Convergence. It's not a fusion rock group or the title of the latest sci-fi thriller. Rather it's a goal, a Promised Land where information about every asset can be gathered and analyzed to give a company a clear picture of its asset costs and where the greatest efficiencies and savings lie.
But getting there requires software systems that provide analytical information beyond simply scheduled maintenance notifications or out-of-spec alarms.
It doesn't matter whether you call the systems business intelligence, analytics, data warehousing or common sense. Their functions are the same. They manipulate information gathered in the enterprise asset management (EAM) systems, enable its analysis by management to discover facts about asset cost and efficiency and, ultimately, empower better executive decision-making.
Strafford Technology of Wyndham, N.H., is implementing just this kind of analytical system for a global telecommunications company. The project began about eight years ago with the development of a system to track "troubles" reports of outages and equipment failures and gather the information they generate. The goal was to correlate that information with investment in proactive and preventive maintenance and aggregate it on a company level to compare the investment against payback, according to Steven Berry, CEO of Strafford.
"Over the years, we've been adding other things," he says. "We maintain an inventory of equipment and tie that into the trouble records so somebody can see that certain equipment generates a certain number of troubles over a certain period of time."
The company now looks at preventive as well as pro-active maintenance to give management answers about the return on investment for preventive maintenance and other related issues.
With the ability to gain such insight, executives are beginning to look at EAM as an investment and even a revenue generator, rather than just a line item cost.
The ERP connection
The benefits of information convergence have not been lost on enterprise resource planning vendors. Some have their own EAM modules. Others have entered into partnerships with EAM vendors to leverage the combined power of the systems.
J. D. Edwards built a data warehouse that supports its enterprise systems and has the ability to integrate information from third-party and legacy sources. "The great thing is that we get this single centralized venue for doing analytics, a single version of the truth across the organization," says Patrick Connolly, business intelligence product marketing manager for J. D. Edwards.
"The next Holy Grail is performance management," he adds. "Picture a triangle. This triangle is the convergence of metrics, processes and methodology."
It's a philosophy rather than a discrete system, according to Connolly. "Metrics, yes, we can do that. Processes [involve] looking at your asset life cycle, [because] some of your performance metrics are based on these assets. Then, on the methodology side . . . [there's the] balanced scorecard, for example, as well as support for some standard industry models, such as SCOR (Supply Chain Operations Reference-model from the Supply Chain Council)."
The virtual factory
Mohammad Ibrahim, director of manufacturing systems for worldwide manufacturing and technology at National Semiconductor, Santa Clara, Calif., calls his version of this vision the Virtual Factory. In this arrangement, information from every aspect of the operation would be available to executives on their desktops. "The bottom line is to integrate this and get all the information in one place," he says. "We have data all over the place, but we need to turn that data into information so we can make sense of it."
Ibraham has linked his EAM module from IFS, supply chain planning software from i2, a financial system from SAP and his shop floor control system. When an operator is alerted to a machine malfunction, notification also goes to maintenance automatically. The maintenance worker logs on to the IFS system to determine the problem and what spare parts are needed to fix it. That information goes to the purchasing system and to maintenance stores automatically. Then a purchase order is generated automatically. The transaction also is recorded in the financial system. This process standardized operations over a number of facilities, increased efficiency and cut costs.
Ibrahim admits his system is on the sharpest cutting edge and one that works best for the largest companies, but he argues that by taking advantage of the scalability of most systems, the same kind of convergence could be developed for smaller companies and traditional manufacturers.
When Douglas Battery Manufacturing Co. of Winston-Salem, N. C., first installed an EAM system, the goal, according to Paul Sheehy, Douglas' director of facil-ities engineering, was "to gain control of our operation." The 80-year-old, family-owned company produces nearly four million batteries a year, making it the fifth-largest lead/acid battery producer in the U.S. But, according to Sheehy, "We had nothing at the end of a fiscal accounting period to substantiate the money we spent [on maintenance]." He also needed a better way to justify the number of people employed in his maintenance department.
Douglas Battery went to SSA Global Technologies of Chicago for a solution. Within six months, the company had converted its card index system to an automated preventive maintenance program; brought its in-house parts inventory system online; and began using work orders to capture its corrective action efforts. Douglas reduced its parts inventory by 48 percent and its costs from $1.3 million to $680,000.
But Sheehy wants more from his system, especially in the area of predictive maintenance, which he says vendors have been slow to integrate into the software. "What I'm wanting to see are enhancements to the software that integrate some of the newer technologies into the existing software."
The Web connection
According to Jill Feblowitz, a senior analyst with AMR Research, vendors are listening to the Paul Sheehys of this world. She says they are expanding their EAM offerings not only to manage maintenance and repair, but also to look at the lifecycle of the equipment and handle e-procurement and work management.
"This year's big story is that [EAM vendors] are making their applications Web-accessible," she says, which enables users to access information from different parts of the enterprise. The other new feature is role-based access, which gives visibility to the information at every level and enables more enterprise-wide planning.
The electric company
A couple of steps back from this bleeding edge, American Electric Power (AEP), a power distributor in Columbus, Ohio, met its mandated deregulation challenge by reinventing its internal systems using a similar convergence strategy. It replaced its financial, human resources, supply chain and work management systems in one fell swoop. It installed Indus Passport for supply chain and work management and PeopleSoft for financials and human resources. It also added a specialized distribution work management system from Severn Trent. Then it added a data warehouse from Business Objects, which it populates with information from the PeopleSoft, Indus and Severn Trent systems.
"We pull the data together so you can get true performance reports," explains Michael DeLoach, AEP's project director for enterprise solutions. "Say you have a multi-million dollar project, and you've expended half the funds that have been allocated for it. That doesn't tell you the whole story. You also need to know what percent of the work is completed so you can extrapolate your end game. That's the kind of reporting we're pulling together currently."
A change of heart
A strategy such as AEP's is not one for the faint-hearted. Most companies will find it easier and safer to move in this direction incrementally with the knowledge that, according to Ibraham, the most difficult thing is not the system, but the management decisions. Recalling the difficulty he faced 10 years ago convincing a top executive at a major electronic firm he needed a PC on his desk, Ibraham adds, "People have to get out of the traditional way of doing things. The biggest challenge is to change people's mentalities."
Three critical steps to convergence
Steven Berry of Strafford Technology makes three recommendations. First, define the end product. Talk to users. Find out what information they need. Make sure everyone means the same thing when they use jargon such as "inventory turns."
Second, integrate your data. Do it consistently and on a timely basis. Make sure to plan for multiple time zones, different platforms and data inconsistency and cleansing.
Finally, prototype the process. Start small (or to use Berry's acronym, GORRD"Get One Report Running, Damnit!''). Then move up.
Nancy Bartels is a contributing editor. She can be reached at 630-467-1301 ext. 486 or email@example.com.
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