10 Reasons to Have an Enterprise Asset Management System (EAM)

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Enterprise Asset Management (EAM) seeks to manage the life cycle of assets in an organization, ideally from purchase planning to the retirement of the asset. Its purpose is to promote the proper use of these to maximize their economic return (ROA).

By asset we must understand all goods that a company possesses for the exercise of its business, from high story buildings to production equipment, from a complex data center to desktop software, from a fleet of vehicles to a chair.

On a planet where there are an estimated 170 trillion dollars in assets, a minimal improvement in asset management can mean higher yields, less waste and a cleaner environment.

The impact of global change

Today businesses are feeling the impact of major environmental, economic and technological trends that affects them. These trends could drive changes in strategy that lead to an improvement or change on their corporate systems, especially with regard of how to streamline assets.

Some of the most important trends are:

Environmental
• More environmental regulations
• Greater control by international regulatory compliance and reporting
• Increasing demands on Corporate Social Responsibility
• Better health and safety practices
• Increased environmental awareness

Economic
• Increased profitability and cost control
• Better ISO / ITIL Practices
• Need to differentiate
• New business models
• Markets in recession

Technological
• Use of intelligent machines and equipment with high computing power
• Use of wireless networks with higher bandwidth
• Asset tracking. Tools and people with RFID or GPS technology
• Data Security
• Systems consolidation and a fast rate of technological change

Why an additional system apart from your ERP?

Unlike an ERP (Enterprise Resource Planning software) which has the accounting view of resource planning, an EAM has a vision focused on asset management, therefore with a more operational view focused on the efficiency of assets instead of counting them. The ERP concept does not care about reliability, operating conditions, risk reduction or preventing equipment failure. For an ERP a critical asset is mostly a number.

The use of an EAM also allows businesses the proper implementation of policies, global standards and specifications, as PAS 55 (ISO 55,000) to raise the level of professionalism and demonstrating a greater concern in the efficient management of its assets.

While many of the world class ERP systems in existence have some functionality in asset management, the depth of these may not be the one required to extract the full potential of good asset management practices, having only the basics or being too complex and slowing the daily operation rather than speeding it. This is particularly one of the reasons why technical personnel has been historically shunned from using such solutions.

On a technological level, the use of an ERP’s maintenance module may require configuration changes on other business-critical modules, such as Purchasing, Inventory and General Ledger modules. This can introduce risks to the supply chain across the organization, requiring tests on all affected modules in the ERP and being particularly relevant when all modules are required to remain in the same version, or when the unified database has to be intervened.

Global actors

Some companies that Gartner has noted in it’s analysis as relevant market participants are SAP (SAP All-in-One’s PM module), Oracle (E -Business Suite Module), IBM MAXIMO (specialized vertical), Invensys Avantis (specialized vertical) and Infor (specialized vertical).

Gartner Magic Quadrant for EAM Utility segment:

But what should a system focused on asset management do to achieve an increasingly demanding level of compliance?

An EAM system should:

1.     Keep your critical equipment available and working
2.     Achieve a high degree of reliability
3.     Prevent critical failures
4.     Efficiently schedule plant shutdowns and routine maintenances
5.     Determine KPIs that drive a reliability strategy
6.     Reduce maintenance costs
7.     Reduce the cost of the stock of parts to make purchases that meet the real needs
8.     Standardize assets to reduce maintenance time and cost
9.     Manage routes of qualified technicians to increase their effectiveness
10.     Detect when a machine within warranty time fails, to manage it’s repair and/or recover associated expenses

Conclusion

Possibly your current ERP system has allowed your business to gain visibility of all areas in an integrated manner, which allows taking better decisions based on real data. An EAM system connected to your ERP could add more value to everything you do with your current ERP, bringing asset management a step further towards world-class reliability and maximizing the return on all your assets.

NOTE: If you’re looking to implement an EAM solution contact me at backofficemag@gmail.com and I’ll be glad to help.