Where and how should your asset management solution be integrated?

Maintenance management systems should not stand alone.

By Sheila Kennedy, Contributing Editor

A number of information systems support the maintenance of physical assets, but they are not always well connected. Typically, enterprise asset management (EAM) or computerized maintenance management system (CMMS) software will operate alongside any number of independent point solutions, which may or may not be integrated. Less often, they will be one component of a fully integrated, multifaceted enterprise suite.

The best approach depends on a company’s particular situation. Linear assets like pipeline and rail have very different needs than manufacturing processes that are fully automated or highly assembly driven. “A simple best-of-breed system with batch integrations might be the most cost-effective solution for one company, but another may need a fully integrated package, including maintenance, supply chain, projects, financials, engineering, and human resources,” says David Berger, principal at Western Management Consultants (WMC).

One thing is for certain: an EAM/CMMS should not operate in isolation.

Why integrate?

Siloed information is the most prominent risk when there are disparate, disconnected systems, although interfacing is not always the best answer. “The downside to integrating software applications is that it is very expensive and you have to keep it up over time,” says Berger.

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On the other hand, integration improves data visibility so that better decisions can be made, and it reduces operational risks. “It’s all about being more efficient and having all of your data in one place, in a single version of the truth,” suggests Patrick Zirnhelt, vice president of enterprise service and asset management at IFS North America.

The biggest drivers for EAM/CMMS integration, whether it’s within an enterprise application or across multiple solutions, are regulatory pressure, financial/competitive pressure, and health and safety considerations. Very public and expensive incidents, such as a mine’s chemical-filled tailing pond breaching into nearby rivers or a very old pipeline springing a leak, highlight the need for integration.

“Regulatory agencies are telling companies that they need to provide accurate and timely information on their activities, their incidents, and their assets,” says Zirnhelt. “For some companies, the required information is on paper somewhere, so it could take days to pull it together. With a properly integrated asset management system, you’ll have all of the information at your fingertips relatively quickly.”

Cost pressures are forcing organizations to be smarter, fueling the thirst for information and analytics. “When you have a complete picture of the costs of operation and maintenance, then you are better equipped to increase your margins or profits,” remarks Zirnhelt. “Reporting consistency also improves business decisions. If two plants report the same equipment need differently, one might get approval when another does not, even if their need is the same or more urgent.”

Rather than simple reporting, organizations want usable information from multiple systems and better compatibility between those systems, explains Berger. “For instance, if a mining operation is able to assess its maintenance dollars spent per tons produced, then it can easily see whether increasing production improves maintenance cost efficiency,” he says.

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From a health and safety perspective, tracking equipment and incidents and making sure you have proper corrective action procedures in place are facilitated by integration.

A plethora of maintenance-related solutions

The systems that impact asset management can be large or small, computerized or paper-based, and widely used or tightly held. “When information technology (IT) personnel do an application audit, they’re almost always surprised at the sheer quantity of applications in use,” says Ralph Rio, research director at ARC Advisory Group. “It’s amazing how point solutions added over decades live on because they solved some problem at a particular time, when they could easily be replaced by something that is more modern and integrated.”

A variety of common EAM/CMMS touch points exist.

Enterprise resource planning (ERP) and financials: “The biggest divide causing information silos is when the EAM/CMMS is separate from the ERP application,” says IFS’s Zirnhelt. “One power generation company has multiple plant sites across North America, each with its own EAM/CMMS system. Some of the sites do integrations and occasionally push data to the ERP financial backbone, but many of them operate in complete silos, without visibility between systems.”

Without integration of EAM and cost accounting, the financial analysts without maintenance expertise will have to do spreadsheet jockeying to pull the data from the EAM/CMMS into the financial system, explains Rio. “This manual approach creates errors and is labor-intensive at the end of the month when a lot of other high priority activities are required,” he says.

Automating the process of moving costs ensures consistency and accuracy, and it frees up the financial analysts to focus on other month-end activities. “Integrating financials between EAM/CMMS and ERP systems works beautifully,” says Rio. “If you have costs that you want to have capitalized at the end of the project, or if you want to allocate the costs of maintenance to a particular cost center, it’s a relatively simple integration that usually involves an end-of-month file transfer. Exceptions are few; there may be a need to reassign a cost center, but you’d have to deal with that manually anyway.”

