After years of mergers, acquisitions, and industry consolidation, the asset management software industry is stronger than ever. That is great news for companies interested in upgrading or replacing their software, as the choices are excellent at all price points. Many CMMS/EAM software companies have invested heavily in further development of their packages, not only to maintain their existing customer base, but also to lure customers away from competitors that have not kept pace. Without significant R&D investment, CMMS/EAM companies will find it difficult to attract new customers, and will watch their installed bases disappear over the next decade or so, as competition continues to increase.
Market trends facing CMMS vendors
The asset management software industry is also heavily influenced by emerging trends in the customer base, especially those emanating from the asset-intensive, highly regulated market segment.
Aging workforce: There is a lot of knowledge that will be disappearing from the workforce over the next few years, as Baby Boomers move to retirement status. Companies will need to formalize and digitize as much of that knowledge as possible, using the CMMS for creating work plans, business rules, and workflows, and documenting technical knowledge.
Smarter, more complex, and more costly assets: Over the years, the off-line world of physical assets has become more connected to the online digital world, through a variety of wired and wireless technologies. The cars we drive, the buildings we enter, and the tools we use are getting smarter and moving online. With smarter assets and automated controls come higher complexity, risk, and ultimately cost.
Enterprise thinking and global reach: The digital age has facilitated the emergence of a global economy and enterprise thinking. CMMS vendors have come a long way since the stand-alone work management systems of yesteryear. Enterprise thinking is embedded in the design of modern CMMS packages, including handling multiple languages and currencies, as well as multiple companies, sites, and warehouses. Furthermore, advanced CMMS packages have functionality relevant to stakeholders across the enterprise, along the entire supply chain in a given vertical market, for the complete asset lifecycle, and covering assets of all classes — plant equipment, facilities, fleet assets, technology assets such as laptops and servers, and infrastructure such as roads and pipelines.
Blurring of historical silos: More integrated systems have enabled organizations to fully share information across the many historical silos in a given organization, and along the entire supply chain. Especially important, albeit a much slower trend, is the blurring of lines between operations and maintenance. With more automated processes, higher risk associated with asset failure, and shifting focus away from manual operations, some companies will benefit by combining operator and maintainer roles into a single technician position.
Greater focus on risk: Our rising dependence on smarter, more complex, and more costly assets in a digital age means that their failure can bring catastrophic consequences. This is one reason why regulatory bodies have increased their pressure on companies from all industries. Pressure comes in the form of mandated policies and procedures, compliance audits, mandatory certification, hefty penalties to the company for non-compliance, and large fines and even jail term for the individuals responsible.
Asset management software vendors have recognized this trend and have developed features and functions that can assist senior management in better managing risk. These include electronic signature, risk scoring, and document management. As well, numerous health, safety, and environment modules have been integrated into the CMMS, such as risk management, compliance management, safety management, management of change, event management, incident management, environmental management, sustainability, energy management, and case management.
All things green: Some companies have begun to see the huge savings potential of focusing on sustainability. CMMS vendors have responded by building sustainability functionality into their software, including the tracking and analysis of usage data for utilities such as electricity, gas, and water. This data, when integrated with equipment history, is useful for a better understanding of the triggers for condition-based maintenance, as well as determining ways to reduce usage, carbon emissions, and safety/environmental impact.
Defining “asset ownership”: Another point of integration undergoing slow but significant change is the concept of asset ownership. Who owns the assets in your company? Is it operations, engineering, or maintenance? Perhaps no one does, implying roles and responsibilities may not be clear. Depending on the industry, the trend line appears to be moving to engineering as owner of the assets, operations managing them day-to-day, and maintenance maintaining the assets. Modern CMMS packages facilitate direct communication among maintainers, operators, and asset owners, across the enterprise and around the world. This includes the ability for maintainers/operators to redline drawings, make notations on the work order, and use a case management tool to ensure changes are made to the work program or equipment design, in order to prevent problems from recurring.
Insatiable thirst for data: Greater prevalence of computerized systems means more data is available to management. There are so many ways to slice and dice data using tools such as report writers, graphics generators, data warehouses, dashboards, business intelligence, and decision support systems. It is easy for management to lose sight of what is critical. The CMMS should provide a framework of best practices, for example, pre-defined workflows, canned reports to use as a starting point, and coded fields and analysis tools for finding patterns in the data — for example, Pareto analysis on problem, cause and action codes.
Context-sensitive mobile is changing everything: The next big wave of change will be a result of mobile technology. It is already happening as our love affair with smart phones, tablets, and other mobile devices continues to grow. The number of sensors, tools, and apps on a typical smart phone is staggering. This will make it easier for CMMS and other vendors to develop context-sensitive functionality, that is, supporting better decision-making by knowing more about you and your environment.
