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    Helping Business Thrive On Technology Change

    April 24, 2006

    Next-Generation EnterpriseAsset Managementby Patrick Connaughton

    M

    A R K E T

    O V E R V I E W

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    2006, Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, Forresters Ultimate Consumer Panel, WholeView 2, Technographics,and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies.Forrester clients may make one attributed copy or slide of each figure contained herein. Additional reproduction is strictly prohibited. Foradditional reproduction rights and usage information, go to www.forrester.com. Information is based on best available resources. Opinionsreflect judgment at the time and are subject to change. To purchase reprints of this document, please email [email protected].

    MARKET OVERVIEW

    EXECUTIVE SUMMARY

    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. As of late, emerging technologies have sparked a renewed interest in EAM, but, overall,

    user adoption continues to suffer. is is due in part to ongoing challenges like inconsistent data

    quality and poor usability. While EAM vendors are providing incremental product enhancements to

    address these immediate issues, they typically fall short when it comes to enabling the next level of

    asset optimization: Predictive Maintenance (PdM). To achieve a predictive state, firms not only need

    the technology solution but also a strong foundation of supporting processes. To get there, firms need

    to conduct a thorough assessment to gauge the strengths and weaknesses of the current processes,

    especially before taking on system upgrades or new installs. While this is oen a daunting task, well-

    defined frameworks like the Reliability Centered Maintenance (RCM) methodology are available to help

    streamline the project. For those looking to jumpstart these initiatives, Forrester recommends running

    the business case for employing a full-service outsourcing company to manage the operations.

    TA BLE OF CONTENTS

    New Technologies Reenergize EnterpriseAsset Management

    Solution Providers Seek To Meet Clients

    Evolving EAM Needs

    Reactive Culture Hinders Wide EAM Adoption

    EAM Solution Providers Focus On Adoption

    Challenges

    To Achieve PDM, EAM Solutions Need To Move

    Upstream

    RECOMMENDATIONS

    Reliability-Centered Maintenance: The FirstStep In EAM Transformation

    WHAT IT MEANS

    Maintenance Outsourcing Can Expedite The

    Asset Management Transformation

    NOTES & RESOURCES

    Forrester interviewed 12 vendor companies: ABB,AssetPoint, Datastream, Indus International, IFS,

    Intentia, IVARA, MRO Software, Oracle, Ramco

    Systems, SAP, and Sunflower Systems. We also

    included end user feedback from client inquiries

    and vendor customer references.

    Related Research Documents

    ERP Vendors Are Marketing EAM

    June 30, 2004, Quick Take

    Predicting When Machines Are About To Fail

    November 17, 2003, Brief Series2003: Firms Spend To Maximize Asset

    Profitability

    August 4, 2003, Brief Series

    How Firms Can Get Value From Physical Assets

    July 28, 2003, Brief Series

    April 24, 2006

    Next-Generation Enterprise Asset ManagementMoving From A Reactive To Predictive State Of Maintenanceby Patrick Connaughtonwith Noha Tohamy and Elisse Gaynor

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    http://www.forrester.com/go?docid=34841&src=39281pdfhttp://www.forrester.com/go?docid=33137&src=39281pdfhttp://www.forrester.com/go?docid=17241&src=39281pdfhttp://www.forrester.com/go?docid=17241&src=39281pdfhttp://www.forrester.com/go?docid=17194&src=39281pdfhttp://www.forrester.com/go?docid=17194&src=39281pdfhttp://www.forrester.com/go?docid=17241&src=39281pdfhttp://www.forrester.com/go?docid=17241&src=39281pdfhttp://www.forrester.com/go?docid=33137&src=39281pdfhttp://www.forrester.com/go?docid=34841&src=39281pdf
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    Market Overview|Next-Generation Enterprise Asset Management

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    NEW TECHNOLOGIES REENERGIZE ENTERPRISE ASSET MANAGEMENT

    In order to yield the maximum return on major investments like manufacturing equipment, utilities

    infrastructure, and transportation fleets, firms are continuously looking for ways to optimize their

    assets reliability, utilization rate, and lifespan while reducing maintenance and spare parts inventory

    costs.

    Enterprise asset management is hardly a new concept. Soware solutions have been in play for more

    than two decades, with most tools offering similar core functionality. For solution providers, selling

    better architected, more user-friendly EAM tools to their existing customer base has become the

    primary growth driver. Datastream, for example, reports that more than 40% of its new installations

    is from existing customers upgrading their legacy client server solution to a Web-enabled one.

