Top Strategies for Asset
Performance Management
(APM)
Mehul Shah, Research Analyst
Aberdeen Group
February 24th, 2010
© AberdeenGroup 2009
Agenda
Introduction
 Polling Questions
 Define Asset Performance Management
 Challenges
 Aberdeen Research Frameworks
 APM Research Results
 Recommendation for Action

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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
© AberdeenGroup 2009
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Polling Question # 2
 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
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Polling Question # 3
 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
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What is Asset Performance Management?
Approach that synchronizes operations, maintenance, and
engineering goals
Balancing asset availability and asset utilization
Risk Management – Maintenance based on criticality of
asset
Visibility into complete lifecycle of asset –
Understanding the Economic Value Add
Aligning asset performance to corporate performance
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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
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Our Research Methodology




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
© AberdeenGroup 2009
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Aberdeen Maturity Class Framework
Best-in-Class
Selected Performance
Criteria (KPI)
- Top 20%
Unscheduled Asset Downtime
OEE
Total
Respondents:
Industry
Average
- Middle 50%
Laggard
- Bottom 30%
Return on Asset Goals
Respondents are scored
individually across KPI
© AberdeenGroup 2009
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Aberdeen’s Methodology
End-User Investigation: PACE Framework
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.
C
The business competencies (organization, process, etc…)
apabilities: required to execute corporate strategy.
Enablers:
© AberdeenGroup 2009
The key technology solutions required to support the
organization’s business practices.
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Aberdeen Maturity Class Framework
Best-in-Class
Selected Performance
Criteria (KPI)
- Top 20%
Time-to-Action/Decision
Asset Downtime
Employee
Productivity
OEE
Total
Respondents:
Industry
Average
- Middle 50%
Laggard
- Bottom 30%
Return
on (i.e.
Assets
Reduction
of Risk
Litigation)
Respondents are scored
individually across KPI

What are Best-in-Class
companies doing differently?
Pressures:
External forces that impact an organization’s market position,
competitiveness, or business operations.

What pitfalls are they
avoiding?
Actions:
The strategic approaches that an organization takes in
response to industry pressures.

Why are they achieving
greater success?
business competencies (organization, process, etc…)
Capabilities: The
required to execute corporate strategy.

What technologies and
services are enabling them to
succeed?
© AberdeenGroup 2009
Enablers:
The key technology solutions required to support the
organization’s business practices.
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Study Demographics
Current Survey Respondents: 139
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)





