Enterprise Asset Management (EAM) Driving Value

Enterprise Asset Management (EAM): Driving Value in
Industrial Environments
Slide 1: Enterprise Asset Management (EAM): Driving Value in Industrial
Environments
Slide 2: Welcome and Introduction
Welcome to todays webinar on Enterprise Asset Management (EAM): Driving Value in Industrial
Environments. Im going to be presenting some findings from the latest research study that I recently
published back in November of last year.
Im part of the Aberdeen group, and what we do as an organization is we really try to create research and
educate the market into the best practices for turning your organization, as well as the technology that you
can implement into cost savings. I lead research in three particular areas: I cover the sustainability space in
manufacturing; I also cover asset management, as well as industrial networking.
Slide 3: Course Overview and Objectives

After you complete this course, you should be able to understand three main things. The first is to really
understand the pressures driving organizations to focus on enterprise asset management (EAM) and the
leading strategies that these industry leaders are implementing in order to overcome these high-level
pressures.
Well also be exploring the different various business capabilities and technologies that leading industry
leaders are using in order to improve their manufacturing productivity, their operational costs, as well as
their sustainability initiatives.
And lastly, were going to highlight and provide a road map on how to achieve this best-in-class
performance.
Slide 4: Lesson 1: Understand EAM Pressures

Slide 5: Lesson Introduction
The first lesson that were going to cover is really high level, understanding the high-level EAM pressures.
And in this lesson, were going to cover three major things. The first is the definition of what EAM means;
what does enterprise asset management mean? The high-level pressures that manufacturing operations
face, as well as the high-level pressures driving companies to focus on asset management.
Slide 6: What is EAM?

Before we dive into the findings of the research, I think it makes a lot of sense to really talk about what we
mean by enterprise asset management. In this sense, since we are talking about this from a manufacturing
perspective, an asset is essentially a machine; any kind of physical asset that you use on your
manufacturing floor. That being said, its not the tracking of, in the IT spaces, laptops and cell phones, but
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when we talk about it in manufacturing, were talking about a pipe or a machine or an asset.
In enterprise asset management, were basically looking at the ability to manage the life cycle of all your
physical assets across your departments, locations, facilities, and in some cases, business units. And when
youre managing the life cycle, it includes, essentially, the design, the construction, the commissioning,
maintaining, repairing, and then lastly, replacing and decommissioning and disposal of that physical asset.
And so in some manufacturing facilities, they have maybe 10 different machines, some have hundreds. And
if you look at it in a global environment, it means managing the life cycle of thousands, even hundreds of
various assets across your entire facilities.
This is a graph that shows the life cycle in three major parts: purchasing of that new equipment, maintaining
and fixing that equipment, and then lastly, decommissioning and recycling that equipment.
Slide 7: Top Pressures in Manufacturing Operations

In this survey, one of the first questions that I askbecause it really made sense in understanding what the
economic condition was doing to manufacturing operationswas really to ask our survey respondents,
what were your high top-two pressures, when it came to manufacturing operations? And surprisingly, it
came down to the need to maximize return on asset (ROA) was the top pressure. And what this really
showed was, it came to no surprise for me (who covers this topic year over year), because of the current
economic condition, many companies are looking for ways to cut down additional costs in an already lean
environment. And since these companies have already invested billions of dollars in their plant equipment,
one of the areas of improvement is to find ways to maximize the return on asset at lower capital risk.
The next set of pressures really revolved around the need to reduce the risk within your operations, as well
as the need to be in compliance to those regulations. And obviously, with their recently highly publicized
events that happened as far as two years ago with the BP (British Petroleum) oil spill, with the Massey
(Energy) mine incident, as well as the Japan nuclear plant incident (Fukushima Daiichi). Organizations are
definitely more sensitive than ever that they need to ensure that a high-profile adverse event doesnt
happen within their operations.
And the analysis of our research really shows how new technologies and approaches to risk management
can address these pressures. And then obviously, lastly, when youre working in a global environment,
theres obviously increased complexity when it comes to managing your operations.
Slide 8: Top Market Pressures Driving Focus on Asset Management

