© AberdeenGroup 2009 Top Strategies for Asset Performance Management (APM) Mehul Shah, Research Analyst Aberdeen Group February 24 th, 2010

© AberdeenGroup 2009

Top Strategies for Asset Performance Management

(APM)

Mehul Shah, Research AnalystAberdeen Group

February 24th, 2010

© AberdeenGroup 2009 2

Agenda

Introduction Polling Questions Define Asset Performance Management Challenges Aberdeen Research Frameworks APM Research Results Recommendation for Action


Polling Question # 1

What are your CFO’s TOP THREE (3) OBJECTIVES for the next 12 months?

1. Revenue growth

2. Reduce operating expense

3. Improve profitability

4. Customer satisfaction

5. Risk Management

6. Maintain or improve product and service margins

7. Sustainability / Corporate Responsibility



What are the TOP TWO PRESSURE driving you to focus on asset management? (Select two)

1. Maximize Return on Assets (RoA)

2. Reduced operational and maintenance budgets

3. Aging assets

4. Need to comply with safety and regulatory requirements

5. Increasing demand variability



What are the TOP TWO STRATEGIES that your company is establishing to address the pressures?

1. Implement advanced asset performance management and analytical capability

2. Establish a risk based strategy

3. Create / improve real time visibility into asset performance

4. Improve collaboration across maintenance, production and financial groups


What is Asset Performance Management?

Approach that synchronizes operations, maintenance, and engineering goals

Visibility into complete lifecycle of asset – Understanding the Economic Value Add

Balancing asset availability and asset utilization

Aligning asset performance to corporate performance

Risk Management – Maintenance based on criticality of asset


6 Major Roadblocks to Asset Management

Change in culture required to move from break fix to proactive maintenance

Asset management is still viewed as a cost center by

senior management

Complex and disparate data sets present a significant road

block to decision making

Lack of communication among production, maintenance,

engineering and IT departments

Lack of awareness of how asset management can reduce

environmental impact

Transfer of knowledge from a few experienced employees to

others


5,000+ Executives surveyed

10,000 + data points collected per study

12 Benchmark Reports planned for 2010

Library of 15,000 benchmark survey responses and 200,000 data points

Our Research Methodology


Aberdeen Maturity Class Framework

Selected Performance Criteria (KPI)

Unscheduled Asset Downtime

OEE

Return on Asset Goals

Total Respondents:

- Top 20%

- Middle 50%

- Bottom 30%

Respondents are scored individually across KPI

Best-in-Class

Industry Average

Laggard


Aberdeen’s MethodologyEnd-User Investigation: PACE Framework

P

A

C

E

Pressures:External and internal forces that impact an organization’s market position, competitiveness, or business operations.

Actions:The strategic approaches that an organization takes in response to industry pressures.

Capabilities:The business competencies (organization, process, etc…) required to execute corporate strategy.

Enablers:The key technology solutions required to support the organization’s business practices.


Aberdeen Maturity Class Framework

P

A

C

E

Pressures:External forces that impact an organization’s market position, competitiveness, or business operations.Pressures:External forces that impact an organization’s market position, competitiveness, or business operations.

Actions:The strategic approaches that an organization takes in response to industry pressures.Actions:The strategic approaches that an organization takes in response to industry pressures.

Capabilities:The business competencies (organization, process, etc…) required to execute corporate strategy.Capabilities:The business competencies (organization, process, etc…) required to execute corporate strategy.

Enablers:The key technology solutions required to support the organization’s business practices.Enablers:The key technology solutions required to support the organization’s business practices.

What are Best-in-Class companies doing differently?

What pitfalls are they avoiding?

Why are they achieving greater success?

What technologies and services are enabling them to succeed?

Selected Performance Criteria (KPI)

Time-to-Action/Decision

Employee Productivity

Reduction of Risk (i.e. Litigation)

Total Respondents:

- Top 20%

- Middle 50%

- Bottom 30%Respondents are scored individually across KPI

Best-in-Class

Industry Average

Laggard

Asset Downtime

OEE

Return on Assets


Study Demographics

Job Title: 26% Upper Management (CEO, COO,

CFO, CTO, President, VP, Partner/Principle)

22% Director 23% Manager 10% Staff

Revenue Size 30% Small (under $50 Million) 38% Medium ($50 Million - $1 Billion) 33% Large (Over $1 Billion)

Geographies: 55% North American 17% Asia Pacific 17% Europe 9% Middle East, Africa

Industry 21% Oil/Gas 11% Consumer Packaged Goods 8% Utilities 5% Chemicals 4% Metal and Metal Products 4% High Technology Manufacturing 2% Automotive

Current Survey Respondents: 139


Top Objectives of CFO’s

20%

24%

28%

40%

46%

63%

0% 10% 20% 30% 40% 50% 60% 70%

Maintain or improve product and service margins

Risk Management

Customer satisfaction

Improve profitability

Revenue growth

Reduce operating expense

Percentage of Respondents, n=139

All Respondents

Source: Aberdeen Group, October 2009


Budget Changes


38%

47%

36%35%31% 32%

27%

22%

28%

0%

10%

20%

30%

40%

50%

Capital Expenditure Operational Expenditure Maintenance Budget

Decreased Increased Remained Same



Top Pressures Driving Improvement in Asset Performance Management


18%

25%

30%

48%

68%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Need to comply with safety and regulatoryrequirements

Increasing demand variability

Aging assets

Maximize Return on Assets (RoA)

Reduced operational and maintenance budgets


All Respondents


Defining the Best-in-Class:

Best-in-Class Industry

Average

Laggard

Performance Criteria Used to Identify Best-in-Class

Operational EquipmentEffectiveness (OEE) 88% 81% 75%

Unscheduled Downtime 2% 11% 18%


Results Achieved by Best-in-Class:

Estimated performance against corporate plan..

