4190 Rae Am Final

Enterprise Asset Management
Maximizing Return on Assets and Emerging Trends
June 2008
~ Underwritten, in Part, by ~
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Executive Summary
Aberdeen Group's latest research in Enterprise Asset Management (EAM) Research Benchmark
reveals that Best-in-Class companies are using asset management strategies Aberdeen’s Research
to reduce operational cost, improve profitability and hence improve the Benchmarks provide an in-
competitive edge in the market place. In this research report, Aberdeen depth and comprehensive look
Group surveyed more than 160 manufacturing executives to understand the into process, procedure,
strategies and business capabilities adopted by manufacturers to maximize methodologies, and
Return on Assets (RoA) and reduce risk from failure of critical assets. This technologies with best practice
research will also uncover emerging trends around energy management identification and actionable
initiatives adopted by companies to reduce energy consumption costs. recommendations
Best-in-Class Performance
In the following analysis, Aberdeen uses three Key Performance Indicators
(KPIs) to identify Best-in-Class performance. Across these metrics Best-in-
Class manufacturers averaged:
• 93% Overall Equipment Effectiveness (OEE)
• 97% plant throughput
• 3% downtime
Competitive Maturity Assessment
Aberdeen's survey analysis shows that the firms enjoying Best-in-Class “With the increase in costs and
being in a highly leveraged
performance share several common characteristics:
industry, maximum uptime and
• Best-in-Class manufacturers are 50% more likely to standardize utilization of assets is very
asset maintenance and reliability processes across the enterprise critical for our organization.
Also, operating in an asset
• Best-in-Class companies are three-times more likely to establish intensive environment, manual
continuous improvement teams to focus on condition and Reliability tasks are impossible to perform
Centered Maintenance (RCM) to achieve our goals. Hence,
maintenance and monitoring of
• Best-in-Class companies are two-times more likely to utilize mobile assets is very critical to our
devices integrated with the asset management solution industry.”
Required Actions ~ Madhukar Rajagopal, CIO
In addition to the specific recommendations in Chapter Three of this JSW Steel Ltd
report, to achieve Best-in-Class performance, companies must:
• Improve visibility into production and asset performance across the
enterprise through the use of asset analytics and dashboards
• Move from a break-fix maintenance approach to a more predictive
approach by adopting advanced capabilities such as RCM
• Invest in an Enterprise Asset Management (EAM) solution and
establish real time interoperability between EAM and Enterprise
Resource Planning (ERP)
© 2008 Aberdeen Group. Telephone: 617 854 5200

www.aberdeen.com Fax: 617 723 7897
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Table of Contents
Executive Summary....................................................................................................... 2
Best-in-Class Performance..................................................................................... 2
Competitive Maturity Assessment....................................................................... 2
Required Actions...................................................................................................... 2
Chapter One: Benchmarking the Best-in-Class ..................................................... 4
Business Context ..................................................................................................... 4
Dominant Market Pressures.................................................................................. 4
The Maturity Class Framework............................................................................ 5
The Best-in-Class PACE Model ............................................................................ 6
Best-in-Class Strategies........................................................................................... 6
Chapter Two: Benchmarking Requirements for Success .................................... 9
Competitive Assessment......................................................................................10
Chapter Three: Required Actions .........................................................................17
Laggard Steps to Success......................................................................................17
Industry Average Steps to Success ....................................................................17
Best-in-Class Steps to Success ............................................................................17
Appendix A: Research Methodology.....................................................................19
Appendix B: Related Aberdeen Research............................................................21
Featured Underwriters..............................................................................................22
Figures
Figure 1: Managing Risks and Maximizing Return on Assets............................... 4
Figure 2: Top Strategic Actions ................................................................................. 7
Figure 3: Technology Enablers .................................................................................13
Figure 4: Empowering Employees with Mobile Solutions..................................14
Figure 5: Establishing Real-time Interoperability..................................................15
Figure 6: Reducing Energy Consumption Costs ..................................................16
Tables
Table 1: Top Performers Earn Best-in-Class Status.............................................. 5
Table 2: The Best-in-Class PACE Framework ....................................................... 6
Table 3: The Competitive Framework...................................................................10
Table 4: The PACE Framework Key ......................................................................20
Table 5: The Competitive Framework Key ..........................................................20
Table 6: The Relationship Between PACE and the Competitive Framework
.........................................................................................................................................20

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Chapter One:
Benchmarking the Best-in-Class
Business Context
Fast Facts
The rising commodity and energy costs and the uncertain global economy
have all put more pressures on manufacturers than ever before to reduce Best-in-Class enterprises
operating costs on each and every aspect of manufacturing operations. For significantly out perform their
competition in all three KPIs.
manufacturers, this requires plants and factories to be available and running
These manufacturers enjoy:
at peak performance and producing high quality products at the right time.
To achieve these goals companies are developing multiple strategies for √ 93% Overall Equipment
asset management at an enterprise level. Effectiveness (OEE)
This Benchmark Report will uncover the pressures that are driving √ 97% plant throughput
companies to focus on Enterprise Asset Management (EAM), the specific
√ 3% downtime
strategic actions companies are taking to address the pressures, and the
business and technology enablers that are adopted by manufacturers to
effectively manage manufacturing assets. The findings of this report will also
uncover some of the emerging trends in the asset management field around
the use of energy management initiatives to achieve the ultimate goal of cost
reductions in manufacturing operations.
Dominant Market Pressures