As we can see here, and this is out of 160 respondents, 52% said reduce capital budgets and next was
regulatory compliance and next was aging assets. Volatile customer demands and economic uncertainty
have really forced companies to put a break on spending. Many companies are delaying capital expenditure
and lowering operational expenditure to stay profitable. At the same time, organizations also understand
that they cant forget about compliance because compliance can result into an incident, which obviously
results in penalties, fines, and in some cases, production line shutdowns.
At the same time, theres also the problem of aging assets. A lot of times when you purchase equipment,
the life cycle of that equipment is around can span from 15 to 20 years. For some assets in your facility,
theyre about to reach that age where you need to invest in upgrading that asset because it can become
obsolete.
And then lastly, is the need to improve energy efficiency. This is also something important that companies
are thinking about, because with the fluctuating oil prices, that puts a strain on your resources. And as we
know, when it comes to manufacturing facilities, energy is one of the most expensive costs that come with
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managing and operating a manufacturing facility. Being able to understand energy consumption of your
facility and know each particular asset can really allow organizations to optimize their energy output.
Slide 9: Check Your Understanding

Slide 10: Lesson Summary
And to summarize, in lesson one, we covered the definition of EAM. We also covered what were the top-two
pressures and the primary drivers for manufacturing operations, which was the need to maximize the return
on assets and the need to be in compliance and reduce the risks of their operations. And we also covered
the driving force between companies to focus on asset management, which was reduced capital budgets,
compliance, and aging assets.
Slide 11: Lesson 2: Explore EAM Business Capabilities and Technologies

Slide 12: Aberdeen Research Methodology
Were going to explore a little bit into the EAM business capabilities and technologies. And before I dive
right into the research, it definitely makes sense to talk about our research framework, the Aberdeen
research methodology, and it essentially consists of two different frameworks.
The first is called the Maturity Class Framework, where we ask each of our survey respondents to
self-assess themselves across three particular KPIs (key performance indicators). And so in this research,
we asked them to talk about where they performed an unscheduled asset downtime, productivity metric
with OEEs (overall equipment effectiveness), as well as the return on asset (ROA) rate versus their
corporate plan. Then we took an aggregate score of all the total respondents across these three KPIs and
broke it down according to the top 20% being the best in class, the middle 50% being the industry average,
and the bottom 30% being the laggards.
And then we had our second framework which is called the PACE, which stands for pressures, actions,
capabilities, and enablers. The pressures look at these high-level pressures driving organizations to focus
on asset management. We look at the high-level corporate strategies that the organizations are
implementing, and then we look at the business capabilities, and lastly, the key technology solutions that
enable them to support their business practices.
And when we marry our Maturity Class Framework and our PACE Framework together, were able to
essentially identify what the best-in-class companies are doing in order to achieve their performance
benefits, as well as why theyre achieving this greater success, and lastly, what kinds of technologies and
business capabilities that theyre using in order to enable them to succeed. How we define the best-in-class
is companies that are able to achieve lower unscheduled asset down time, higher productivity rates, and
higher return on asset rates, as compared to their competitors.
Slide 13: Differentiating Best-in-Class Strategies

The first thing that we looked at was what were their high-level corporate strategies that these best-in-class
companies have implemented to achieve these performance benefits? And at a high level, we see that in
order to overcome that top pressure of reduced capital budget, best-in-class companies are providing
real-time visibility into asset performance to enable them to be more predictive in, not only managing their
operations, but also their maintenance and reduce their overall risk.
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At the same time, secondly, the goal of asset management is to maximize the return on capital invested in
the asset. And so the best in class are aligning their operational goals with (that) to meet their financial
goals. And coupled with that is also having this long-term capital planning, so that they can improve with
their analytical tools. And then lastly, theyre also having and managing the energy and emissions as part of
their maintenance strategy. And again, we talked a little bit about this energy. Reducing the energy intensity
within their facility not only furthers their quests for being socially responsible and sustainable, but also
furthers their quest for profits and their bottom line.
Slide 14: Business Capabilities