Supply chain: Rio considers the integration of EAM/CMMS with purchasing, inventory management (IM), or both in the ERP system to be a painful approach. “Typically, a simple, seemingly inexpensive information transfer from the ERP to EAM will help you to know which work orders to issue, but the exceptions can be very painful — like when a part comes into inventory but you find out later it’s the wrong material or of poor quality, and it gets pulled out of inventory and returned to the vendor. Those kinds of exceptions are not generally transferred back to the EAM.”

Sheila Kennedy is a professional freelance writer specializing in industrial and technical topics.Sheila Kennedy is a professional freelance writer specializing in industrial and technical topics. She established Additive Communications in 2003 to serve software, technology, and service providers in industries such as manufacturing and utilities, and became a contributing editor and Technology Toolbox columnist for Plant Services in 2004. Prior to Additive Communications, she had 11 years of experience implementing industrial information systems. Kennedy earned her B.S. at Purdue University and her MBA at the University of Phoenix. She can be reached at sheila@addcomm.com.

Instead, for those who have separate EAM and ERP systems, Rio suggests managing the purchasing and inventory for spare parts in the EAM application, managing the purchasing and inventory for products made in the plant in the ERP application, and allowing them to be separate. “That works a lot better than an attempted integration,” suggests Rio.

WMC’s Berger agrees that IM belongs within the EAM/CMMS application. “Asset history information, including labor and materials, is needed in real time while you’re planning work and budgeting for materials, labor, and contractors,” he says. “Why would I track labor in the maintenance system and use another system to track materials? It’s a fundamental component of the EAM/CMMS.”

Rio says he’s asked many end users why they manage work in an EAM/CMMS system and IM and purchasing in an ERP system, and invariably they say it’s because IT said so. “There is no good business case for it that I can find,” he explains. “The item numbers and optimization methodologies for the spares used in maintenance and the inventory used for making an end product are different, so managing it all in the ERP doesn’t help to reduce inventory at all.”

Project management (PM): PM is another common silo because many companies use separate solutions to track their projects. In order to fully capture project costs, integration between the PM, EAM/CMMS, and ERP is necessary. “A turnaround at a refinery is a big capital project, and each activity will incur equipment, material, or labor costs,” explains Zirnhelt. “If the PM system is separate from the EAM/CMMS system, the costs are not ignored, but they may not be accurately tied to the asset.”

Integrating these systems allows you to track the project and all costs associated with it to the asset, providing a complete picture of the value of the asset. It can also lead to some tax write-offs and it will simplify non-conformance reporting (NCR) efforts.

Human resources (HR): Some companies have a separate HR system, but whether a welder is certified or not is very important to know while the work is being scheduled in the EAM/CMMS. Real-time access to employee training and certification records is essential.

Health and safety (H&S): “If a safety incentive or issue is related to a certain piece of equipment or individual, then it’s important to have a connection between the EAM/CMMS, H&S, lockout/tagout, HR, and ERP systems in order for your analysis to be complete,” suggests Zirnhelt.

Document management: Document management systems and EAM/CMMS applications are likewise interdependent. Real-time integration allows a technician working on a pump to pull up the pump’s specs and manual, for example.

Historians: Historian integrations are underserved, says Rio. “Condition monitoring data from an historian can drive predictive maintenance (PdM) within an EAM/CMMS system,” he explains. “When process data values are run through algorithms that determine when conditions are going bad, it’s a fairly simple and inexpensive integration to pass those flags to the EAM/CMMS and initiate a work order. Unfortunately, our research shows that only about 35% of industrial sites do this kind of condition monitoring, and we’ve also found anecdotally that there are usually not many instances within any one site.”

By integrating shop floor data collection systems with production and EAM/CMMS systems, not only can alarms trigger work orders, but the trends that came before the alarm can be used to better predict failures, understand the root causes, and build a more effective work program to prevent alarm conditions, says Berger. “I’ll know if my production runs for 10 hours or more at a certain speed, whether it’s more likely to trigger failure,” he says. “I can determine whether increasing my preventive maintenance intervals will help.”

Unfortunately, setting up the integrations requires engineering resources, and that type of labor is expensive and prone to turnover. Another deterrent is information overload. “If 1,000 points being tracked are changing 100 times per second, how do I best merge that data?” asks Berger. “Is the raw trend data useful, or should I be summarizing it before it comes across? That’s quite difficult and there are costs involved.” On the other hand, the business benefits of condition-based maintenance are quantifiable and widely documented.

IT considerations

“Technology has been getting better at being more open system and plug and play, with identical or similar user interfaces,” says WMC’s Berger. “An example of this is Web services. Open standards are especially important for small, independent vendors whose products need to be integrated with larger solutions.”