Manufacturers across different industry verticals have invested heavily in
assets. When it comes to asset intensive industries this investment can be a
significant portion of the total capital invested in a manufacturing plant. The
top pressure driving manufacturers to focus on asset management is to
maximize return on the investments on these assets.
Figure 1: Managing Risks and Maximizing Return on Assets
Maximize Return on Assets (RoA) 65%
The risks from failure of critical assets 61%
Complexity in manufacturing assets 19%
Reduce energy consumption costs 19%

Compliance to regulatory requirements
18%
(e.g. environmental, OSHA)
Aging / Retiring workforce 7%
Corporate focus on green initiatives 5%
0% 35% 70%
% All Respondents
Source: Aberdeen Group, June 2008

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The second most prevalent pressure in the industry around asset “We have been given the tone
management is to manage and mitigate risk due to failure of critical assets at the top: higher focus on
asset management in order to
(61%). Aberdeen research in March 2008 regarding Risk Mitigation in
improve reliability and
Manufacturing Operations showed that risk due to asset failure is one of the performance, reduce out of
top three risks that have the most impact on manufacturing operations. The service time. The main and
science of risk has garnered much attention among manufacturers and is principal decision so far was to
critical in terms of asset management. Managing risk is an approach of create an Asset Management
identifying the top risks to the operations, quantifying and prioritizing the Group to drive this approach
identified risks, and establishing controls to mitigate these risks. From the and concept.”
asset management perspective, this approach helps manufacturers to be ~ Gilles Bocabarteille, Vice
proactive in nature and move away from the traditional break-fix approach President, Asset Management,
by gaining real-time visibility into equipment failures before they actually Pride International, Inc.
occur. The focus on transitioning from a reactive to predictive asset
management approach will remain central throughout the rest of this
analysis and continue to re-emerge in our key findings.
The Maturity Class Framework
Aberdeen uses three key performance criteria to distinguish the Best-in-
Class from Industry Average and Laggard organizations. These are:
• Overall Equipment Effectiveness (OEE) measured as a
percentage by multiplying availability times performance times
quality
• Plant throughput measured as total actual output divided by total
theoretical output
• Asset downtime measured as the amount of time the asset is
offline against total asset availability
Respondents were divided among three categories based on their aggregate
performances in these three metrics: the top 20% of performers (Best-in-
Class), the middle 50% (Industry Average), and the bottom 30% of
performers (Laggards). Table 1 displays the aggregated performance of Best-
in-Class, Industry Average, and Laggard organizations.
Table 1: Top Performers Earn Best-in-Class Status

Definition of Maturity Class Mean Class Performance
Best-in-Class: 93% OEE
Top 20% of aggregate 97% plant throughput
performance scorers 3% asset downtime
Industry Average: 86% OEE
Middle 50% of aggregate 91% plant throughput
performance scorers 13% downtime
Laggard: 67% OEE
Bottom 30% of aggregate 74% plant throughput
performance scorers 34% asset downtime

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The Best-in-Class PACE Model

Manufacturing companies faced with the pressure to maximize Return on
Assets (RoA) are looking at multiple strategies to optimize asset utilization
at the enterprise level. Table 2 summarizes some of the strategic actions,
business process capabilities, and technology enablers Best-in-Class
companies have implemented to address these market pressures.
Table 2: The Best-in-Class PACE Framework

Pressures Actions Capabilities Enablers
Maximize Return Optimize asset Standardized processes for Predictive maintenance
on Assets (RoA) utilization maintenance and reliability across Reliability Centered Maintenance
Improve visibility the enterprise (RCM)
into production and Executive ownership and Asset performance dashboards
asset performance sponsorship for asset Manufacturing analytics
across enterprise management strategies across
Condition based maintenance
Executive focus on the enterprise
Operator training
establishing Asset management data is used
continuous to analyze, predict, plan, and Mobile solutions
improvement schedule maintenance activities Risk management
initiatives for asset Asset management system is Corrective and Preventive Actions
management integrated with predictive failure (CAPA)
analysis data
Best-in-Class Strategies
The top strategic action manufacturers are taking to address the market
pressures shown in Figure 1 is to optimize asset utilization (Figure 2). This
action is reported by more than two thirds of the total pool of survey
respondents. Optimizing asset utilization is a process of balancing trade-offs
between different areas of asset management such as asset scheduling, spare
parts replenishment, asset downtime, and the maximizing metrics like
Overall Equipment Effectiveness (OEE) and plant throughput. Often this
improvement in operational performance can result in the ultimate cost
reduction and improved profitability.
One of the steps necessary to optimize asset utilization is to move from a
reactive to a proactive based asset management approach. This requires
manufacturers to have real-time visibility into production and asset
performance data. This visibility allows manufacturers to monitor asset
condition in real time, deliver that data to decision makers as actionable
intelligence and finally use the data to analyze, predict, plan, and schedule
maintenance activities across different assets. This is the action being taken
by 53% of the responding manufacturers.