What kinds of business capabilities have the best-in-class companies utilized in order to execute upon
these strategies?
And what we saw was, the first strategy that really shows differentiation was that the best in class are
having their maintenance procedures be risk based. So what do we mean by being risk based? It means
standardizing processes to identify, quantify, and prioritize all the risks within their assets. And then, in
addition to that, creating a closed-loop process, where they have controls and contingency plans in order to
reduce the impact of these risks. This kind of framework really provides the best-in-class companies the
ability to understand the risk profile of their assets and really to predict future events before it were to
actually occur. And they do that also by having the ability to have this real-time data, which enables them to
do root cause analysis for every adverse event.
And then another differentiating business capability is that they are able to link asset performance with
corporate performance. I believe this is pretty critical as well because for the maintenance and for the
liability personnel, theyre able to contextualize the role of their job and how important it is, and how it can
impact their jobs in terms of financial terms. What do I mean by that? It means that these companiesthe
maintenance and reliability personnelcan really understand what it means if they do take shortcuts when
they are performing a work order; not fully doing lockout-tagout (LOTO) when theyre doing maintenance.
And then if they do overcome those kinds of safety measures, it can cause an incident, and then the
machine would have to be shut down. If they get hurt, there are penalties and fines, and there are all
financial terms in terms of the financial impact of them not performing on their job properly.
And then lastly, all levels within their organization have defined roles and responsibilities in the case of an
adverse event. So that way, theyre all trained properly, and they all understand how to mitigate and
minimize the impact of that event to their operations.
Slide 15: Sustainability Capabilities

The best-in-class companies are doing all four of those key capabilities. One of the main things is that the
best-in-class companies are integrating their energy management program with their overall asset
management program. This means that theyve implemented strategies and technologies to collect their
energy emissions and asset data into a single repository and provide this information to key decision
makers for asset and energy decisions.
And best-in-class companies are also three times as likely as laggard companies to use energy
consumption and emissions data for operational decision making (and thats talking about the first data
point over there). For example, if a motor is using more energy than expected with available data that
best-in-class companies are collecting, maintenance managers can schedule maintenance to diagnose
and fix that problem. But this capability will also allow manufacturers to not only reduce energy but also
improve their productivity. Theyre using it to minimize energy consumption, as well as using the carbon
emissions level to get that visibility into understanding and aligning your maintenance, your operational, and
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your production plans, all based on whats happening on their energy level.
Slide 16: Technology Enablers

And then we looked at technology enablers and we asked our respondents whos using an enterprise-level
EAM solution (an enterprise asset management solution). And as you can see here, 64% (as compared to
their competitors are significantly the best in class) are more likely to implement this high-enterprise-level
EAM solution.
What is an EAM solution, an enterprise-level asset management solution? It really plays a critical role in
automating data collection from the assets and using analytical capabilities to understand the true value of
the data collected. It helps manufacturers manage all the critical information around work orders, materials,
spare parts, employee data, procurement, and the maintenance schedule, all in a single platform to collect
this information in a timely fashion, so you can have a really predictive approach towards maintenance. And
when I say a predictive approach, its not a break/fix; you only fix it when its broken. Youre able to predict
when an asset is going to get broken and fix it accordingly, rather than fixing a problem when its already
broken, which can cause and cascade into more production issues. So thats the key value of having an
enterprise asset management solution.
Slide 17: Technology Capabilities

