April 24, 2006

Next-Generation Enterprise Asset Management
by Patrick Connaughton

Helping Business Thrive On Technology Change


Quick Take “Predicting When Machines Are About To Fail” November 17. All other trademarks are the property of their respective companies. For those looking to jumpstart these initiatives. Additional reproduction is strictly prohibited. Technographics. To get there. Ramco Systems. especially before taking on system upgrades or new installs. SAP. To achieve a predictive state. go to www. To purchase reprints of this document. Forrester Wave. 2003. Forrester Research. IVARA. While EAM vendors are providing incremental product enhancements to address these immediate issues. Brief Series 8 Reliability-Centered Maintenance: The First Step In EAM Transformation WHAT IT MEANS 9 Maintenance Outsourcing Can Expedite The Asset Management Transformation © 2006. Opinions reflect judgment at the time and are subject to change. IFS. MRO Software. Forrester’s Ultimate Consumer Panel. and Sunflower Systems. overall. 2003. Intentia. and Total Economic Impact are trademarks of Forrester Research. WholeView 2. Forrester. AssetPoint. Forrester recommends running the business case for employing a full-service outsourcing company to manage the operations. firms need to conduct a thorough assessment to gauge the strengths and weaknesses of the current processes. All rights reserved. Brief Series 2003: Firms Spend To Maximize Asset Profitability” August 4. While this is often a daunting task. Related Research Documents “ERP Vendors Are Marketing EAM” June 30. Indus International. This is due in part to ongoing challenges like inconsistent data quality and poor usability. but. please email resourcecenter@forrester. emerging technologies have sparked a renewed interest in EAM. EAM Solutions Need To Move Upstream RECOMMENDATIONS N OT E S & R E S O U R C E S Forrester interviewed 12 vendor companies: ABB.com. For additional reproduction rights and usage information.MA RK E T O V E R VIE W April 24. Oracle. 2003.com. TABLE O F CO N T E N TS 2 New Technologies Reenergize Enterprise Asset Management 3 Solution Providers Seek To Meet Clients’ Evolving EAM Needs 5 Reactive Culture Hinders Wide EAM Adoption 5 EAM Solution Providers Focus On Adoption Challenges 6 To Achieve PDM.forrester. firms not only need the technology solution but also a strong foundation of supporting processes. Forrester clients may make one attributed copy or slide of each figure contained herein. 2004. Brief Series “How Firms Can Get Value From Physical Assets” July 28. . As of late. Information is based on best available resources. user adoption continues to suffer. Inc. welldefined frameworks like the Reliability Centered Maintenance (RCM) methodology are available to help streamline the project. they typically fall short when it comes to enabling the next level of asset optimization: Predictive Maintenance (PdM). 2006 Next-Generation Enterprise Asset Management Moving From A Reactive To Predictive State Of Maintenance by Patrick Connaughton with Noha Tohamy and Elisse Gaynor EXECUT I V E S U M MA RY Enterprise Asset Management (EAM) solutions have been on the market for more than two decades and range in sophistication from basic work order generation to predictive analysis of future asset performance. Datastream. We also included end user feedback from client inquiries and vendor customer references. Inc.

