Paul Mervine's mission two years ago was simple: cut costs. "My edict when I came on board was to cut down the administrative staff," says the CIO of Century Aluminum Inc. (Ravenswood, WV). It was a gutsy directive given the fact that the company had just sold off a portion of its plant that included the entire IT staff. But Mervine had a plan, one in which enterprise asset management (EAM) software would be a crucial component.
"I started this with a vision, otherwise we would have never gone down this road," he says. That vision goes way beyond staff reductions and into the internal operations of the company. It's a corporate design, Mervine says, that starts with EAM but ends with a new set of enterprise-wide best practices that provide a way to manage all of the company's critical assets from a single interface, thereby increasing productivity and lowering the cost of operations as well as the price of Century's aluminum for its customers.
For Mervine, the assets not only include plant equipment and personnel, which have been covered under the traditional concept of computerized maintenance management systems (CMMS), but also will encompass such things as facilities, mobile devices, and perhaps most importantly, a unified view of all data about assets in a company.
This expanded notion of EAM, particularly important during an economic downturn when companies are looking to better manage assets, is now in play across the landscape of the industry. Enterprise resource planning (ERP) vendors, for example, have entered the picture with EAM adjuncts to accounting applications, adding financial data to the list of assets that need to be managed. Meanwhile, major EAM vendors are reengineering their product suites around the Web to strengthen the global capabilities of their applications. In addition, they've been adding hosted services and such capabilities as e-commerce, fleet management, facility and property management, and even aviation and telecommunications into the mix, opening the door for new, specialized players to partner with them or compete for their own niche market spaces.
But perhaps the most significant sign that EAM is morphing into something that CIOs and CFOs alike will soon be demanding is the addition of information technology equipment, such as PCs, servers, and communication networks, into what a company considers to be critical assets. Seeking to get in front of this emerging opportunity, MRO Software Inc. (Bedford, MA) in late May signaled its intent to broaden its vision of EAM in part through the acquisition of MainControl Inc. (McLean, VA), a developer of applications to track IT assets (see sidebar).
"The EAM market is in its latter days," explains Chip Drapeau, president of MRO Software. "All of this swirl is forming a new market called strategic asset management, which will be part of a modern product portfolio. The subtle difference is that it is managing the entire infrastructure of a company. We support manufacturing and production processes and you can expect us to add to the asset classes to the point where we can go into a CFO and talk about managing the entire infrastructure in the company."
Within an oil company, for example, Drapeau says the asset responsibility for MRO Software may stretch beyond production facilities to offshore drilling platforms, trucks, and other transportation to retail outlets, corporate facilities, and now, as a result of the MainControl acquisition, local- and wide-area networks, PCs, and even point-of-purchase terminals.
MRO's move toward mainstream IT is a logical extension of what the company already does for manufacturers, and it opens the door for the company to enter into service and financial markets. "It allows a CIO to rely on one system to manage all critical assets," explains Drapeau. "The timing is right, driven by a shift to Internet standards around the globe. We believe strategic asset management will take its place as a prominent and vital portion of the modern enterprise." Drapeau reasons that there's a great deal of logic around the notion that if the internal house is not in order-meaning assets are not performing-then the ability to create value from CRM and other applications is drastically diminished.
These events reflect the EAM vendor community's response to the needs and pressures facing executives like Mervine, who require a way to maintain factory-floor equipment through CMMS, but then must tie that data into the accounting department's ERP applications as well as out to the warehouses, the supply chain, and even to logistics and transportation systems.
Indeed, it was the ability to share resources between multiple plants, centrally control inventory, and access up-to-the-minute accounting transactions that caught Mervine's attention "The more metal we move out, the more money we make, and it helps in lowering cost," he says. Since deploying Indus International Inc.'s EMPAC software with an integration link into Oracle's 11i financial application, Century Aluminum has cut the cost of delivered product by 5%, as a result of increasing productivity and decreasing equipment downtime.