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Figure 2: Top Strategic Actions

BIC All Respondents
69%
Optimize asset utilization
63%
Improve visibility into production and asset 53% “Our plant is sitting on over
performance across enterprise 47% $600 million in fixed assets.
Asset management is vital for
municipal infrastructure.”
Executive focus on establishing Continuous 38%
Improvement initiatives for asset management 32% ~ Bradley Bellows
City of Ottawa
Create real-time interoperability between asset 19%
management and existing technology investments 26%
0% 40% 80%
Manufacturers are also developing strategies for establishing continuous

improvement initiatives and getting attention from the executive team to
enable the success of such initiatives. These initiatives are focused on
establishing cross functional teams to share and execute best practices for
asset management across different departments. Companies are extending
this collaborative approach by creating real-time interoperability between
asset management solutions and the existing technology investments at the
plant and enterprise level.
Manufacturers of all performance levels face the same market pressures and
are responding with the same strategic actions. When compared, there is no
significant difference between the market pressures faced by the Best-in-
Class, Industry Average, or Laggard manufacturers. Similarly, there is no
significant difference in the strategic actions these different categories of
manufacturers are taking. However Best-in-Class manufacturers realize
improved performance as compared to Industry Average and Laggard
manufacturers (Figure 1). In the next chapter, Aberdeen will link specific
business capabilities and technology enablers to Best-in-Class performance
and identify how the aforementioned strategic actions can be assured success.
Aberdeen Insights — Challenges
Seventy-seven percent (77%) of survey respondents indicated that their

focus on asset management has increased as compared to last year. Upon
further analysis, Aberdeen found that this focus is even higher among
Best-in-Class companies, with 84% of the Best-in-Class increasing their
focus on asset management. While asset management is top of mind for
plant management as well as corporate leadership, there are multiple
challenges companies are facing to effectively execute the strategic
actions discussed in this chapter.
continued

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Aberdeen Insights — Challenges
The top two challenges are based on the cultural change required within
the organization. Companies are primarily challenged due to the change
in culture required to move from break-fix maintenance to proactive
maintenance techniques (45%). The second most prevalent challenge
among survey respondents was that asset management is still viewed as a
necessary cost by senior management (35%) and hence it is difficult to get
ownership from the executives. In addition to the cultural challenges,
companies are overwhelmed with the data available on the plant floor
and face challenges to manage the complex and disparate data sets to
improve decision making (31%).
Chapter Two will look at the capabilities Best-in-Class are adopting to
address these challenges.

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Chapter Two:
Benchmarking Requirements for Success
The success of asset management initiatives depends heavily on where in the Fast Facts
maturity class framework an enterprise falls (Table 1). Maturity affects how Best-in-Class manufacturers are
an enterprise should leverage supporting technologies and other business more likely to adopt the
capabilities, and in turn, goes a long way to translating the strategies following technology enablers:
presented in Chapter One to maximizing RoA.
√ Two-times as likely to adopt
Case Study - Skånemejerier Reliability Centered
Maintenance (RCM)
Skånemejerier is one of the largest dairy companies in the Scandinavian √ 60% more likely to adopt
market, best known for its milk and dairy products. Skånemejerier has alert and alarm management
three production plants that process over 40,000 order lines daily for
products ranging from milk and cheese to highly specialized health foods. √ 62% more likely to adopt
asset analytics
With such a variety of short shelf-life products, equipment failures,
production stoppages, and recalls, could be extremely costly.
Skånemejerier wanted to improve the analyses of assembly line
breakdowns and allow production and maintenance personnel access to
relevant data that would help them make better decisions to improve the
overall quality of the plant. Skånemejerier had an outdated, in-house
maintenance solution that was beginning to cause problems. The
company was looking to computerize preventive maintenance routines,
as well as improve the spare parts purchasing and handling process.
Skånemejerier decided to adopt an integrated EAM solution to address
these issues.
The biggest overall benefit Skånemejerier has experienced, since
implementing the EAM solution, is the drastic reduction in spare parts
inventory. According to Jan Lindskog, CIO of Skånemejerier “We are able
to reduce our spare parts stock level by 40% resulting in cost reduction
from USD $2.29 million to USD $1.37 million.” Some other benefits that
Skånemejerier realized after the implementation are as follows:
• Increased collaboration among plants as all three production
plants can now see the amount and type of stock available in
other locations
• Reduction in error and increased time savings as the new EAM
solution is integrated with other financial, production, and
purchasing solutions eliminating the need to manually input and
transfer information such as financial data between the various
systems
• Improved visibility into assets and the ability to analyze trends
around equipment reliability
• Reduction in maintenance resource waste and increased control
over maintenance related costs