with most tools offering similar core functionality. Forrester Research.1 For example. This functionality is especially useful for utilities field service workers. selling better architected. Mobile assets can include anything from a fleet of trucks. Tracking these assets continues to get a good deal of market attention as security issues remain on the forefront of every firm’s agenda. emerging technologies like the X Internet are also generating a renewed interest in the space. utilities infrastructure.2 For example. parts management clerks can significantly improve inventory accuracy by using handheld bar-code April 24. and lifespan while reducing maintenance and spare parts inventory costs. 2006 © 2006. Inc. users can typically drill down to more information like open work orders and maintenance history in a tabular format. reports that more than 40% of its new installations is from existing customers upgrading their legacy client server solution to a Web-enabled one. trailers. For example. · Wireless rugged PCs and handheld devices enable automated data entry. reading the tag details when the container is stacked. For solution providers. firms are continuously looking for ways to optimize their asset’s reliability. using GIS technology. Datastream. From the asset icon on the map. a Japanese railway transportation company. and containers to a hospital’s movable medical devices. utility workers for a company like Southern Company.2 Market Overview | Next-Generation Enterprise Asset Management NEW TECHNOLOGIES REENERGIZE ENTERPRISE ASSET MANAGEMENT In order to yield the maximum return on major investments like manufacturing equipment. GPS antennae and satellites can report location details anywhere in the world. one of the largest utility companies in the US. and sending it to the master tracking software. Wireless rugged PCs and handheld devices continue to emerge in support of the distributed and disconnected workforce. can pinpoint the exact location of a shipping container among the thousands in its yard by mounting a GPS antenna and RFID reader to the forklift. · GIS make it possible to view asset details geographically. can answer questions in the field like “Are there other open work orders within a two-mile radius of a utility?” or “What is the quickest driving route to my next work order?” This streamlines the field service workers’ job and puts the information at their fingertips to make them more efficient. and transportation fleets.3 EAM field workers stand to benefit from this technology by automating much of the currently manual data entry required when completing a work request. Reproduction Prohibited . Geographic Information Systems (GIS) tools use location data to display assets on a computerized map. An active RFID tag can store and transmit asset information up to 30 feet away. Enterprise asset management is hardly a new concept. technologies like: · RFID and GPS enable mobile asset tracking. Software solutions have been in play for more than two decades. Recently. This not only reduces the time it takes to locate an asset but also improves overall visibility throughout the supply chain. a company like JR Freight. linking it to the GPS coordinates received on the forklift. more user-friendly EAM tools to their existing customer base has become the primary growth driver. Within the facility. utilization rate. for example.

Best-of-breed vendors like MRO Software. and vibration levels. Intentia. · Ultrasound. many are looking to their existing ERP solutions to provide the needed EAM functions. and Oracle all have EAM solutions within their larger ERP offerings. Condition monitoring technologies track key asset health indicators like temperature. Inc. ERP vendors that do not have an EAM tool are working to fill that functional gap. IFS. can use wireless sensors to monitor remote. © 2006. Forrester Research. and business intelligence analytics (see Figure 1). and Indus International offer standalone solutions with out-of-the-box ERP integration points. But Forrester has identified two major categories in the vendor base: best-of-breed and ERP (see Figure 2). Pratt & Whitney has implemented a wireless bar-code-based data collection system using Intermec’s mobile computers with integrated bar-code scanners. A recent example of this was the March 2006 acquisition of best-of-breed EAM provider Datastream by ERP vendor Infor. offshore oil wells. Inc. Reproduction Prohibited April 24. pressure. An emerging trend in condition monitoring is the use of embedded sensors that wirelessly transmit condition and diagnostic data to the main EAM system for real-time analysis. For example. PdM. significantly improving parts inventory data accuracy and streamlining the receiving process into the warehouse. EAM solutions are continually expanding into a much larger solution footprint. thermal imaging. A company like Chevron. 2006 . with literally hundreds of niche vendors. SOLUTION PROVIDERS SEEK TO MEET CLIENTS’ EVOLVING EAM NEEDS The EAM solution market is highly fragmented. Figure 1 The Expanding EAM Functional Footprint Role-based analytics and reporting Asset registry HR skills registry Requisition and Purchasing eCommerce Warranty management Event management and Alerting Workforce management Spare parts management Work order management Financial reporting Preventive scheduling Reliability Centered Maintenance (RCM) 39281 Predictive Maintenance (PdM) Source: Forrester Research. As firms move to reduce the number of vendors they have to work with and standardize their technology stacks. Fueled by these technology advances. Datastream.Market Overview | Next-Generation Enterprise Asset Management 3 scanners instead of manually entering data. helping to pinpoint problems early and avoid costly repairs to the infrastructure. ERP suites like SAP. for example. adding areas like performance monitoring. This is especially useful for monitoring assets in hard-to-reach or hazardous environments. and wireless sensors enable condition monitoring.