Industry
 21% Oil/Gas
 11% Consumer Packaged Goods
 8% Utilities
 5% Chemicals
 4% Metal and Metal Products
 4% High Technology Manufacturing
 2% Automotive
Geographies:
55% North American
17% Asia Pacific
17% Europe
9% Middle East, Africa
© AberdeenGroup 2009
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Top Objectives of CFO’s
63%
Reduce operating expense
46%
Revenue growth
40%
Improve profitability
Customer satisfaction
28%
Risk Management
24%
Maintain or improve product and service margins
20%
0%
10%
20%
30%
40%
50%
60%
70%
Percentage of Respondents, n=139
All Respondents
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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Budget Changes
47%
50%
40%
38%
36%
35%
32%
31%
30%
28%
27%
22%
20%
10%
0%
Capital Expenditure
Operational Expenditure
Maintenance Budget
Percentage of Respondents, n=139
Decreased
Increased
Remained Same
Source: Aberdeen Group, October 2009
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Top Pressures Driving Improvement in Asset
Performance Management
Reduced operational and maintenance budgets
68%
Maximize Return on Assets (RoA)
48%
Aging assets
30%
Increasing demand variability
25%
Need to comply with safety and regulatory
requirements
18%
0%
10% 20% 30% 40% 50% 60% 70% 80%
Percentage of Respondents, n=139
All Respondents
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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Defining the Best-in-Class:
Performance Criteria Used
to Identify Best-in-Class
Best-inClass
Industry
Average
Laggard
Operational Equipment
Effectiveness (OEE)
88%
81%
75%
Unscheduled Downtime
2%
11%
18%
© AberdeenGroup 2009
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Results Achieved by Best-in-Class:
Percentage of Respondents, n=139
Estimated performance against corporate plan..
30%
Over achieved by 25%
25%
20%
15%
10%
Over achieved by 7%
5%
0%
-5%
-10%
Missed by -10%
-15%
Return on Assets (RoA)
Best-in-Class
© AberdeenGroup 2009
Industry Average
Laggard
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Actions – The “A” of PACE
Initiatives the Best-in-Class Leverage to Outperform Peers
Implement advanced asset performance
management and analytical capability
57%
40%
39%
Establish a risk based strategy
23%
26%
Establish continuous improvement programs
41%
Create / improve real time visibility into asset
performance
26%
23%
Synchronize asset performance with corporate
performance objectives
26%
0%
32%
10%
20%
30%
40%
50%
60%
Percentage of Respondents, n=139
All Others
Best-in-Class
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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Percentage of Respondents, n=139
Process Capabilities
70%
60%
50%
65%
57%
54%
43%
40%
43%
41%
33%
36%
30%
17%
20%
10%
0%
Standardized process is in
Standardized KPI's
Frequent risk based
place for the prioritization established to measure the assessments to understand
and management of
success of asset
the risk profile of the asset
maintenance work
performance management
initiatives
Best-in-Class
Industry Average
Laggard
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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Percentage of Respondents, n=139
Organization Capabilities
60%
57%
57%
48%
50%
40%
39%
35%
31% 30%
30%
30%
23%
20%
10%
0%
Executive focus on aligning
asset performance with
corporate performance
Management goals are
aligned and coordinated with
maintenance and production
teams
Best-in-Class
Industry Average
Roles and responsibilities
established within
departments to successfully
execute APM initiatives
Laggard
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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Percentage of Respondents, n=136
Knowledge Management Capabilities
70%
59%
59%
50%
52%
45%
41%
35%
34% 36%
24%
21%
12% 10%
0%
Failure data is used Historical as well as Finance executives Reliability Centered
to perform root
real-time asset
have visibility into Maintenance (RCM)
cause analysis
performance data is critical maintenance
used as actionable
and production
intelligence
metrics
Best-in-Class
Industry Average
Laggard
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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Percentage of Respondents, n=139
Performance Management Capabilities
80%
70%
70%
61%
60%
48%
46% 47%
39%
36%
40%
20%
30%
17%
20%
3%
0%
SOP are
documented and
automated
Maintenance work
sites are audited on
a regular basis to
confirm compliance
to work instructions
Best-in-Class
Asset Performance Asset Performance
can be compared metrics are linked to
across plants
financial metrics
Industry Average
Laggard
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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Percentage of Respondents, n=136
Sustainability
70%
45%
35%
36% 32%
39% 39%
34%
24%
21%
10%
0%
Emissions data is
collected
automatically
Energy consumption
data is collected
automatically
Best-in-Class
Industry Average
Energy consumption
and costs used as
KPI for operation
decision-making
Laggard
Source: Aberdeen Group, October 2009
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Percentage of Respondents, n=139
Enterprise Wide Technology
80%
70%
60%
50%
40%
30%
20%
10%
0%
73%
71%
62%
65% 63%
50%
48%
43% 42%
31% 32%
22%
EAM - Enterprise
Asset Management
EHS - Environment
Health and Safety
Best-in-Class
BI - Business
Intelligence
Industry Average
Energy Management
Laggard
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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Real Time Interoperability
CMMS/EAM and ERP
55%
31%
33%
50%
Control System and CMMS/EAM
42%
28%
38%
CMMS/EAM and Mobile devices
23%
14%
CMMS/EAM and BI
33%
Energy Management and CMMS/EAM
18%
7%
Wireless Sensors and CMMS/EAM
18%
4%
0%
35%
16%
17%
10%
20%
25%
30%
40%
50%
60%
Percentage of Respondents, n=139
Laggard
Industry Average
Best-in-Class
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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Enablers
Alerts and Alarm
Management
81%
44%
46%
Spare Parts Optimization
43%
42%
32%
Asset Analytics
22%
43%
31%
43%
41%
Asset Dashboard
19%
Master Data Management
22%
Mobile Solutions
0%
17%
12%
10%
20%
31%
38%
33%
Best-in-Class
Industry Average
Laggard
30%
40%
50%
60%
70%
Percentage of Respondents, n=139
80%
90%
Source: Aberdeen Group, October 2009
© AberdeenGroup 2009
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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
© AberdeenGroup 2009
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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
© AberdeenGroup 2009
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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
© AberdeenGroup 2009
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Thank You
Research Contact:
Mehul Shah
Research Analyst
[email protected]
617-854-5212
© AberdeenGroup 2009
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