In addition to the enterprise solutions that we talked about with it having an EAM solution, Aberdeen also
analyzed specific modules of technology that differentiates best-in-class performance. And we talked a lot
about visibility, and essentially, to provide visibility, best-in-class companies have adopted three key
technology modules, and thats Asset Analytics, Asset Dashboards, as well as Alarm and Event
Management. And these three tools allow companies to automate that data collection, analyze and monitor
that data, and lastly, escalate an adverse event to the appropriate decision maker. And thats really key as
well. Its all about getting the right information to the right person at the right time.
And then lastly, its the Spare Parts Inventory Optimization, and I think this is also another key technology
module, because a lot of times, organizations dont have visibility into the spare parts for that particular
asset. And if you dont know if you have that spare part to fix that machine, it can make it a longer time to fix
a particular problem. Thats also another critical capability.
Slide 18: Case Study: Photronics

One of the case studies that I featured in the report was from Photronics. Essentially, what they do is they
develop subwavelength reticle solution technology, which really provides a complete array of photomask
solutions for manufacturers who develop semiconductors, flat panel displays, as well as data storage
components.
And in 2007, Photronics opened a new semiconductor facility in Boise, Idaho, in order for them to build their
products at high-end markets. And because this was servicing a high-end market, their manufacturing
equipment that they used cost billions of dollars. It was extremely expensive. And so for them, any form of
equipment failure was not only costly to repair but also it took a long time and could bring their production
line to a complete standstill. They really understood the importance of having an asset management system
to track their work orders, their spare parts, the maintenance, and the asset status of all the equipment in
their facilities.
What kinds of benefits did they get? Why this was all so critical was that sometimes when their asset went
down, it could take weeks to even a month to get that equipment to get back online. So thats why it was
critical for them to get visibility into the health of that asset.
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But lastly, it also provided them the ability to save millions of dollars in renegotiations of service contracts.
As Tim Strodtbeck, their site support manager explained, Whenever we need to outsource our
maintenance work to a third party, through our asset management tool, I can track how long it takes the field
service engineer to respond to our request and get on site. This kind of visibility allows me to hold our third
party accountable to their contracts and gives me a lot of leverage to renegotiate our service contracts.
And he said they saved millions of dollars just by having this kind of visibility.
This is a great case study on how you could leverage an asset management solution to not only get the
health of your asset but also save millions of dollars in renegotiations of your service contracts.

In summary, in this lesson, we covered what the high-level corporate strategies were that were adopted by
best-in-class companies, their differentiated business capabilities, as well as the key technology solutions
that they use to get better visibility into their assets.
Slide 21: Lesson 3: Use a Best-in-Class Performance Road Map

Slide 22: Lesson Introduction
And now were on our final lesson, lesson three, where Im going to provide a best-in-class performance
road map. What road map did the best in class follow to get where they are? And so, in this lesson, we will
discuss the key role an organization structure plays in an organizations EAM strategy, how important it is to
properly manage your asset data, how the best in class are able to connect with the rest of the enterprise,
and how theyre leveraging the latest technology with mobility tools.
Slide 23: Organilzation's Perception on Asset Management

Our respondents, a little under 50%, said that they saw it as a high-level strategic function, where 38% saw
it as a mid-level strategic function. And again, I think this makes a lot of sense. Companies have invested
millions and billions of dollars into their assets. It doesnt make good business sense if you dont
understand the value of those assets and get the needed visibility into understanding where that asset is in
its life cycle. Because, again, it can cause production line shutdowns, it can cause accidents and incidents
to the personnel in your manufacturing facility, so therefore, it is very critical to really understand the health
of your assets.
Slide 24: Importance of Organizational Structure

How important is an organizational structure for this kind of vision?
If you see it as a high-level strategic function within your organization, the best-in-class companies
understand that in order to drive this vision, you really need an executive sponsor. It becomes extremely
difficult to drive such a vision, if you dont have someone from the top driving this initiative, as well as getting
a true budget holder (such as an executive) to allocate the needed resources and money behind that vision.
And then secondly, the best-in-class companies are ensuring that cross-functional teams, across
operations, maintenance, engineering, production, finance to work together to improve the overall risk and
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asset performance of that facility. You can have an initiative that an executive is behind, but if you dont
have anyone else from the top floor all the way down to the shop floor believing in this initiative, it goes into
waste. So you really need to get that executive buy-in, but at the same time, you need to get the buy-in from
the plant-level personnel to really change their culture to being more safety orientated, risk orientated, and
maintenance orientated.
And as we all know, manufacturing facilities contain many different kinds of assets. Certain assets require
continuous monitoring, as well as advanced maintenance strategies, while some are not as expensive and
do not require those expensive techniques and tools.
So when you get your maintenance and your production teams to work together, everyone understands and
can share the needed information in order to understand what happens if I shut down this machine, and
how much effort do I have to put into monitoring this machine versus Machine B. So sharing that kind of
information can really get everyone onboard in understanding the impact of their role within asset
management.
Slide 25: Managing the Data