Reproduction Prohibited . and embedded plant design feature. Given MRO Software’s leadership position. eliminating the need for point-to-point interfaces. and embedded analytics. preconfigured software and Key Performance Indicator (KPI) functionality. flexible data model. Oracle’s EAM solution differentiates itself with its Web-based architecture. Inc. This solution differentiates itself with its Web-based. Forrester was not briefed by this vendor for this report. and a data model that support multiple asset ownership and location tracking. vertical focus. DataStream 7i is a best-of-breed EAM that differentiates itself with its J2EE Web-based architecture. it should be on every vendor assessment short list. 39281 April 24. Source: Forrester Research. 2006 © 2006. Mincom differentiates itself with an ERP solution that caters specifically to asset-intensive industries. and embedded GIS capability. and its solution set has a wide breath of functionality across vertical markets and asset types. single sign-on with the ERP solution. Oracle is committed to continuing support of the JD Edwards EAM product in the short-term and is actively selling this solution in the SMB and global markets. commitment to SOA. deep vertical focus. and it Management differentiates itself with its integrated suite of products for managing the complete life cycle of an asset. and two-way MS Project integration. clean integration with asset monitoring tools. Indus Asset Suite IFS EAM Intentia EAM MRO Software Maximo Enterprise Suite Mincom Ellipse Oracle E-Business Suite EAM EnterpriseOne ALM Oracle JD Edwards SAP Service and Asset SAP’s EAM module runs as part of the mySAP Business Suite.4 Market Overview | Next-Generation Enterprise Asset Management Figure 2 EAM Software Vendor Landscape Vendor Integrys Asset Point DataStream EAM Products TabWare EFx DataStream 7i Comments AssetPoint’s Tabware EFx differentiates itself with a hosted solution and Windows XP look and feel. Inc. IFS differentiates itself with its long-standing component-based architecture. Cognos-powered analytics. Intentia differentiates itself with a completely integrated RCM module. MRO Software is the revenue leader in the best-of-breed EAM category. an integrated advanced production planning tool. Forrester Research. Indus differentiates itself by offering EAM as part of their Service Delivery Management suite (complementing EAM with CIS/billing and field service solutions) as well as their SOA architecture.

This problem results in a lack of faith in the system as well as low adoption rates. Bar-code-enabled scanners are used to quickly identify an asset and bring up the relevant work order. and preventative maintenance is one of their biggest challenges. Inc. offering incremental improvements over legacy tools. it becomes extremely difficult to plan for PdM. some companies opt to overmaintain their assets to avoid machine failure or plant shutdown. Best-of-breed applications can now run on mobile devices like Symbol’s rugged MC70 or MC9000 Series handheld computers and bar-code scanners. To keep operations up and running and to avoid disruptive events like a plant shutdown. This means that the EAM tools cannot rely on an accurate picture of which parts are really available. we found that many firms are still struggling with the day-to-day reactive issues. Over time. Users also reported that allocating their ever- shrinking labor pool between reactive.Market Overview | Next-Generation Enterprise Asset Management 5 REACTIVE CULTURE HINDERS WIDE EAM ADOPTION Based on Forrester’s interviews. Because of this firefighting state. like bar-code-enabled receipt. both of which compound the issue even more. EAM users have reported that inaccurate and incomplete data is the most persistent problem firms face. Some firms attribute the problems to their existing processes or the lack of a dedicated owner/administrator of the data. improving the quality of the © 2006. Reproduction Prohibited April 24. stocking. they are not able to make program improvements or move to a predictive strategy in maintaining their assets. they have: · Automated data entry and refined validation rules to address integrity issues. When in a reactive state. Additionally. The simple question of what work to do at the right time remains unanswered. scheduled. EAM solution providers have worked with their customers to enhance functionality. Forrester Research. EAM SOLUTION PROVIDERS FOCUS ON ADOPTION CHALLENGES In order to address the above challenges. This helps to eliminate the need for a clipboard and avoid manual entry. The three most commonly reported issues are: · Bad data and low user adoption of EAM applications. · Poor inventory management of service parts. 2006 . This allows workers to complete work order details in the field or reference key asset information when making a repair. · Inability to create proper work schedules. this practice ends up being as expensive as the cost of recovering from that same disruptive event. and picking. On the other hand. many maintenance managers opt to hedge in their requirements for parts safety stocks. Others point to their system’s poor usability and tedious data entry requirements. many facilities have yet to adopt robust management processes. and many firms are incurring higher inventory carrying costs with excess on hand. Specifically.