Over achieved by 25%

Over achieved by 7%

Missed by -10%-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Return on Assets (RoA)

Per

cen

tag

e o

f R

espo

nden

ts,

n=

139

Best-in-Class Industry Average Laggard


Actions – The “A” of PACEInitiatives the Best-in-Class Leverage to Outperform Peers

32%

23%

41%

23%

40%

26%

26%

26%

39%

57%

0% 10% 20% 30% 40% 50% 60%

Synchronize asset performance with corporateperformance objectives

Create / improve real time visibility into assetperformance

Establish continuous improvement programs

Establish a risk based strategy

Implement advanced asset performancemanagement and analytical capability


All Others Best-in-ClassSource: Aberdeen Group, October 2009


Process Capabilities

65%57%

41%

54%

43%36%

43%

33%

17%

0%

10%

20%

30%

40%

50%

60%

70%

Standardized process is inplace for the prioritization

and management ofmaintenance work

Standardized KPI'sestablished to measure the

success of assetperformance management

initiatives

Frequent risk basedassessments to understandthe risk profile of the assetP

erc

en

tag

e o

f Re

spo

nd

en

ts, n

=1

39




Organization Capabilities

57% 57%

48%

35%39%

31%

23%

30% 30%

0%

10%

20%

30%

40%

50%

60%

Executive focus on aligningasset performance withcorporate performance

Management goals arealigned and coordinated withmaintenance and production

teams

Roles and responsibilitiesestablished within

departments to successfullyexecute APM initiatives

Pe

rce

nta

ge

of R

esp

on

de

nts

, n=

13

9




Knowledge Management Capabilities


59% 59%

41%

24%

50% 52%

34%

12%

45%

21%

36%

10%

0%

35%

70%

Failure data is usedto perform rootcause analysis

Historical as well asreal-time asset

performance data isused as actionable

intelligence

Finance executiveshave visibility into

critical maintenanceand production

metrics

Reliability CenteredMaintenance (RCM)

Per

cent

age

of R

espo

nden

ts,

n=13

6



Performance Management Capabilities


70% 70%61%

39%48% 46%

36%30%

20%

47%

17%

3%

0%

20%

40%

60%

80%

SOP aredocumented and

automated

Maintenance worksites are audited on

a regular basis toconfirm complianceto work instructions

Asset Performancecan be compared

across plants

Asset Performancemetrics are linked to

financial metricsPe

rce

nta

ge

of R

esp

on

de

nts

, n=

13

9



Sustainability


36%45%

39%32% 34%

39%

10%

24% 21%

0%

35%

70%

Emissions data iscollected

automatically

Energy consumptiondata is collected

automatically

Energy consumptionand costs used asKPI for operationdecision-makingP

erce

ntag

e of

Res

pond

ents

, n=

136



Enterprise Wide Technology


73% 71%

50%43%

62% 65%

31%42%

48%

63%

32%22%

0%10%20%30%40%50%60%70%80%

EAM - EnterpriseAsset Management

EHS - EnvironmentHealth and Safety

BI - BusinessIntelligence

Energy Management

Pe

rce

nta

ge

of

Re

spo

nd

en

ts,

n=

13

9



Real Time Interoperability

4%

7%

17%

14%

28%

33%

18%

18%

16%

23%

42%

31%

25%

33%

35%

38%

50%

55%

0% 10% 20% 30% 40% 50% 60%

Wireless Sensors and CMMS/EAM

Energy Management and CMMS/EAM

CMMS/EAM and BI

CMMS/EAM and Mobile devices

Control System and CMMS/EAM

CMMS/EAM and ERP


Laggard Industry Average Best-in-Class



Enablers

12%

22%

19%

22%

32%

46%

17%

31%

41%

31%

42%

44%

33%

38%

43%

43%

43%

81%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Mobile Solutions

Master Data Management

Asset Dashboard

Asset Analytics

Spare Parts Optimization

Alerts and AlarmManagement


LaggardIndustry AverageBest-in-Class



Laggard Step to Success

Establish executive ownership and sponsorship for asset performance and energy management strategies across the enterprise

Align goals and metrics across maintenance and production teams

Invest in analytics to provide predictive insights based on the captured asset data

Include energy data (consumption, costs etc) as part of the optimization process to schedule maintenance and production activities


Industry Average Steps to Success

Provide on-demand asset lifecycle information to maintenance and production employees

Invest in centralized knowledge warehouse to store asset performance, energy and operations data

Include energy management in corporate wide sustainability initiative

Invest in automation with specific focus on alarm management, dashboards, analytics, and mobile solution


Best-in-Class Steps to Success

Align operational performance with corporate performance to understand the impact of asset strategies on organizations financial goals

Manage energy consumption by developing initiatives integrated with the overall asset management strategy

Establish a risk based approach to ensure predictive asset management

Establish real-time interoperability between asset management and business systems


Thank You

Research Contact:

Mehul ShahResearch [email protected]

Documents

© AberdeenGroup 2009 Top Strategies for Asset Performance Management (APM) Mehul Shah, Research Analyst Aberdeen Group February 24 th, 2010