regulation. Certification and training is important for asset integrity because regulation may require a certified instrument technician, welder, or electrician to perform specific tasks. It can also be important for HSE because some tasks may require, for instance, a confined space certification. So EAM will offer a centralized data source to ensure information is available per required reporting. But we can also use EAM to deal more proactively with regulators by voluntarily offering up information and providing more visibility into how we are circumventing problems before they happen. Work orders originating from fault reports from preventive maintenance can be used to demonstrate due diligence to regulators. 4

Any maintenance department will do preventive maintenance routes, checking on several pieces of equipment, sometimes dozens in one check. In IFS Applications, when you are doing a route and complete a fault report on the things that you find as you go along, you can flag those fault reports as things you proactively find and subsequently fix. When the technician finds an issue, he or she can create a fault report work order that will reflect the fact that it was generated during the preventive maintenance route. A lot of maintenance and plant managers want to show a regulatory body like OSHA that they don t have any problems. But what really impresses those regulators is to show them how you can query your EAM software to generate a list of corrective work orders you have completed based on preventative maintenance. This proves that you are actively looking for things that could be HSE issues. Admitting that there have been problems that are fixed gives you more credibility than claiming that everything is always perfect. By demonstrating that you are trying to get in front of things, you may impress them enough that if they do find something and they do see that you are being proactive; they are apt to be more lenient. Apart from avoiding fines and other penalties associated with regulatory violations, the health and safety capabilities of EAM can drive health and safety benefits by actually mitigating risks associated with employee injury or accidents that impact the environment. Everyone knows unmitigated asset risk can prove hazardous to a company and can lead to a multitude of disastrous consequences including bad public relations, reduced stock price and getting named to a Superfund claim by the EPA from the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Everyone has seen the well-publicized tragedies such as the Deepwater Horizon oil spill in the Gulf of Mexico or the Union Carbide Bhopal disaster, yet many more, smaller, tragedies happen every day caused by faulty equipment. But when a company has a hard time demonstrating that they were undertaking due diligence to prevent that accident from occurring, there s a good chance they wind up getting hit with a penalty in civil court and chances are they are in for major claim. 2. REALIZE THAT HUMAN RESOURCES ARE CENTRAL While EAM is all about managing assets, the assets and asset value depend on adequate human resources to perform maintenance work. Technology has come a long way, but machines still can t maintain or fix themselves! So it is important to see the human resources functionality of EAM as being critical tools for asset management. Not only do you need to document that qualified people are performing work per regulation. But you need to ensure that, given the maintenance needs of your equipment, you have enough people on hand to meet current and future needs. This impacts hiring decisions, vacation scheduling and means that as sick days are called in, the maintenance schedule or staffing levels must be adjusted accordingly. 5

As executives in the manufacturing and industrial environments try to run with fewer resources, EAM can, by documenting the staffing demands of the assets, help illustrate the fact that there are certain staffing levels required to keep equipment running effectively. Maintenance staffing is often seen as overhead rather than a vital part of the profit center of an asset-intensive industry. By using EAM, a plant manager can make the case that cutting back on their maintenance staff may be penny wise but pound foolish. If maintenance is not completed in a timely fashion or performed thoroughly due to lack of time and manpower, there will be an impact on operations up to and including health and safety issues or asset failure. Assets will decline in value, while product quality and deliverability will suffer. EAM can definitely illustrate the pay me now or pay me later dynamic of maintenance staffing. 3. INVOLVE THE MAINTENANCE TEAM EARLY It should go without saying that maintenance team involvement is a key factor in the success of an EAM implementation project. When we implement EAM in asset driven companies (like power generation plants, oil and gas pipelines, foundries, shipyards, or offshore drilling companies), maintenance and plant management tend to be drivers and centrally involved. But in implementations where the early phases are more focused on manufacturing, finance, purchasing or project management, EAM can sometimes be treated with less emphasis or regarded as not as important. When an enterprise implementation is driven by other priorities, we ll sometimes come in to implement the EAM solution and project leadership will hand us off to an IT person to be the lead in helping us get the maintenance system stood up. Of course that IT person has no understanding of the equipment and assets, the existing maintenance processes or routines, or how management wants to break down the cost or productivity of the assets. The justification is that all of their maintenance guys are running and gunning after immediate break-fix priorities and cannot be spared to participate in an implementation. What this means is that there is a lack of understanding of the organizational demands of standing up a sophisticated EAM tool. It also means that maintenance is overwhelmed, and nobody thought to plan capacity for one or more technicians or maintenance managers to participate in the implementation. Everybody s equipment, equipment structure, processes and asset management needs are different and you have to approach it differently. There are also differences in the extent of information that different management and maintenance teams really need to enter into the system to begin with, and differences in the amount of time they will have on an ongoing basis to enter work orders and use the data from the EAM system. Some companies have a managerial and clerical class in maintenance, and have time to really collect a lot of data and some people really are just running and gunning. We have to build the implementation with the customer in mind which requires some participation from key stakeholders. 6