    Recently, emerging technologies like the X Internet are also generating a renewed interest in the

    space.1For example, technologies like:

    RFID and GPS enable mobile asset tracking.An active RFID tag can store and transmit assetinformation up to 30 feet away. GPS antennae and satellites can report location details anywhere

    in the world. Mobile assets can include anything from a fleet of trucks, trailers, and containers

    to a hospitals movable medical devices. Tracking these assets continues to get a good deal of

    market attention as security issues remain on the forefront of every firms agenda.2For example,

    a company like JR Freight, a Japanese railway transportation company, 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 forkli, reading the tag details when the container is stacked, linking it

    to the GPS coordinates received on the forkli, and sending it to the master tracking soware.

    is not only reduces the time it takes to locate an asset but also improves overall visibilitythroughout the supply chain.

    GIS make it possible to view asset details geographically.Geographic Information Systems(GIS) tools use location data to display assets on a computerized map. From the asset icon

    on the map, users can typically drill down to more information like open work orders and

    maintenance history in a tabular format. is functionality is especially useful for utilities field

    service workers. For example, using GIS technology, utility workers for a company like Southern

    Company, one of the largest utility companies in the US, 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? is streamlines the field service workers job and puts

    the information at their fingertips to make them more efficient.

    Wireless rugged PCs and handheld devices enable automated data entry. Wireless ruggedPCs and handheld devices continue to emerge in support of the distributed and disconnected

    workforce.3EAM field workers stand to benefit from this technology by automating much of the

    currently manual data entry required when completing a work request. Within the facility, parts

    management clerks can significantly improve inventory accuracy by using handheld bar-code

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    scanners instead of manually entering data. For example, Pratt & Whitney has implemented

    a wireless bar-code-based data collection system using Intermecs mobile computers with

    integrated bar-code scanners, significantly improving parts inventory data accuracy and

    streamlining the receiving process into the warehouse.

    Ultrasound, thermal imaging, and wireless sensors enable condition monitoring.Conditionmonitoring technologies track key asset health indicators like temperature, pressure, and

    vibration levels. 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.

    is is especially useful for monitoring assets in hard-to-reach or hazardous environments. A

    company like Chevron, for example, can use wireless sensors to monitor remote, offshore oil

    wells, helping to pinpoint problems early and avoid costly repairs to the infrastructure.

    Fueled by these technology advances, EAM solutions are continually expanding into a much larger

    solution footprint, adding areas like performance monitoring, PdM, and business intelligenceanalytics (see Figure 1).

    SOLUTION PROVIDERS SEEK TO MEET CLIENTS EVOLVING EAM NEEDS

    e EAM solution market is highly fragmented, with literally hundreds of niche vendors. But

    Forrester has identified two major categories in the vendor base: best-of-breed and ERP (see Figure

    2). Best-of-breed vendors like MRO Soware, Datastream, and Indus International offer standalone

    solutions with out-of-the-box ERP integration points. ERP suites like SAP, IFS, Intentia, and Oracle

    all have EAM solutions within their larger ERP offerings.

    As firms move to reduce the number of vendors they have to work with and standardize their

    technology stacks, many are looking to their existing ERP solutions to provide the needed EAM

    functions. ERP vendors that do not have an EAM tool are working to fill that functional gap. A

    recent example of this was the March 2006 acquisition of best-of-breed EAM provider Datastream

    by ERP vendor Infor.

    Figure 1The Expanding EAM Functional Footprint

    Source: Forrester Research, Inc.39281

    Reliability Centered Maintenance (RCM) Predictive Maintenance (PdM)

    Work ordermanagement

    Asset registry

    HR skillsregistry

    Workforcemanagement

    Preventivescheduling

    Spare partsmanagement

    Requisition andPurchasing

    eCommerce

    Financialreporting

    Warrantymanagement

    Eventmanagementand Alerting

    Role-based analytics and reporting

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    Figure 2EAM Software Vendor Landscape

    Source: Forrester Research, Inc.39281

    Vendor EAM Products Comments

    Integrys AssetPoint

    DataStream

    Indus

    IFS

    Intentia

    MRO Software

    Mincom

    Oracle

    Oracle JDEdwards

    SAP

    TabWare EFx

    DataStream 7i

    Asset Suite

    EAM

    EAM

    MaximoEnterprise Suite

    Ellipse

    E-Business SuiteEAM

    EnterpriseOneALM

    Service and AssetManagement

    AssetPoints Tabware EFx differentiates itself with a hosted solution andWindows XP look and feel.