At the same time, application consolidation has been an ongoing trend. “The bigger vendors have been acquiring and incorporating many of the best-of-breed applications into their own integrated suites,” explains Berger. “In some cases, it’s a misnomer to call these suites fully integrated, particularly when an acquired package has a different table, infrastructure, or system design.”

The total cost of ownership is lower when there’s a single EAM/CMMS solution, whether it’s a single best-of-breed instance serving all plant sites or a component of a fully integrated enterprise suite. “It’s much easier to share best practices, such as predictive vs. preventive maintenance, and it places all maintenance information at your fingertips,” says ARC’s Rio. “It allows you to share inventory. For instance if a critical asset used in multiple sites very rarely fails, it becomes possible to share the spare parts rather than storing spares at every site. The single solution also rationalizes IT support and operating costs.”

The alternative to a single, integrated solution is maintaining multiple systems, versions, technology sets, and skill sets over time. “These are big costs that many companies ignore,” says IFS’s Zirnhelt. “I view integration as an iceberg; one-ninth of an iceberg — the amount visible above water — represents the immediate cost of integration, but the ongoing costs are hidden.”

When there are multiple integrated platforms to manage, it can be difficult to find the source of problems and the vendor responsible. Keeping interfaces in sync and compatible during application upgrades can also be difficult. Additionally, when batch interfaces are used rather than online, real-time links, frustration among end users is more likely.

“Periodic application rationalization just makes sense,” suggests Rio. “We saw it with the Y2K audits and now with the shift to the cloud, mobility, and the Internet of Things. Every time there’s a major technology shift, companies revisit their applications to see what they still need, what should be migrated to newer technologies, and what should just go away.”

Proven integration efficiencies

The benefits of properly integrated applications are readily apparent.

  • Nucor Steel reduced its spare parts inventory by a couple million dollars per year at one site by integrating its EAM/CMMS, IM, and purchasing systems, says Zirnhelt.
  • A contract drilling company implemented a single integrated solution at its offshore oil rigs to improve maintenance and inventory efficiency. Each rig now has a single instance that houses its EAM/CMMS, HR, H&S, NCR quality audit data and electronic documents, and the rigs communicate and replicate data with the head office and financial system onshore.
  • A renewable power company that operates in the United States, Canada, and Brazil, eliminated about 10,000 spreadsheets by replacing disparate systems and data silos with a single, integrated EAM/CMMS system, reports Zirnhelt. Now, one system and instance is backed up nightly instead of thousands of spreadsheets, resulting in significant IT and operator efficiencies.
  • Two companies, an oil and gas manufacturer, and a specialty chemicals producer, moved from calendar-based preventive maintenance to condition-based PdM — a practice enabled by integrating shop floor and EAM/CMMS software. One company saved 50% of the cost of maintenance (labor and materials), and the other saved 33%, says Rio.

Recommended paths

These suggestions from industry experts can help you to develop an optimal approach.

David8090.jpgFrom David Berger, Western Management Consultants: Start with a good spec. You need to fully understand the key drivers for your business, what your needs are, and the most cost-effective level of integration. Look for a package that aligns with your needs, but also consider the vendor, because it’ll be a long-term relationship.

Start small. Don’t try to bite off 15 integrations that will cost you millions of dollars. Integrations are tedious, time-consuming, expensive, and wrought with custom programming, so try to minimize them.

Keep things on the system of record that makes sense. Payroll and personnel files can be on HR, and finance can have purchasing, but I highly recommend that IM stay on the EAM/CMMS because, like labor, it is so vital and intimately related to maintenance.

lead ralph rioFrom Ralph Rio, ARC Advisory Group: I recommend integration of EAM/CMMS with financials. It’s a simple and relatively inexpensive integration and it ensures much more accurate capital and cost accounting than the manual alternative. On the other hand, spare parts purchasing and inventory should be managed within the EAM/CMMS rather than integrating it from the ERP.

If labor constraints are holding you back from condition-based maintenance, explore the software tools and template methodologies that make it easier to develop and maintain EAM/CMMS and historian integrations.

If your IT organization lacks the time or expertise to compare and rationalize your applications, consider one of the global service providers that have developed very significant practices around this task.

From Patrick Zirnhelt, IFS North America: Choose very easy-to-use, intuitive systems that don’t cause frustration, workarounds, or excuses. If you maximize the wrench time of your mechanics and make it easy for them to report their activities, their valuable data will eventually become knowledge and intelligence.