And, today, two years after shedding half of one plant, Century Aluminum has purchased a second plant. Mervine is now striving to deliver on his vision, lobbying the corporate heads to approve the consolidation of the two factories under the one Indus EAM application.
Manufacturers will benefit from the expanding EAM offerings, but an over-saturated market could mean trouble for EAM players if they don't try to leapfrog the competition. And the economy isn't helping matters. Datastream Systems Inc. (Greenville, SC), Indus International Inc. (Atlanta, GA), and MRO Software, for instance, all had a tough first quarter, partly due to end-of-year sales deferrals.
Meanwhile, ERP vendors, including SAP America (Walldorf, Germany), IFS North America Inc. (Chicago, IL), J.D. Edwards & Co. (Denver, CO), and Oracle Corp. (Redwood Shores, CA) represent an increasingly competitive threat as they push EAM out to their existing customer bases as an integral part of their financial application suites.
"I hear more companies on the process side, who are heavily dependent on assets to generate revenue, talk about using their SAP, J.D. Edwards, or IFS suite," says Marc McCluskey, research director at AMR Research Inc. (Boston, MA). "That is shocking to me because I don't see the ERP players having the depth or patience to develop the partner networks around asset management solutions to make it effective in reducing cost."
MRO Software is raising the bar, however, with a new class of asset management capabilities. Drapeau says by adding information assets into the mix, MRO will no longer compete head-on with Indus, Datastream, or any of the ERP players. Rather, Peregrine Systems Inc. (San Diego, CA), which pioneered the concept of infrastructure management, and Ariba Inc. (Sunnyvale, CA), which delivers a white-collar spend management view of controlling business costs, are the two players he now considers rivals.
Nevertheless, core EAM vendors are continuing to try to build their own businesses through other outlets. Indus International, for instance, is negotiating to enlarge its footprint through OEM relationships. "We've had soft relationships with automation vendors," says Neil Cooper, Indus' vice president of strategic solutions. "My job now is to build stronger relationships with the big automation firms."
Cooper wants the Indus application to be bundled with an automation suite or re-branded, not just resold. Cooper is currently in discussions with Rockwell Automation Inc. (Milwaukee, WI), as well as Emerson Electric Co. (St. Louis, MO), Honeywell Industry Solutions (Phoenix, AZ), Siemens Energy & Automation Inc. (Norcross, GA), and ABB Group (Zurich, Switzerland). These companies, he says, think of asset management as monitoring, alerting, and maintaining a plant-floor device, but their definition does not go as far as including contracts, service level agreements, and consulting expertise, which are Indus' core competencies.
Rockwell, in its Global Manufacturing Systems (GMS) group, has an asset management business that provides a variety of services to improve the utilization of such devices as sensors and motors and even ERP applications. GMS considers itself a full-service EAM provider since it also has a re-sale agreement with MRO Software under which it offers the company's Maximo application as well as integration services to customers. "The tool is the EAM software, but the enabler is our knowledge of product performance, warranty, process management. That is what helps customers improve their process," says Mike Laszkiewicz, vice president of Rockwell's asset management business.
Rockwell integrates Maximo into Rockwell Software's RSBizWare suite, which includes condition-based monitoring tools, by using a mapping tool called RSSql. Another product from Rockwell Software, PlantMetrics, measures the yield of a piece of equipment relative to its capability, allowing a plant manager to determine where to deploy maintenance people on a proactive basis. "All of this gets into other business dynamics," says Rich Ryan, president of Rockwell Software (Mayfield Village, OH). "Because we are looking at the holistic picture, we can drive more value from a single application."
That bigger picture, which collaborative asset management is driving toward, is important because assets themselves are becoming more difficult to manage, explains Houghton LeRoy, an analyst at ARC Advisory Group (Dedham, MA). "Assets are becoming more intelligent, some reporting on their own health or having self-diagnostics. As a result, collaboration is required to share responsibility and ensure everything is performing adequately." It is a solution-sell these days, he says, versus the stand-alone database system. "People are looking for more performance-oriented results rather than database systems which give them a lot of information but no recommendations."