Additionally. parts. EAM providers now offer many inventory management features — such as eCommerce cataloging and purchasing — inventory tolerance levels that trigger auto-requisitions.6 Market Overview | Next-Generation Enterprise Asset Management input needed by the EAM solution. · Added business logic to facilitate optimal maintenance scheduling. Providers also work with their clients to implement other inventory management best practices. EAM solution providers have focused on offering easy-to-use scheduling functionality like a graphical calendar display or integration into third-party scheduling tools. includes a built-in Microsoft Project interface that enables planning the schedule in Project using labor and task data from the EAM solution without having to manually export and import the data each time. · Applied supply chain best practices to improve spare parts inventory management. including labor. Datastream 7i. Reproduction Prohibited . 2006 © 2006. In order to prioritize tasks. including previously completed maintenance and other task priorities. for example. and downtime cost in conjunction with asset monitoring trends and predictions all in one application. Forrester Research. In order to do that. IFS. MRO Software’s Maximo Enterprise Suite solution. In order to understand the total cost and ramifications of a scheduling decision. solution providers have embedded data cleansing and validation utilities in an effort to address data errors. planners need access to a consolidated view of EAM data. firms need tools to help them not only react to actual failure points but predict future failure points and proactively recommend remediation. Inc. for example. Based on this simulation. the tool can then recommend the timing of the maintenance using the overall asset criticality and resource availability. If the record violates any business rules. Forrester believes that this can be achieved by establishing a greater interoperability between asset monitoring/diagnostics solutions and EAM tools. has a built-in procurement module that offers automated materials requisitions based on maintenance schedules to ensure that the right parts are ordered at the right time. has built-in validation rules that dictate that imported or manually entered records are checked for possible errors and duplicates. such as setting up the standard parts taxonomy and naming conventions as well as the use of numbered inventory racks. EAM SOLUTIONS NEED TO MOVE UPSTREAM Although EAM solutions have made progress in areas like usability and data validation. April 24. solutions rely on past asset performance information to simulate a failure point. TO ACHIEVE PDM. for example. they still fall short of helping clients optimize their asset utilization. the tool alerts the user of the potential problem and does not update the production data until it is resolved. To build efficiency gains by having the right part on hand for the needed maintenance. and bar-code label generation for receipt and cycle counting. To help users build maintenance work plans based on factual assessment of priorities. The integration of these systems not only offers the advance identification of a required work order but manages the creation and scheduling of that order based on all the information available in EAM.