    DataStream 7i is a best-of-breed EAM that differentiates itself with itsJ2EE Web-based architecture, commitment to SOA, Cognos-poweredanalytics, and embedded GIS capability.

    Indus differentiates itself by offering EAM as part of their ServiceDelivery Management suite (complementing EAM with CIS/billing andfield service solutions) as well as their SOA architecture, deep verticalfocus, and a data model that support multiple asset ownership andlocation tracking.

    IFS differentiates itself with its long-standing component-basedarchitecture, clean integration with asset monitoring tools, verticalfocus, and embedded plant design feature.

    Intentia differentiates itself with a completely integrated RCM module,an integrated advanced production planning tool, and two-way MSProject integration.

    MRO Software is the revenue leader in the best-of-breed EAM category,and its solution set has a wide breath of functionality across verticalmarkets and asset types. Given MRO Softwares leadership position, itshould be on every vendor assessment short list.

    Mincom differentiates itself with an ERP solution that caters specificallyto asset-intensive industries. Forrester was not briefed by this vendorfor this report.

    Oracles EAM solution differentiates itself with its Web-basedarchitecture, flexible data model, single sign-on with the ERP solution,and embedded analytics.

    Oracle is committed to continuing support of the JD Edwards EAMproduct in the short-term and is actively selling this solution in theSMB and global markets. This solution differentiates itself with itsWeb-based, preconfigured software and Key Performance Indicator(KPI) functionality.

    SAPs EAM module runs as part of the mySAP Business Suite, and itdifferentiates itself with its integrated suite of products for managingthe complete life cycle of an asset, eliminating the need forpoint-to-point interfaces.

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    REACTIVE CULTURE HINDERS WIDE EAM ADOPTION

    Based on Forresters interviews, we found that many firms are still struggling with the day-to-day

    reactive issues. Because of this firefighting state, they are not able to make program improvements

    or move to a predictive strategy in maintaining their assets. e three most commonly reported

    issues are:

    Bad data and low user adoption of EAM applications. EAM users have reported thatinaccurate and incomplete data is the most persistent problem firms face. is problem results

    in a lack of faith in the system as well as low adoption rates, both of which compound the

    issue even more. Some firms attribute the problems to their existing processes or the lack of a

    dedicated owner/administrator of the data. Others point to their systems poor usability and

    tedious data entry requirements.

    Poor inventory management of service parts. To keep operations up and running and toavoid disruptive events like a plant shutdown, many maintenance managers opt to hedge intheir requirements for parts safety stocks. Additionally, many facilities have yet to adopt robust

    management processes, like bar-code-enabled receipt, stocking, and picking. is means that

    the EAM tools cannot rely on an accurate picture of which parts are really available, and many

    firms are incurring higher inventory carrying costs with excess on hand.

    Inability to create proper work schedules.Users also reported that allocating their ever-shrinking labor pool between reactive, scheduled, and preventative maintenance is one of

    their biggest challenges. e simple question of what work to do at the right time remains

    unanswered. When in a reactive state, it becomes extremely difficult to plan for PdM. On the

    other hand, some companies opt to overmaintain their assets to avoid machine failure or plantshutdown. Over time, this practice ends up being as expensive as the cost of recovering from

    that same disruptive event.

    EAM SOLUTION PROVIDERS FOCUS ON ADOPTION CHALLENGES

    In order to address the above challenges, EAM solution providers have worked with their customers

    to enhance functionality, offering incremental improvements over legacy tools. Specifically, they

    have:

    Automated data entry and refined validation rules to address integrity issues. Best-of-breedapplications can now run on mobile devices like Symbols rugged MC70 or MC9000 Serieshandheld computers and bar-code scanners. is allows workers to complete work order

    details in the field or reference key asset information when making a repair. Bar-code-enabled

    scanners are used to quickly identify an asset and bring up the relevant work order. is helps

    to eliminate the need for a clipboard and avoid manual entry, improving the quality of the

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    input needed by the EAM solution. Additionally, solution providers have embedded data

    cleansing and validation utilities in an effort to address data errors. IFS, for example, has built-in

    validation rules that dictate that imported or manually entered records are checked for possible

    errors and duplicates. If the record violates any business rules, the tool alerts the user of thepotential problem and does not update the production data until it is resolved.