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Competitive Assessment
Aberdeen analyzed the aggregated metrics of surveyed companies to determine
whether their performance ranked as Best-in-Class, Industry Average, or Laggard.
In addition to having common performance levels, each class also shared
characteristics in five key categories: (1) process (the standardization and
management of processes across the enterprise); (2) organization (cross
functional teams established to create corporate culture of reliability); (3)
knowledge management (using data modeling capabilities to automate
workflows); (4) technology (the software and capabilities that are crucial for asset
management); and (5) performance management (use of asset data to manage
performance). These characteristics serve as guidelines for best practices, and
correlate directly with Best-in-Class performance across the key metrics.
Table 3: The Competitive Framework

Best-in-Class Average Laggards Definitions
Standardized processes for maintenance and reliability across the √ EAM - Enterprise Asset
enterprise Management
68% 51% 45%
√ CMMS - Computerized
Standardized measurement of Key Performance Indicators (KPI)
Maintenance Management
Process across the enterprise
System
53% 40% 18%
Standardized processes for monitoring equipment condition √ APM- Asset Performance
across the enterprise Management
44% 40% 15% √ ERP- Enterprise Resource
Executive ownership and sponsorship for asset management Planning
strategies across the enterprise
√ PFA- Plant Floor
53% 52% 36%
Automation
Established continuous improvement teams focused on condition
Organization and reliability centered maintenance activities √ RCM- Reliability Centered
53% 50% 16% Maintenance
Established cross-functional team including maintenance, productions,
and engineering to create a corporate culture for reliability
35% 23% 18%
Process modeling capabilities are used for automating workflows
Knowledge and interoperability between systems
33% 19% 13%
Percentage of manufacturers currently using technology:
61% PFA 45% PFA 23% PFA
Technology
79% EAM / CMMS 56 % EAM / CMMS 48% EAM / CMMS
37% APM 31% APM 11% APM
Asset management system is integrated with predictive failure
analysis data
Performance 28%s 17% 6%
Lean principles used to manage maintenance operations
37% 25% 12%

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Process
Best-in-Class manufacturers are differentiating themselves by standardizing
processes across different aspects of asset management. First, these
manufacturers are 50% more likely than Laggards to standardize asset
maintenance and reliability processes across the enterprise. Best-in-Class
manufacturers are also nearly three times as likely as Laggards to
standardize the measurement of Key Performance Indicators (KPIs) as well
as standardize equipment monitoring condition across the enterprise.
All these are important processes for managing assets, and standardizing
these processes will allow manufacturers to capture best practices and
implement them across different plants to optimize asset utilization. This
also allows senior executives to compare performance of different plants
and to share knowledge and information from one plant to another.
Organization
Organizational capabilities are critical for addressing the cultural challenges
discussed in Chapter One. Best-in-Class manufacturers are strategically
organized to get buy-in from different stakeholders in the organization by
raising awareness about the importance of asset management to the overall
corporate growth plans. The Best-in-Class are establishing ownership and
sponsorship from the executive level regarding their asset management
strategies and programs. On a plant floor level, Best-in-Class manufacturers
are establishing continuous improvement teams focused on advanced asset
management capabilities such as condition and reliability centered
maintenance initiatives. This step directly helps companies to change the
maintenance culture to being predictive and have teams in place to
continually improve processes for reliability and condition based
maintenance programs.
Finally, Best-in-Class manufacturers are taking a collaborative approach
towards asset management by establishing cross-functional teams from
production, maintenance, and engineering to create a corporate culture of
reliability. This also helps organizations to bring perspectives from different
functional departments to optimize production, inventory, and assets at an
enterprise level. This may very well be one of the reasons why Best-in-Class
manufacturers realize 16% higher Overall Equipment Effectives (OEE) as
compared to Laggard manufacturers. As OEE is a metric that involves
availability, quality and performance, it is absolutely necessary for all these
departments to work collaboratively and establish strategies to realize
higher operational performance.
Knowledge and Performance Management

Knowledge and performance management capabilities are both crucial for
the overall asset management strategy of the organization. Best-in-Class
manufacturers are not only automating workflows, but are using process
modeling capabilities to effectively automate workflows and interoperate
across different systems. This is an effective capability as it allows

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manufacturers to capture best practices from the experienced maintenance