4. TAKE OWNERSHIP When you implement, this is going to be your EAM system. The maintenance team needs to not only learn enough about the software itself to get around, but participate and start to drive decisions about how you will use the software to facilitate your business processes. Those processes are built around the equipment objects that the EAM system will use to manage. When we stand up a system, the first thing that we do is lay out equipment in groups and then add structure and depth under those groups to allow very granular drill-down into asset cost. But that means the structure needs to reflect how management wants to analyze and breakdown groups of assets and equipment, how the equipment is used and how it is maintained. We need the involvement of someone with a deeper understanding of the operation, not just from a maintenance perspective, but from an asset accounting and management standpoint. Every user needs to step up to the plate and take ownership. But each implementation also needs a champion someone with a good understanding of the equipment, how it is used and what kind of visibility management needs of their assets. A champion is someone like one gentleman I had the privilege to work with on a recent project. He was a young marine architect from the University of Michigan, and very comfortable with computers. He was able to provide a number of important insights into how equipment should be structured in the system to conform to the way they manage their maintenance and assets. Not only does this proactive approach result in a system that better conforms to business needs right out of the box, but with input such as was given on that particular project, I think they are going to use the software more extensively and are going to garner a lot more benefit than they anticipated. Taking ownership is important not only to ensure the system is correctly set up, but to ensure it is used properly and good information is entered into the system once you are live. Maintenance people have a lot of pride, and they do want to do things right if they see the value in it. But they are notorious for being able to work around a system if they think it is questionable. They will have open work orders and just dump unrelated man-hours into them because they don t feel like they have time to open up a new work order and distribute time like they should across different jobs. This directly affects the effectiveness of the system by skewing the actual costs of maintaining the gear. But if maintenance sees their EAM system as a tool to help them do their jobs better, they can use it to prove what they already know: that certain pieces of equipment are bad apples. So they start tracking pertinent time for the work they do and present management with suggestions on how to make things better. Ownership is a cultural issue that drives engagement as well as a factor contributing to a quality implementation. 7

5. REVISIT THINGS SOON AFTER GO-LIVE So you are live on your EAM software suite. Everything is working, and you are driving postings to finance. This has involved some real work by a number of people in the organization and everybody is so relieved that it is done, they often just want to coast until a future upgrade to a new iteration of the software is made. But, it makes a lot more sense for a core project team to continue to meet regularly with a project champion, especially when there are several sites. That champion will need some time allocated on an ongoing basis to continue to implement or record the ideas of the team. Even an hour meeting once a month, tapering down to once a quarter, will drive ideas for improvements. After six months to a year of analyzing how they are using the system, what they would do slightly differently, they can bring the software vendor back in to revisit a few things. It s been my experience that one week onsite planned and prepared for post go-live meeting will garner more value than any one week of training during implementation. After all, during that initial implementation, they are under a lot of pressure. They are learning the software, while under a deadline to get it up by a certain date. But once they are comfortable with how it works, and they have real world experience with it, they get ideas of how technicians can save a couple of clicks on a work order, which may be a valuable time savings and contribute to end user buy-in if you are doing 20 work orders a day. Unfortunately, a lot of people wait until they do an upgrade, and at that point they have to learn some new functional enhancements that, while helpful, take up some of the bandwidth that they could use getting their initial upgrade implementation the way they really want it. Proactive implementation teams can make simple alterations driven by that real life post go-live experience, or maybe add nice-tohave functionality they omitted during the original project. CONCLUSION EAM software delivers key benefits to an organization that relies on expensive and complex assets. It gives senior management visibility and control over the drivers of cost and productivity of those assets. And it offers real maintenance management and risk management benefits. Realizing those benefits is not as simple as licensing the software though. Management and maintenance both need to contribute to the implementation process in a meaningful way. And once they are live, they need to continue to think creatively about how the system is meeting their needs and how it can be improved. 8

In his role as Business Consultant for IFS North America, Jerry Browning helps IFS customers get the most out of IFS Applications functionality for maintenance, enterprise asset management and asset lifecycle management. He has more than 25 years of maintenance and asset management experience, along with an academic background in electronics and electrical engineering at Ohio University and the University of Houston. He was part of the esteemed AEGIS program in the US Navy. For more information on IFS, please visit www.ifsworld.com/us 9

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