Apart from collaboration, manufacturers are also looking to rationalize their system infrastructures. In the case of Cabot Corp. (Boston, MA), consolidation was the driving force behind Craig Bickel's purchase of J.D. Edwards' EAM application. Bickel is the vice president and CIO of Cabot, a global specialty chemical company that has roughly 50 plants around the world, each of which in the past used different maintenance management packages. "We found over time, with these disjointed EAM systems, there were walls that built up between the finance and the maintenance groups," says Bickel. The company is in the process of moving from 40 different applications to just five. For its ERP and EAM needs, Cabot has chosen J.D. Edwards.
Despite some industry observers' opinion that ERP vendors can't satisfy the needs of asset-intensive process companies, Cabot's decision to expand the ERP application suite with EAM avoided the issue of having to integrate a disparate application. "We didn't find it compelling to go with a best-of-breed EAM solution, and then have to deal with the integration," says Bickel.
J.D. Edwards officials echo that view, saying that it, like its ERP competitors, takes EAM seriously. "Many firms look to supply chain and CRM for internal and external [optimization], and not enough attention is given to the current plant investment," says J.D. Edwards' Jim Upton, product marketing manager for enterprise asset management. "We are pulling more value out of that investment by virtue of what it can do for the whole enterprise."
Other vendors are stepping up their efforts to advance the idea of full-service EAM. Take Invensys plc (London, England), which formed Avantis Asset Management Solutions in March. The company has the tools: Avantis.CM (condition monitoring) and Avantis.DMM (dynamic maintenance management), and has built upon them with InRIM (industrial rapid implementation methodology), a service that delivers predefined templates to get up and running with not just the software, but also best practices. "I like to think that EAM is the conduit that links the plant floor to the enterprise," says Sil Zoratti, business development manager for Avantis. "But the functionality [of the EAM application] becomes less of a differentiator. What is important is the service element and delivering solutions to a marketplace."
Consulting expertise continues to be a traditional service offering, but outsourcing services are now being offered by Datastream, Indus, MRO, and Cayenta Inc. (San Diego, CA). Indus' Cooper argues that in a collaborative world, the trend is that 80% of assets in the production process will not be maintained by the end user, but rather outsourced, enabling a company to focus on its core competency. To accommodate this emerging need, these EAM vendors offer a hosted model in which the vendor maintains the application. Small companies migrate to this model as a way to avoid capital costs, but larger customers, says MRO's Drapeau, have a complex integrated architecture that makes hosting impractical.
In April, Datastream announced a new release of its 7i product that includes what it calls extended Web services. According to Marty Osborn, Datastream's vice president of product management, these HTML-based Web services enable the capture and consolidation of data from multiple areas in a company.
This is where the recently inked deal between Datastream and GE FANUC Automation North America Inc. (Charlottesville, VA) comes in, says Osborn. GE FANUC has a digital cockpit, essentially a portal that draws together data about such activities as order status, utilization of equipment, and its CIMPLICITY human-machine interface (HMI) system. "So the end user doesn't know what application they are in, they are just looking at the results. In the end, Web services is about exposing business logic," says Osborne.
Similarly, Pavilion Technologies Inc. (Austin, TX) is rolling out a set of tools dubbed the PROSPER solution suite that is in a Web-based portal format. Pavilion traditionally plays in the realm of optimization of business processes for specific units, like a unit producing polyethylene. The portal that Pavilion is creating will build upon that to deliver and store all aspects of the business, including energy consumption at each corporate or plant facility.
"Now we are taking that same idea of model-based predictive control and applying optimization to business processes and non-physical processes," says Gail Moser, chief marketing officer for Pavilion. "Someone at a high level of planning may use the models to make decisions about buying a new plant or selling one." That's because the software will be able to convert everything into terms that business people understand: money. Key performance indicators are directly associated with cash flow to understand what impact every decision has on the bottom line, says Moser.
The new vision of EAM will impact a company's bottom line like never before. That's a message that CIOs love to relay, and a language that CFOs will understand. MA