employees and incorporate those practices to model and manage
workflows. Adopting such capabilities also allows manufacturers to address
the issue of an aging / retiring workforce by transferring knowledge from “We are at the early stage and
few experienced employees to the overall workforce. Best-in-Class are are transiting from a traditional
nearly three times as likely to use such advanced modeling capabilities to engineering and technical group
automate workflows as compared to Laggards. to asset management group.
Our expectation is to drive the
On the performance management side, Best-in-Class companies are cultural change with regards to
integrating failure analysis data in their asset management system and are the maintenance of our asset in
also three-times as likely as Laggards to use Lean maintenance concepts in order to better prevent,
their overall asset management strategy. As standalones, the necessity for predict rather than react.”
these capabilities is not immediately apparent. However, in aggregate, there
~ Gilles Bocabarteille, Vice
are important synergies that exist between the knowledge and performance President, Asset Management,
management capabilities identified earlier. Process modeling capabilities very Pride International, Inc.
often help facilitate using Lean in maintenance operations. Subsequently,
manufacturers are able to more precisely understand both processes and
the performance of assets, ultimately allowing for optimized spare parts
inventory levels and asset maintenance schedules.
Technology
Best-in-Class companies are automating the capabilities discussed earlier by
adopting technology solutions. Best-in-Class companies are nearly three-
times as likely as Laggards to use Plant Floor Automation (PFA) and Asset
Performance Management (APM) solutions. These solutions play a critical
part in automating data collection from the assets and using analytical
capabilities to understand the true value of the data collected. Best-in-Class
companies are 65% more likely than Laggards to invest in an Enterprise
Asset Management (EAM) solution. Aberdeen Group findings indicate that
the adoption level of EAM solutions have increased since last year for
manufacturers across all the three categories of performance. This truly
highlights the importance of looking at asset management at an enterprise
level.
In addition to looking at the major technology solutions, Aberdeen Group
analyzed the specific modules or technology enablers that differentiate Best-
in-Class performance (Figure 4). Best-in-Class companies are adopting
modules to automate three important aspects of asset management:
advanced maintenance capabilities, real-time visibility, and monitoring of
assets and employee training.

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Figure 3: Technology Enablers

Best-in-Class Others
71%
Alerts and Alarm Management “We use an enterprise asset
44%
management solution that
67% tracks job ticket measures. We
Preventive Maintenance
49% track and trend key
Operator Training 44% performances indicators and
21% review them versus plan each
44% month.”
Asset Analytics
27%
~ Manager, IT
Asset Dashboards 41% Large Life Science Company
35%
40%
Reliability Centered Maintenance (RCM)
22%
0% 40% 80%
One of the top strategic action manufacturers are taking is to increase

visibility into production and asset performance (Figure 2). While we
observed insignificant differences in the strategic actions of the Best-in-Class
compared to our general population, we do see differences in how they
might be satisfying the need for visibility and other requirements. Best-in-
Class companies are improving visibility by adopting asset analytics,
dashboards, and alarm management modules to automate data collection,
analyze and monitor asset data, and finally escalate adverse events to
appropriate decision makers at the right time and in the right format to
prevent equipment failure.
Best-in-Class manufacturers are also moving away from the break-fix
maintenance to a predictive approach by adopting preventive maintenance
as well as Reliability Centered Maintenance (RCM) capabilities. Preventive
maintenance capabilities ensure that asset maintenance is performed at
regular intervals to improve the life span for assets. RCM is an advanced
maintenance capability that analyzes critical failure mode of assets to
determine the optimum maintenance policy to reduce the severity of asset
failure. Both these approaches are important to reduce the risk due to
failure of critical assets.
Finally, Best-in-Class companies are addressing the aging / retiring
workforce by adopting operator training modules. This ensures that the
best practices already embedded in asset management systems are
effectively transferred to new and inexperienced employees. This often
further reduces down time and critical asset failures.
Use of Mobile Solutions in Asset Management

Another area that clearly differentiates Best-in-Class performance is the use
of mobile solutions in the overall asset management strategy. Best-in-Class

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companies are 2.5-times as likely as other manufacturers to integrate mobile

devices with the asset management solution allowing manufacturers the
flexibility to operate remotely.
Figure 4: Empowering Employees with Mobile Solutions

Best-in-Class Others
Mobile devices integrated with asset 37%

management systems 15%
Mobile devices are used in 32%

maintenance rounds 19%
Mobile devices used to initiate work 26%

order without going back to 20%
workstations
0% 20% 40%
Traditionally, maintenance employees collected asset and equipment

information on paper while on maintenance rounds for routine inspection of
equipment. However, the Best-in-Class are eliminating this manual approach
by equipping their employees with mobile devices to input equipment
inspection data directly into mobile devices that are integrated with the
asset management system. This eliminates the process of manual data entry
into the computer resulting in reduction of data collection errors and time
savings. Finally, the Best-in-Class are using mobile devices to initiate work
orders without going to their workstations.
Real Time Interoperability

While Best-in-Class manufacturers are more likely to invest in asset
management technology, these manufacturers are also establishing real-time
interoperability among existing technology investments. This capability is
very much in line with the strategic actions of creating real-time
interoperability between technology solutions, discussed in Chapter One.

