EAM / ERP Software / Software / IIoT / Smart Manufacturing

EAM and ERP in the era of the IIoT

Why fully integrated enterprise software is more important than ever.

By Sheila Kennedy, CMRP, contributing editor

Asset-intensive industries would be lost without enterprise software tying their processes and data together. The two most crucial solutions – enterprise asset management (EAM) and enterprise resource planning (ERP) – are inexorably linked, and the bond is tightening with application and service innovations spawned by digitalization and the industrial internet of things (IIoT).

Advanced technologies and analytics are improving the precision and timeliness of asset maintenance, and the impact on uptime, productivity, and costs are attracting the attention of the C-suite. It’s almost as if maintenance is suddenly part of the home team – not an outlier that is ignored until something breaks down.

How do these developments increase customer value?

  • Sustaining and disruptive innovations streamline and automate traditional processes
  • Big data and advanced analytics heighten business decisions and mitigate aging workforces
  • Cloud-based and subscription delivery make software adoption more affordable
  • Servitization allows customers to refocus their attention on the core business

Choosing between EAM and ERP is no longer an option for modern industrial and utility operations, but whether a company realizes full advantage of the two depends on which products are chosen and how they are integrated. ERP solutions with extensive, fully integrated EAM capabilities represent the best of both worlds.

Crucial, complementary solutions

Individually, EAM and ERP systems serve distinct business functions. EAM is needed to optimize the equipment, fleets, facilities, and other physical assets crucial to successful business operation. ERP is needed to facilitate how the core business is managed – from budgeting and the general ledger to human resources, manufacturing, distribution, sales, procurement, and projects.

One cannot replace the other, particularly in manufacturing, mining, oil and gas, utilities and other asset-heavy industries. Together, they facilitate enterprise-wide reliability, performance, productivity, and profitability.

As an example, Ted Rohm, senior ERP analyst at Technology Evaluation Centers (TEC), observes in a blog post that most ERP solutions will not manage even a relatively simple asset component makeup; however, the EAM system will support these complex components, track the location and status of the assets in real time, schedule work orders to maintain and fix the assets, and manage the storage of spare parts required to service the assets.

“EAM can be thought of as being separate from ERP or part of ERP. In addition, some ERP systems have made very strong inroads into asset management,” says Tracy Strawn, president of energy services at Marshall Institute. “Loyal users of each application feel very strongly about their software system choice. In my opinion, both have their strengths and weaknesses.”

The IIoT game changer

The advent of the IIoT and related technologies makes a stronger partnership between EAM and ERP more crucial. Networked sensors and intelligent devices are collecting exponentially more data, and decisions are being facilitated by modeling, machine learning, and advanced analytics.

Many IIoT applications have moved beyond specific point solutions such as predictive maintenance of critical assets; they have become part of a broader digital transformation, says Ralph Rio, vice president at ARC Advisory Group. This includes new services and business models that require support from multiple parts of the organization, i.e., product development, marketing, manufacturing, sales, and services.

“An example is aftermarket condition monitoring services for equipment sold by an OEM. This cross-functional involvement requires tight integration with the business processes embedded in ERP applications,” explains Rio.

Rohm adds that technological advances, along with the associated price drop for smart products being developed for the IoT, now make it possible to monitor almost any asset in real time from nearly any location across the globe.

The new technologies are helping to improve asset tracking and management. “We see drones being used to monitor assets, such as monitoring oil pipelines in Canada and oil platforms in the Bering Sea, as well as inspecting bridges and infrastructure without endangering the inspector. All this means that there is more detailed and current data, which allows for better management of the assets via prescriptive analytics,” Rohm explains.

Today, there are EAM and ERP solutions with tremendous IIoT capability. Strawn sees two primary reasons why manufacturers invest in the IIoT:

  1. Disrupt or be disrupted: In other words, “adopt” or get run over by the competition.
  2. Need for productivity: Ultimately, the IIoT will drive productivity up and production costs down.

“Many EAM and ERP providers have strengthened their positions and offerings through investments and acquisitions,” adds Strawn. “They are continually evolving to stay ahead of the curve, enabling new business models in managing physical assets and IIoT applications.”

How to choose?

While cloud-based and subscription delivery models have lessened the upfront capital outlay, the data conversions, interfaces, business process refinement, training, and culture change that accompany major software implementations still exist.

ERP and EAM implementations are more challenging and costlier when the solutions come from different vendors. Purchasing independent ERP and EAM solutions requires integrating crucial data and transaction touchpoints in order to keep the systems in sync. For example, EAM’s asset and associated inventory management costs are shared with the ERP, and ERP’s workforce data such as availability and skill certifications are shared with the EAM.

Additionally, sustaining interfaces and configurations through each maintenance release, critical update, and major upgrade poses a significant risk. Without constant availability of thoroughly knowledgeable resources to oversee the integration over time, it is bound to break and put daily operations and information management at risk.

In contrast, a sole-source, fully integrated ERP and EAM solution has inherent compatibility in its system architectures, data definitions, and business processes, thus minimizing the time, costs, and risks of integration. The provider assumes full responsibility for ensuring its systems are designed, developed, tested, and delivered as one – whether it’s the initial installation or future updates or upgrades. In addition, the common user interface simplifies training and encourages adoption.

“It may end up being choice driven by the Finance group (because at the end of the day, money speaks louder than everything) and the IT group (because ultimately they have to support it),” observes Strawn.

However, he adds: “If a company chooses to go with a high-end ERP to manage physical assets, then the maintenance folks shouldn’t worry.”