Another thing that the best-in-class companies are doing as well is understanding the importance of
managing that data. And so theyre providing both historical asset data, as well as real-time asset data, to
provide this actionable intelligence for optimized decision making. Coupled with that, theyre also providing
on-demand access to this data, so its more easily accessible to maintenance and production employees.
But in order to do that, they understand that they need a centralized knowledge warehouse to store all this
information, in order to get the analytics needed to understand the health of your assets. So theyre doing
all these four major things: theyre centralizing that data, and then providing that centralized data to key
decision makers through various analytics tools.
Slide 26: Connecting with the Enterprise

We talked about how best-in-class companies were using EAM. About 63% are actually implementing it,
but where the best-in-class companies are even going further than that to really enable true predictive
maintenance, was that you need to integrate your EAM solution with your existing technology investments.
And the primary role of technology is to facilitate information sharing across the enterprise; to streamline,
not only your maintenance operations, but it enables better planning and scheduling of production and
maintenance tasks.
And one of the roadblocks to achieving this goal is that many companies have adopted multiple technology
solutions that operate in silos that dont talk to each other. As a result, you really cant take advantage of
these tools that you have. And so as you can see here, the best-in-class companies are more likely to
integrate their EAM solutions with other enterprise-level solutions in order to get better visibility into the
complete asset life cycle, from the design phase to the final decommissioning phase of that asset.
Integration also allows manufacturers to connect their maintenance application with high-level business
systems, such as ERP (your enterprise resource planning), which in turn, results in increased
responsiveness and provides the ability for manufacturers to make quick and intelligent maintenance and
asset decisions.
Something thats important to note here is the significant difference between the integration between your
EAM and your energy management system. Theres a huge significant difference. The best-in-class
companies are really understanding the value of gaining that visibility into energy consumption at each
asset level.
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Slide 27: Use of Mobility

The next thing that were actually going to talk about is the use of mobility on the plant floor. And while these
adoption rates are quite low even amongst the best in class, we also have to remember that in
manufacturing, as an industry, they are significantly slower when it comes to adopting technology solutions.
I think if there is one recommendation that I could provide companies it would betake advantage of the
technology thats out there right now. Take advantage of the mobility solutions that are available and really
leverage it for your companys advantage.
Mobility solutions really provide relevant information to field workers on their mobile devices. And these
solutions are extremely important during operator rounds when operators need to store inspection data and
sign off on work orders. Traditionally this stuff is done through paper-based systems. You know a
maintenance worker will go around with a piece of paper and a clipboard and write this information down
and then having to transfer that information into a spreadsheet. Having it easily on a mobile device and
having a workflow behind that allows you to capture that information and automatically store it into a single
system, and thus, communicating this critical information to all the needed employees.
These tools are really essential in many industrieslike oil and gas, chemicals, utilities, miningwhere
workstations are not only as easily accessible, especially if youre offshore. So having the use of mobility
can really help transfer that knowledge and capture that data in a less error-prone fashion than using
paper-based systems.
Slide 28: Case Study: Regain