analyze it. and the only way to strike the balance is to combine the predictive data with the EAM labor.5 In conjunction with SOA and open standards initiatives.4 The issue with this is that pointto-point interfaces would still be required. The wealth of data these two systems create can be combined to provide a holistic view of trends across an enterprise. as well as a measurable way for firms to make continuous improvements to their programs. The shortcoming of this approach is that this task is created in a silo. When EAM analytics include the raw monitoring and diagnostics data. it is typically only to import a predefined work order task from the diagnostic system to the EAM tool. the EAM will also provide a dashboard view of the current state of health across all of a firm’s assets. 2006 . Forrester Research. based on the asset monitoring data and not on the priority or cost considerations stored within the EAM application. · Increased efficiency in labor management. © 2006. To counter this. Reproduction Prohibited April 24. There are a number of initiatives leading the way for open standards today. the EAM solutions need to extend their offerings to include utilizing the raw condition monitoring data within the analytics and business intelligence modules to enable enterprisewide benchmarking and optimal scheduling recommendations. and report on it. Because of this. For example. one consolidated suite including EAM and PdM may not be in the cards in the near future. the data captured by the condition monitoring/diagnostic system has not been used within the EAM system for failure trend analysis or predictive scheduling. including asset and work order status. The next-best option is to renew the focus on open messaging standards between the two applications. It would take a tremendous amount of work to rationalize all the data across these proprietary applications. “run to failure” analysis uses the diagnostic data from the condition monitoring software and the labor. performance measurements. import it into the EAM.Market Overview | Next-Generation Enterprise Asset Management 7 Historically. and downtime costs from the EAM solution to assess whether it would be less expensive to run the asset until it breaks rather than address the issue. vendors are committing to building service-oriented architecture (SOA) that would provide a central data exchange. Using the alerts and monitoring data from the monitoring system. To combine these applications is not a simple undertaking. Too much maintenance can be as costly as not enough. enabling users to make better decisions and benchmark against other facilities. reducing the need for point-to-point interfaces. and KPIs. parts. By performing this analysis. When these two systems are integrated. Inc. parts. including MIMOSA and the Open O&M program. teams can make better decisions on where to focus constrained repair resources. adding to the overall cost of ownership and complexity. firms can benefit from: · Real-time performance management and enterprise-level analytics. and downtime costs to make better decisions. This provides a window for management teams into high-performing areas that can potentially be leveraged for best practices.

April 24.8 Market Overview | Next-Generation Enterprise Asset Management · Closer ties between the diagnostics and remediation task. In the newly engineered process. If the old EAM data is simply exported into the new system without this assessment. tolerances. 2006 © 2006. Specifically. firms must use insights from RCM assessments to gauge the effectiveness of their current maintenance practices and ensure that the new processes set up in the EAM system will only improve their overall return on assets. loosely coupled operation. Reproduction Prohibited . such as higher service-level agreements or further decentralization of their operations. the first challenge is to gain an accurate understanding of the strengths and weaknesses of their current practices. As in all process re-engineering efforts. RCM helps define the key performance metrics for the asset under review as well as the reasons. companies lack the foundation to define and detail the road map to the desired “to-be” state. R E C O M M E N D AT I O N S RELIABILITY-CENTERED MAINTENANCE: THE FIRST STEP IN EAM TRANSFORMATION Facing new business requirements. remediation work management. the Reliability Centered Maintenance (RCM) assessment methodology. RCM assessments are beneficial to asset management transformation only if firms translate the assessment findings into action-oriented recommendations and work orders within the EAM system. Forrester Research. firms must allocate resources proportionate to the cost and yield of each maintenance task. likelihood and impact of possible failures. By completing this exercise. at least all of the information is in one place to catch and generate alerts and manage the resolution workflow. By embedding the diagnostics. The challenge is that benchmarking efforts are often overwhelming to firms with already stretched maintenance budgets and limited personnel bandwidth. all of the inaccurate and improperly prioritized tasks come with it. and KPIs within the EAM solution. The good news is that there are a number of well-defined methodologies and tools to help teams streamline the process — namely. Forrester recommends that firms take the opportunity before system upgrades or new installs to conduct a complete RCM assessment and use the results to drive the new system requirements. which can provide an excellent framework for the first steps in process re-engineering efforts. there is a much greater likelihood that the events will be noticed and action will be taken. One of the biggest issues with diagnostics and assessments results is that often times no remediation action is being taken and the feedback loop is never being closed. This is especially relevant for companies that have grown through acquisition. they are a step closer to ensuring that the right tasks are performed at the right time. Practices that assumed a highly centralized organization might now be unsuitable to a distributed. inheriting new facilities and manufacturing operations with different processes and systems. Inc. Without gauging the effectiveness of the “as-is” state. Importantly. firms are looking to revamp their asset management practices. RCM can also help map out the preventative tasks that can minimize the likelihood of each failure. If action is not taken.