    Applied supply chain best practices to improve spare parts inventory management. Tobuild efficiency gains by having the right part on hand for the needed maintenance, EAM

    providers now offer many inventory management features such as eCommerce cataloging

    and purchasing inventory tolerance levels that trigger auto-requisitions, and bar-code label

    generation for receipt and cycle counting. MRO Sowares Maximo Enterprise Suite solution,

    for example, 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.

    Providers also work with their clients to implement other inventory management best practices,

    such as setting up the standard parts taxonomy and naming conventions as well as the use of

    numbered inventory racks.

    Added business logic to facilitate optimal maintenance scheduling. To help users buildmaintenance work plans based on factual assessment of priorities, EAM solution providers

    have focused on offering easy-to-use scheduling functionality like a graphical calendar display

    or integration into third-party scheduling tools. Datastream 7i, for example, includes a built-in

    Microso 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.

    In order to prioritize tasks, solutions rely on past asset performance information to simulate

    a failure point. Based on this simulation, the tool can then recommend the timing of themaintenance using the overall asset criticality and resource availability.

    TO ACHIEVE PDM, EAM SOLUTIONS NEED TO MOVE UPSTREAM

    Although EAM solutions have made progress in areas like usability and data validation, they still

    fall short of helping clients optimize their asset utilization. In order to do that, firms need tools to

    help them not only react to actual failure points but predict future failure points and proactively

    recommend remediation. Forrester believes that this can be achieved by establishing a greater

    interoperability between asset monitoring/diagnostics solutions and EAM tools. In order to

    understand the total cost and ramifications of a scheduling decision, planners need access to a

    consolidated view of EAM data, including labor, parts, and downtime cost in conjunction with asset

    monitoring trends and predictions all in one application. e 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, including previously completed

    maintenance and other task priorities.

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    Historically, the data captured by the condition monitoring/diagnostic system has not been used

    within the EAM system for failure trend analysis or predictive scheduling. When these two systems

    are integrated, it is typically only to import a predefined work order task from the diagnostic system

    to the EAM tool. e shortcoming of this approach is that this task is created in a silo, based onthe asset monitoring data and not on the priority or cost considerations stored within the EAM

    application.

    To combine these applications is not a simple undertaking. It would take a tremendous amount

    of work to rationalize all the data across these proprietary applications, import it into the EAM,

    analyze it, and report on it. Because of this, one consolidated suite including EAM and PdM may

    not be in the cards in the near future. e next-best option is to renew the focus on open messaging

    standards between the two applications. ere are a number of initiatives leading the way for open

    standards today, including MIMOSA and the Open O&M program.4e issue with this is that point-

    to-point interfaces would still be required, adding to the overall cost of ownership and complexity.

    To counter this, vendors are committing to building service-oriented architecture (SOA) that would

    provide a central data exchange, reducing the need for point-to-point interfaces.5

    In conjunction with SOA and open standards initiatives, 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.

    When EAM analytics include the raw monitoring and diagnostics data, firms can benefit from:

    Real-time performance management and enterprise-level analytics. e wealth of data thesetwo systems create can be combined to provide a holistic view of trends across an enterprise,enabling users to make better decisions and benchmark against other facilities. Using the alerts

    and monitoring data from the monitoring system, the EAM will also provide a dashboard

    view of the current state of health across all of a firms assets, including asset and work order

    status, performance measurements, and KPIs. is provides a window for management teams

    into high-performing areas that can potentially be leveraged for best practices, as well as a

    measurable way for firms to make continuous improvements to their programs.

    Increased efficiency in labor management.By performing this analysis, teams can make betterdecisions on where to focus constrained repair resources. Too much maintenance can be as

    costly as not enough, and the only way to strike the balance is to combine the predictive data

    with the EAM labor, parts, and downtime costs to make better decisions. For example, run to

    failure analysis uses the diagnostic data from the condition monitoring soware and the labor,

    parts, 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.

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    Closer ties between the diagnostics and remediation task.One of the biggest issues withdiagnostics and assessments results is that oen times no remediation action is being taken and

    the feedback loop is never being closed. By embedding the diagnostics, tolerances, remediation

    work management, and KPIs within the EAM solution, there is a much greater likelihood

    that the events will be noticed and action will be taken. If action is not taken, at least all of the

    information is in one place to catch and generate alerts and manage the resolution workflow.