For example, GPS technology built into a mobile device means the CMMS application can incorporate maintainer location into way-finding and scheduling decisions. A built-in camera can be used to record photos, videos, or even live streaming of a problem, in support of root cause analysis. RFID tags affixed to critical assets on the move can be used to track their whereabouts, such as specialized tools used on a construction site.
The CMMS vendor response: Key differentiators
CMMS vendors have responded in different ways to the market pressures, demands, and trends. This has resulted in a wide assortment of CMMS vendors and the approaches they have taken over the years to differentiate their products and services.
Best of breed vs. integrated solution: One major differentiator that has emerged over the years is the best-of-breed approach used by vendors that specialize in CMMS, versus the integrated-solution approach adopted by vendors for which CMMS is one of many modules. Other modules within the integrated solution can include enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), product lifecycle management (PLM), human-machine interface (HMI), and shop-floor data collection. Best-of-breed CMMS vendors must build the appropriate interfaces with these products in order to compete effectively, especially for large corporate accounts. The battle for market share between these two groups is quite fierce.
Customer size: Another key differentiator among CMMS vendors is the size of company that they typically pursue. The Tier 1 vendors can accommodate the large, complex, global enterprise implementations with a price tag of more than $1 million. This is not to say that these CMMS vendors cannot, and do not, handle smaller deals. However, if possible, these vendors would prefer to focus on the large corporate clientele. At the other end of the scale, the Tier 3 vendors typically handle smaller accounts in their local areas, with minimal marketing. The Tier 2 vendors are somewhere in the middle of these two extremes, with somewhat of a national or international presence, medium to large companies as typical customers, and fairly flexible pricing.
Vendor size: Loosely correlated to customer size is the size of the vendor needed to service their customers. As with sizing the customer base described above, vendor size can be expressed in terms of annual sales revenue, number of customer sites, market share, or simply tier level 1, 2, or 3.
Note that each tier level can be further subdivided into “integrated solution” and “best of breed” vendors. Although the integrated solution vendors can be substantially bigger overall, they may be closer in line with their best of breed counterparts when you estimate the sales revenue from the CMMS business alone. However, stripping out CMMS sales is no easy task when global deals are made bundling 20+ modules and a host of services.
Over the past few years there have been fewer new entrants into the CMMS vendor world, and there has been tremendous consolidation. Many of the companies acquiring CMMS vendors are looking to expand their product and service offerings, such as large ERP, plant automation, and specialty software companies. These are the signs of a maturing market. From the customer’s perspective, this can be a good-news story if product and service offerings are improved and better differentiated. Additionally, the resultant companies following a period of consolidation tend to be more financially stable. However, with fewer competitors and more differentiated product and service offerings, there may be reduced pressure on vendors to negotiate prices.
Area of specialization: One way to compare CMMS vendors is to determine their areas of specialization. This can be expressed in terms of industry specialization (for example, nuclear power generation vs. municipalities), product or service (for example, reliability-centred maintenance), asset class (for example, fleet vs. facilities maintenance), and functionality offered (for example, calibration). The perception of the customer base is that no CMMS vendor can do it all equally well, although many CMMS vendors have tried. It appears that specialization is on the rise as the CMMS market matures and competition increases.
Market verticalization: In response to growing demand from customers for industry-specific features, CMMS vendors have responded by:
- building features applicable to a wide variety of industries into their base functionality
- bundling industry-specific features onto base functionality for each target industry, thus creating multiple industry-specific versions of the CMMS package
- selecting one or a few industries to target with deeper specialization of products and services
- building core framework software, and a flexible configuration tool that can be used to tailor the CMMS solution to the specific needs of an industry or a given company.
Some CMMS vendors prefer to stay general and avoid declaring an industry specialization, although they realize it is difficult to maintain a jack-of-all-trades image over the long term. When you examine the breakdown of sales by industry, however, there is seldom an even distribution across all industries served. Other CMMS vendors are quite content to actively pursue a limited number of industries.
Although your company and your industry have unique needs and priorities, there are certainly many features and functions that are transferable to other industries, albeit perhaps with a different priority. For example, property management companies may place a high importance on finding a CMMS that can handle chargebacks to tenants in a fairly sophisticated way. Perhaps less of a priority, this functionality would also be useful for hospitals, hotels, and airports that have a few retail tenants for which they provide maintenance services. Manufacturers that provide on-site maintenance services for the products they sell may also be interested in chargeback capability.
It appears that the greatest level of specialization by the CMMS vendors is in addressing the needs of the asset-intensive, high-growth, or niche industries. Examples are utilities, mining, pharmaceutical, municipalities, health care, and third-party maintenance service providers.