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Figure 5: Establishing Real-time Interoperability

“We use the asset management
BIC Industry Average Laggards module from our ERP, tying
100% 100% financial, HR, and operations
80% together. We take data
71%
80% collected from the work orders
56%
47% in the system to determine
42%
40% 33% 33% where worker hours and
maintenance costs are going
and monitoring the work order
0% backlog. The data is compiled
APM and PFA (Plant floor APM and CMMS/EAM CMMS/EAM and ERP into detailed monthly reports
automation) for the supervisors and high-
Source: Aberdeen Group, June 2008 level quarterly graphical reports
for management. The data is
The primary role of technology is to facilitate information sharing across the monitored to ensure that we
enterprise so that employees have visibility into the manufacturing process. hit set targets.”
One of the roadblocks to this facilitation is the fact that manufacturers have
adopted technology applications that function independently in a siloed ~ Bradley Bellows
manner. Best-in-Class manufacturers are not only integrating their City of Ottawa
technology solution at the plant level by integrating Plant Floor Automation
(PFA) with APM solutions and APM with CMMS / EAM solutions, but these
manufacturers are getting the true value of enterprise-wide adoption by
integrating the EAM solution with ERP solutions.
This integration provides manufacturers with the ability to streamline
maintenance operations through better planning and scheduling of production
and maintenance tasks. An integrated solution offers enterprise-wide visibility
of the complete asset lifecycle, right from the design phase to the final
disposition. This information becomes important in making decisions about
future asset purchases. Finally, integration allows manufacturers to connect
their maintenance applications with higher-level business systems more easily
which in turn results in increasing responsiveness and an ability to make quick
and intelligent asset management decisions.
Aberdeen Insights — Technology
While only 19% of survey respondents have selected reducing energy

management cost as a pressure (Figure 1), Aberdeen found that Best-in-
Class manufacturers are more likely to face this as a pressure as
compared to other manufacturers. The Best-in-Class are developing
strategies at a plant level and gaining support from the top executives to
reduce energy consumption costs.
Best-in-Class manufacturers are integrating energy management
programs with the overall asset management strategy. Best-in-Class are
three-times as likely as Laggards to establish executive level accountability
to manage the success of green initiatives. The Best-in-Class are also
three-times as likely to collect and monitor asset data at the equipment
level and utilize that data to minimize energy consumption.
continued

Page 16
Aberdeen Insights — Technology
As the energy cost is skyrocketing, the cost of operating manufacturing

assets and equipments are likely to rise. Companies need to establish
these energy management strategies and adopt analytics and dashboards
to collect, monitor, and analyze energy usage data to minimize energy
consumption.
Figure 6: Reducing Energy Consumption Costs
BIC Industry Average Laggards

“JSW Group is associated with
60% 53% Al Gore's ‘The Climate
Project.’ We have one of the
37% 37%
31% 32% 29% greenest steel plants and many
30%
19%
23% 24% of our manufacturing processes
12% 13% 12% are inherently green. In
addition, from an IT
0% perspective, we are ensuring
Energy usage data is Asset data utilized to Energy management Executive level that all components, including
monitored and minimize energy integrated with the accountability to the data center, are green.”
collected at consumption overall asset manage the success
equipment level management strategy of green initiatives ~ Madhukar Rajagopal, CIO
JSW Steel Ltd

Page 17
Chapter Three:
Required Actions
Whether a company is trying to move its performance in EAM from Laggard Fast Facts
to Industry Average, or Industry Average to Best-in-Class, the following Best in Class manufacturers
actions will help spur the necessary performance improvements: are:
√ Two-times more likely to
Laggard Steps to Success standardize processes for
• Transition from a break-fix approach for asset management to a measuring KPIs across the
predictive approach by establishing continuous improvement teams enterprise
with a focus on condition and reliability centered maintenance √ Two-times more likely to
activities. Best-in-Class manufacturers are two-times more likely to use Lean principles to
establish such teams. manage maintenance
operations
• Standardize processes for maintenance and reliability as well as
monitoring equipment status across the enterprise. This will enable √ 1.5-times more likely to
Laggards to capture best practices for asset management across integrate mobile deices with
different plants and scale it across the enterprise. asset management systems
• Establish support from the executive management for asset √ 30% more likely to utilize
management initiatives. Best-in-Class companies are nearly 50% mobile device to initiate
more likely to get executive sponsorships for asset management work order without going
programs. back to workstations
• Invest in analytics, dashboards, and alarm management tools to

improve visibility into production and asset performance across the
enterprise. The Best-in-Class are more likely than Laggards to adopt
the aforementioned tools.
Industry Average Steps to Success

• Utilize data and process modeling capabilities to automate
workflows and interoperate between technologies. The Best-in-
Class are 75% more likely to invest in such capabilities than Industry
Average manufacturers.
• Establish cross functional teams between production, maintenance,
and engineering to foster collaboration among these departments
and establish a corporate culture of reliability.
• Invest in EAM solutions and establish real-time interoperability
between EAM and ERP solutions. The Best-in-Class are 40% more
likely than Industry Average manufacturers to invest in EAM
solutions and establish interoperability with ERP.
Best-in-Class Steps to Success

• Invest in advanced maintenance capabilities such as Reliability
Centered Maintenance (RCM). Currently only 40% of Best-in-Class
manufacturers have adopted RCM. This is an important capability