    R E C O M M E N D A T I O N S

    RELIABILITYCENTERED MAINTENANCE: THE FIRST STEP IN EAM TRANSFORMATION

    Facing new business requirements, such as higher service-level agreements or further

    decentralization of their operations, firms are looking to revamp their asset management

    practices. As in all process re-engineering efforts, the first challenge is to gain an accurateunderstanding of the strengths and weaknesses of their current practices. This is especially

    relevant for companies that have grown through acquisition, inheriting new facilities and

    manufacturing operations with different processes and systems. Practices that assumed a highly

    centralized organization might now be unsuitable to a distributed, loosely coupled operation.

    Without gauging the effectiveness of the as-is state, companies lack the foundation to define

    and detail the road map to the desired to-be state.

    The challenge is that benchmarking efforts are often overwhelming to firms with already

    stretched maintenance budgets and limited personnel bandwidth. The good news is that there

    are a number of well-defined methodologies and tools to help teams streamline the process

    namely, the Reliability Centered Maintenance (RCM) assessment methodology, which can providean excellent framework for the first steps in process re-engineering efforts.

    RCM helps define the key performance metrics for the asset under review as well as the reasons,

    likelihood and impact of possible failures. RCM can also help map out the preventative tasks that

    can minimize the likelihood of each failure.

    Importantly, 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. 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. If the old EAM data is simply

    exported into the new system without this assessment, all of the inaccurate and improperlyprioritized tasks come with it. In the newly engineered process, firms must allocate resources

    proportionate to the cost and yield of each maintenance task. By completing this exercise, they

    are a step closer to ensuring that the right tasks are performed at the right time.

    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.

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    Once the system is live in production, it becomes exponentially more difficult to make changes

    from both process and application perspectives. Many RCM assessments fall short today because

    the recommendations for making improvements are not translated into action-oriented tasks

    within the production system. However, if this analysis is completed on the front end of the

    implementation cycle as a precursor to setting up the system, the odds of success are increased

    significantly.

    W H A T 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.

    Asset management improvements directly result in better asset utilization, reliability, and return

    on capital investment. But many firms, strapped for resources, cannot realistically make the

    upfront investments needed to re-engineer their maintenance processes. 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, work scheduling, and parts

    management. To achieve this, some are looking for service providers that can help improve their

    maintenance function without significant capital investments. A third party willing to take over

    operations and contractually commit to cost optimization can expedite the transformation of

    asset management. For example, 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. In addition

    to full maintenance services, ABB can guide a company to benchmark its maintenance practicesagainst industry best practices. Employing a provider like this, firms can embark on an asset

    management transformation effort, leveraging the providers investments and scale. The provider

    can also help firms map out their asset management strategy, which could range from process re-

    engineering to a systematic approach to improving asset reliability, while sharing the project risk

    on a pay-for-performance basis.

    ENDNOTES

    1 e Extended Internet (what Forrester calls the X Internet) connects information systems to physical

    assets, products, devices, and even people. e emerging architecture, business applications, and

    technologies like RFID, sensors, telematics, mobile networks, and biometrics are all encompassed by theterm X Internet. See the April 4, 2006, Topic Overview Topic Overview: e Extended Internet.

    2 Supply chain development continues to be driven by globalization and outsourcing. As a result, supply

    chains become even more distributed. e inevitable drawback to this increase in links is greater

    vulnerability from a functional, process-oriented, and security standpoint. In the wake of 9/11 and more

    recent US homeland security initiatives, the security of global supply chains has garnered much attention

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    and scrutiny from both the public and private sectors. See the October 18, 2004, 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, mobile applications have finally found traction in todays enterprise. See the March

    15, 2006, Topic Overview Topic Overview: Enterprise Mobility.

    4 e Machinery Information Management Open Systems Alliance (MIMOSA) is leading the way in

    defining open standards for integration between condition monitoring and EAM applications. One of its

    core objectives is to publish open specifications for robust Enterprise Application Integration (EAI) and

    Condition-based Maintenance (CBM). ese XML-based specifications will enable end-to-end, vertical,

    and horizontal information integration. Source: http://www.mimosa.org.

    5 e style of design, deployment, and management of soware 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. See theDecember 22, 2005, Topic Overview, Topic Overview: Service-Oriented Architecture.

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