Many RCM assessments fall short today because the recommendations for making improvements are not translated into action-oriented tasks within the production system. 2006 . devices. The emerging architecture. firms can embark on an asset management transformation effort. 2006. See the April 4. the security of global supply chains has garnered much attention 2 © 2006. leveraging the provider’s investments and scale. In the wake of 9/11 and more recent US homeland security initiatives. Forrester Research. reliability. which could range from process reengineering to a systematic approach to improving asset reliability. sensors. However. As a result. while sharing the project risk on a pay-for-performance basis. process-oriented. The inevitable drawback to this increase in links is greater vulnerability from a functional. supply chains become even more distributed. business applications. In addition to full maintenance services. ENDNOTES 1 The Extended Internet (what Forrester calls the “X Internet”) connects information systems to physical assets. Employing a provider like this. it becomes exponentially more difficult to make changes from both process and application perspectives. But many firms. ABB can guide a company to benchmark its maintenance practices against industry best practices. some are looking for service providers that can help improve their maintenance function without significant capital investments. and return on capital investment. work scheduling. a pulp and paper mill struggling to compete against increasing competition can turn to a service provider like ABB for an outsourced maintenance program that contractually commits to plant productivity improvement as well as cost optimization. Inc. W H AT I T M E A N S MAINTENANCE OUTSOURCING CAN EXPEDITE THE ASSET MANAGEMENT TRANSFORMATION Most companies realized long ago that maintenance cannot be treated merely as a cost center. and even people. if this analysis is completed on the front end of the implementation cycle as a precursor to setting up the system. and parts management. Topic Overview “Topic Overview: The Extended Internet. telematics. Asset management improvements directly result in better asset utilization. and security standpoint.Market Overview | Next-Generation Enterprise Asset Management 9 Once the system is live in production. To achieve this. For example. A third party willing to take over operations and contractually commit to cost optimization can expedite the transformation of asset management. strapped for resources. the odds of success are increased significantly. The provider can also help firms map out their asset management strategy. cannot realistically make the upfront investments needed to re-engineer their maintenance processes. and technologies like RFID. products. and biometrics are all encompassed by the term X Internet.” Supply chain development continues to be driven by globalization and outsourcing. Reproduction Prohibited April 24. To make the necessary changes to maintenance functions and the required investments in technology solutions. firms need to take a holistic approach across condition monitoring. mobile networks.

and horizontal information integration. These XML-based specifications will enable end-to-end. Topic Overview. and management of software infrastructure and applications to create a more flexible digital embodiment of any business are the major tenants of service-oriented architecture and allow firms to reduce system complexities and increase flexibility in their digital environments. vertical.10 Market Overview | Next-Generation Enterprise Asset Management and scrutiny from both the public and private sectors.” The Machinery Information Management Open Systems Alliance (MIMOSA) is leading the way in defining open standards for integration between condition monitoring and EAM applications. Inc. Reproduction Prohibited . See the October 18.mimosa. 2006. One of its core objectives is to “publish open specifications for robust Enterprise Application Integration (EAI) and Condition-based Maintenance (CBM). Best Practices “Are Our Supply Chains Less Vulnerable Now?” 3 With an average of 22% of the workforce leveraging mobile applications for greater access to pertinent information and data. Topic Overview “Topic Overview: Enterprise Mobility.” Source: http://www. deployment. See the December 22. “Topic Overview: Service-Oriented Architecture.org. 2005. The style of design. mobile applications have finally found traction in today’s enterprise. Forrester Research. 2004.” 4 5 April 24. 2006 © 2006. See the March 15.

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