Page 18
for Best-in-Class manufacturers to retain their higher operational

performance.
• Empower maintenance employees with mobile devices that are
integrated with asset management solutions. Adoption of mobility
solutions for asset management will reduce error because of manual
data entry during routine operator rounds and will enable
employees to initiate work orders without going to their
workstations.
• Establish strategies to reduce energy consumptions costs. This
includes collecting and monitoring energy usage data at the
equipment level and using that data to minimize energy
consumption. Best-in-Class manufacturers should also include
energy management initiatives with the overall asset management
strategy.
Aberdeen Insights — Summary
Manufacturing companies are facing increasing pressure to maximize RoA

and reduce risks due to failure of critical assets. To address these
pressures Best-in-Class manufacturers are taking a holistic approach by
taking asset management to an enterprise level.
Best-in-Class manufacturers are adopting predictive maintenance
capabilities, improving visibility into production and asset performance,
establishing executive sponsorship as well as cross functional teams on
the plant floor, investing in EAM solutions, and are closing the loop by
establishing real-time interoperability with ERP systems.
All these steps are critical for Best-in-Class companies to realize 16%
higher Overall Equipment Effectiveness (OEE), 22% higher plant
throughput, and 31% lower asset downtime as compared to Laggards.

Page 19
Appendix A:
Research Methodology
Between April and June 2008, Aberdeen examined the use, the experiences, Study Focus
and the intentions of more than 160 manufacturing executives across Responding manufacturing
different industry verticals regarding their asset management capabilities. executives completed an online
Aberdeen supplemented this online survey effort with interviews with select survey that included questions
designed to determine the
survey respondents, gathering additional information on asset management following:
strategies, experiences, and results.
√ The pressures driving their
Responding enterprises included the following: focus on enterprise asset
management
• Job title / function: The research sample included respondents with
the following job titles: CxO or President (9%); Vice-President (5%); √ The structure and
Director (9%); Manager (39%), Staff (16%), Consultant (16%), and effectiveness of existing
other (5%). technology implementations
• Industry: The research sample included respondents from √ Top technology enablers
automotive (15%); chemicals (15%); oil and gas (14%); utilities (8%); adopted to facilitate
food and beverage (8%); industrial equipment manufacturing (8%) enterprise asset management
and energy (7%). √ The benefits, if any, that have
• Geography: The majority of respondents (56%) were from North been derived from
America. Remaining respondents were from the Asia-Pacific region technology adoption and
integration
(14%), Europe (18%) and Middle East, Africa (10%).
The study is aimed to identify
• Company size: Forty-seven percent (47%) of respondents were from
emerging best practices for
large enterprises (annual revenues above US $1 billion); 27% were enterprise asset management
from midsize enterprises (annual revenues between $50 million and across the industry, and to
$1 billion); and 26% of respondents were from small businesses provide a framework by which
(annual revenues of $50 million or less). readers could assess their own
capabilities
• Headcount: Fifty-three percent (53%) of respondents were from
large enterprises (headcount greater than 1,000 employees); 26%
were from midsize enterprises (headcount between 100 and 999
employees); and 31% of respondents were from small businesses
(headcount between 1 and 99 employees).
Solution providers recognized as sponsors were solicited after the fact and
had no substantive influence on the direction of this report. Their
sponsorship has made it possible for Aberdeen Group to make these
findings available to readers at no charge.

Page 20
Table 4: The PACE Framework Key

Overview
Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities,
and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as
follows:
Pressures — external forces that impact an organization’s market position, competitiveness, or business
operations (e.g., economic, political and regulatory, technology, changing customer preferences, competitive)
Actions — the strategic approaches that an organization takes in response to industry pressures (e.g., align the
corporate business model to leverage industry opportunities, such as product / service strategy, target markets,
financial strategy, go-to-market, and sales strategy)
Capabilities — the business process competencies required to execute corporate strategy (e.g., skilled people,
brand, market positioning, viable products / services, ecosystem partners, financing)
Enablers — the key functionality of technology solutions required to support the organization’s enabling business
practices (e.g., development platform, applications, network connectivity, user interface, training and support,
partner interfaces, data cleansing, and management)
Table 5: The Competitive Framework Key

Overview
The Aberdeen Competitive Framework defines enterprises In the following categories:

as falling into one of the following three levels of practices Process — What is the scope of process
and performance: standardization? What is the efficiency and
Best-in-Class (20%) — Practices that are the best effectiveness of this process?
currently being employed and are significantly superior to Organization — How is your company currently
the Industry Average, and result in the top industry organized to manage and optimize this particular
performance. process?
Industry Average (50%) — Practices that represent the Knowledge — What visibility do you have into key
average or norm, and result in average industry data and intelligence required to manage this process?
performance. Technology — What level of automation have you
Laggards (30%) — Practices that are significantly behind used to support this process? How is this automation
the average of the industry, and result in below average integrated and aligned?
performance. Performance — What do you measure? How
frequently? What’s your actual performance?
Table 6: The Relationship Between PACE and the Competitive Framework

PACE and the Competitive Framework – How They Interact
Aberdeen research indicates that companies that identify the most influential pressures and take the most
transformational and effective actions are most likely to achieve superior performance. The level of competitive
performance that a company achieves is strongly determined by the PACE choices that they make and how well they
execute those decisions.