I had the luxury of talking to another company thats based out of Australia, and they do mineral trading and
processing. Their managing director is Bernie Cooper, who is really a pioneer in the asset performance
management space. He really understands, and this is a relatively new company, definitely not a company
I would define as best in class, but he really understood the vision of asset performance management and
the benefits that it can do to an organization. He really understood that production losses really transcend
into not only the reliability professional but also the financial team.
Understanding this, he established a lot of key capabilities to link their corporate performance with their
asset performance. And he did this by implementing a new system, and this new system, not necessarily, is
an actual technology tool. I think right now theyre using an in-house system. They didnt go to the vendor to
get that kind of system, but I think eventually they will. It really provided them to really understand the impact
of what each equipment failure can do to their financials. And he did it in such a way where he could create
a mathematical formula to really understand the risks of each of their asset bases. This allowed them to be
better prepared for future events and to find better ways to mitigate that problem.
So by understanding that risk, they were able to rank the various risks of all their asset base and really put
a high priority for assets that had the higher risk of causing production losses. And so this really provided
them to get an understanding on which asset had the higher risk and where they needed to focus their
attention when it came to managing the life cycle of their assets.
He did say though, While linking our corporate and asset performance is critical, it wouldnt have been
possible without enabling employee engagement from our front line workers. And I think thats something
that everyone should take away from that too is he had this vision, but it wouldnt have been possible
without his employee buy-in.
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To summarize, really to achieve best-in-class status, you need to have that effective organizational
structure; you need to have a way to manage all that enterprise data. And once youve figured out how to
leverage that enterprise data, to really leverage technology solutions to connect with the rest of the
enterprise. Because one thing is to have this technology solution to collect this asset data, another thing is
to share it to all the different parts of your enterprise, so they can make better decisions when it comes to
managing the business. And then lastly, look to adopt mobility solutions if you havent done so yet.
Slide 31: Summary: Key Takeaways

Slide 32: Course Summary
In summary, the key takeaways from this lesson was, I hope, that everyone can really understand the
pressures driving organizations to focus on asset management, as well as the various strategies that
industry leaders have implemented to overcome these high-level pressures; the ability to understand the
different business capabilities and technologies that the best-in-class companies have implemented to
improve manufacturing productivity, their operational costs, as well as their sustainability initiatives. And
then lastly, to understand what that best-in-class road map looks like and how you, within your organization,
can follow that road map.
Slide 33: Thank You

If you want to get a copy of the study you can email me at the email below. But I really think especially in this
economy manufacturers are really faced with a lot of pressures to do more with less. And I think if you can
find ways to make the most out of your current asset base, you need to change your culture. So changing
that culture is key, but its also having the key business capabilities that really enable you to improve
visibility to your production and your asset performance. So, if you havent done so, you should look into
implementing one within your organization and I hope that this was really helpful in getting a better
understanding of the power of asset management and what kinds of benefits you can get from
implementing a really good asset management strategy.
It was a pleasure to present and I thank you again everyone for taking the time to listen to this presentation
Slide 34: Assessment
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Enterprise Asset Management (EAM): Driving Value in

Slide 3: Course Overview and Objectives

Slide 4: Lesson 1: Understand EAM Pressures

Slide 6: What is EAM?

Slide 7: Top Pressures in Manufacturing Operations

Slide 8: Top Market Pressures Driving Focus on Asset Management

Slide 9: Check Your Understanding

Slide 11: Lesson 2: Explore EAM Business Capabilities and Technologies

Slide 13: Differentiating Best-in-Class Strategies

Slide 14: Business Capabilities

Slide 15: Sustainability Capabilities

Slide 16: Technology Enablers

Slide 17: Technology Capabilities

Slide 18: Case Study: Photronics

Slide 19: Check Your Understanding

Slide 21: Lesson 3: Use a Best-in-Class Performance Road Map

Slide 23: Organilzation's Perception on Asset Management

Slide 24: Importance of Organizational Structure

Slide 25: Managing the Data

Slide 26: Connecting with the Enterprise

Slide 27: Use of Mobility

Slide 28: Case Study: Regain

Slide 29: Check Your Understanding

Slide 30: Lesson Summary

Slide 31: Summary: Key Takeaways

Slide 33: Thank You

Slide 34: Assessment

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