Technology platform: CMMS vendors can also be differentiated based on technology employed. This includes architecture (for example, Web-based vs. client/server), database (for example, MS Access vs. Oracle), operating system (for example, MS Windows vs. UNIX), network (for example, stand-alone vs. connected), and hosting (for example, internal vs. external, private vs. public cloud, or software as a service (SaaS) vs. application service provider (ASP)). In some cases, CMMS vendors have rewritten their software several times over the years to take advantage of improvements in software tools and technology as it becomes available. Others have held on to legacy systems and have built a new user interface or backend onto their packages to avoid an expensive rewrite. Although customers can save money with the latter approach, the trade-off may be reduced functionality especially in the longer term.
Functionality: One of the more obvious ways to differentiate CMMS vendors and their products is, of course, in terms of the myriad software features and functions offered. Some of these features and functions relate directly to the previous differentiators such as functionality relevant to a given industry. However, there are many other features that strongly distinguish one package from another, such as the ease of navigating the software or the off-the-shelf reporting and analysis tools offered with the package.
Pricing: This is sometimes one of the more difficult means of differentiating CMMS vendors because comparing prices on an apples-to-apples basis can be problematic. There seems to be a strong link between base package prices quoted by the CMMS vendors and their tier levels. Not surprisingly, the Tier 1 vendors quote a higher price than the Tier 2 vendors, who quote higher than the Tier 3 vendors. However, many CMMS vendors will negotiate prices lower than their tier levels will suggest, depending on the number of users, future business potential, competitive pressures, backlog of committed customers, and strategic value of the business to the CMMS vendor. Thus, it is difficult to compare prices, even from vendors of different tier levels, and the industry trend is toward increasing complexity. As well, there are many other complicating factors including:
- different pricing schemes, such as price per named user vs. price per concurrent user vs. subscription price (for example, pay for hours of use)
- site license alternatives
- multiple modules and optional core software that is over and above the base package price
- third-party software that you buy outright or pay licensing fees through the CMMS vendor (for example, data warehouse, reporting tools, document management, workflow engine, graphics parts book, root cause analysis, specialized condition-based assessment software)
- prerequisite software or hardware, such as operating system or database tools, required to run the CMMS
- integration software, and services to build the interface with other applications
- peripheral devices and software such as barcode readers and label printers, RFID devices and scanners, and mobile technology
- hosting, rental, ASP, private or public cloud, SaaS, and other variations on these themes
- “hidden,” bundled or separately requested services such as data conversion, customization, training, implementation, installation, business process re-engineering, consulting, and maintenance.
The only way to take all of these factors into account and compare CMMS vendors on a somewhat level playing field is to develop user requirements and issue a request for proposal (RFP). But it may not be until you have reviewed the proposals and completed negotiations with each vendor that you will know the bottom-line differences in pricing.
|David Berger, a Certified Management Consultant (C.M.C.) registered in Ontario, Canada, is a Principal of Western Management Consultants, based in the Toronto office. David has written more than 200 articles on a variety of topics such as maintenance management, operations management, information technology, e-commerce, organizational design, and strategy. In Plant Services magazine, he has written a monthly column on maintenance management in the United States, as well as three very extensive reviews of maintenance management systems available in North America. David has done extensive work in the areas of strategy, information technology and business process re-engineering. He can be reached at firstname.lastname@example.org.|
Implementation: Even after multiple decades of experience with CMMS packages, in my view there is still a probability of less than 50% that the implementation will be a success. This view seems to be shared by others in the industry and is similar to success rates quoted for implementing any other software applications such as ERP software. This is rarely because of selecting the wrong software package. The list of things that can go wrong is long, but the key reasons are:
- poor top management support
- insufficient or inexperienced resources available for the project
- inability to define and measure success for the project in terms of performance targets
- weak planning, such as an unrealistic timetable
- inadequate user training
- limited communication with and input from stakeholders
- deficient change management, such as not understanding objections to be overcome, what’s in it for the users, and which behavior changes are necessary for success
- not understanding organizational impact, such as changing roles and responsibilities
- poor understanding as to how processes must change and what the CMMS must do to support those changes
- unclear incentives for success, as well as unstated consequences for failure.
A very slow trend in the industry is realizing that these factors will not go away with improved technology, as they are all related to human behavior. It is unfair to put much of the blame on the vendor, as they have every reason to make each implementation a roaring success. For one thing, they are trying to build a list of successful references. As well, they are looking for a long-term cash flow from happy customers, including revenue from maintenance fees, upgrades, additional products and services, and so on.
Therefore, much of the onus is on the customer to beat the odds and partner with the vendor to avoid the barriers to a successful implementation. For example, would you be willing to set achievable performance targets and then share savings with the vendor on some percentage basis, when targets are exceeded? Would you also be willing to provide an incentive to employees who were instrumental in exceeding those targets? If you answered “yes” to one or both of these questions, then you will be contributing to a positive but slow-moving trend — greater strategic partnership between the CMMS vendor and the customers they serve.