Page 21
Appendix B:
Related Aberdeen Research
Related Aberdeen research that forms a companion or reference to this
report include:
• Risk Mitigation in Manufacturing Operations; March 2008
• Event Driven Manufacturing Intelligence: Creating Closed Loop
Performance Management; May 2008
• Manufacturing Operations Management: The Next Generation of
Manufacturing Systems; January 2008
• Ground Up Strategies for Asset Performance Management;
September 2007
• Manufacturing IQ: Taking Manufacturing Intelligence to the
Enterprise; July 2007
• Benchmarking Enterprise Asset Management; June 2007
• Collaborative Asset Maintenance Strategies, December 2006
• Driving Enterprise Performance with Asset Information, July 2006
• The Asset Management Benchmark Report : Moving Toward Zero
Downtime, April 2006
Information on these and any other Aberdeen publications can be found at
www.Aberdeen.com.
Author: Matthew Littlefield, Research Analyst, Manufacturing,

matthew.littlefield@aberdeen.com
Mehul Shah, Research Analyst, Manufacturing,
mehul.shah@aberdeen.com
Since 1988, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having
benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide
organizations with the facts that matter — the facts that enable companies to get ahead and drive results. That's why
our research is relied on by more than 2.2 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of
the Technology 500.
As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted
marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-
Hanks (Information – Opportunity – Insight – Engagement – Interaction) extends the client value and accentuates the
strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen http://www.aberdeen.com
or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com
This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies
provide for objective fact-based research and represent the best analysis available at the time of publication. Unless
otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be
reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by
Aberdeen Group, Inc. 043008a


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Enterprise Asset Management

Maximizing Return on Assets and Emerging Trends

© 2008 Aberdeen Group. Telephone: 617 854 5200

© 2008 Aberdeen Group. Telephone: 617 854 5200

Dominant Market Pressures

Figure 1: Managing Risks and Maximizing Return on Assets

Maximize Return on Assets (RoA) 65%

The risks from failure of critical assets 61%

Complexity in manufacturing assets 19%

Reduce energy consumption costs 19%

Corporate focus on green initiatives 5%

© 2008 Aberdeen Group. Telephone: 617 854 5200

Table 1: Top Performers Earn Best-in-Class Status

Source: Aberdeen Group, June 2008

© 2008 Aberdeen Group. Telephone: 617 854 5200

The Best-in-Class PACE Model

Table 2: The Best-in-Class PACE Framework

© 2008 Aberdeen Group. Telephone: 617 854 5200

Figure 2: Top Strategic Actions

Manufacturers are also developing strategies for establishing continuous

Aberdeen Insights — Challenges

Seventy-seven percent (77%) of survey respondents indicated that their

© 2008 Aberdeen Group. Telephone: 617 854 5200

Aberdeen Insights — Challenges

© 2008 Aberdeen Group. Telephone: 617 854 5200

© 2008 Aberdeen Group. Telephone: 617 854 5200

Table 3: The Competitive Framework

© 2008 Aberdeen Group. Telephone: 617 854 5200

Knowledge and Performance Management

© 2008 Aberdeen Group. Telephone: 617 854 5200

manufacturers to capture best practices from the experienced maintenance

© 2008 Aberdeen Group. Telephone: 617 854 5200

Figure 3: Technology Enablers

One of the top strategic action manufacturers are taking is to increase

Use of Mobile Solutions in Asset Management

© 2008 Aberdeen Group. Telephone: 617 854 5200

companies are 2.5-times as likely as other manufacturers to integrate mobile

Figure 4: Empowering Employees with Mobile Solutions

Mobile devices integrated with asset 37%

Mobile devices are used in 32%

Mobile devices used to initiate work 26%

Traditionally, maintenance employees collected asset and equipment

Real Time Interoperability

© 2008 Aberdeen Group. Telephone: 617 854 5200

Figure 5: Establishing Real-time Interoperability

Aberdeen Insights — Technology

While only 19% of survey respondents have selected reducing energy

© 2008 Aberdeen Group. Telephone: 617 854 5200

Aberdeen Insights — Technology

As the energy cost is skyrocketing, the cost of operating manufacturing

Figure 6: Reducing Energy Consumption Costs

BIC Industry Average Laggards

© 2008 Aberdeen Group. Telephone: 617 854 5200

• Invest in analytics, dashboards, and alarm management tools to

Industry Average Steps to Success

Best-in-Class Steps to Success

© 2008 Aberdeen Group. Telephone: 617 854 5200

for Best-in-Class manufacturers to retain their higher operational

Manufacturing companies are facing increasing pressure to maximize RoA

© 2008 Aberdeen Group. Telephone: 617 854 5200

© 2008 Aberdeen Group. Telephone: 617 854 5200

Table 4: The PACE Framework Key

Table 5: The Competitive Framework Key

The Aberdeen Competitive Framework defines enterprises In the following categories: