While asset-intensive industries can be cyclical and dependent on commodity prices, the expanding global economy makes more investment in plant and equipment assets inevitable.
According to research from PwC, global capital project and infrastructure spending will exceed US$9 trillion by 2025, up from US$4 trillion in 2012 which coincided with the peak of the Australian business investment boom.
Companies will continue to invest in complex plant and equipment assets to meet the needs of the global economy, especially high growth regions such as Asia Pacific. Those that excel at asset lifecycle management and cost-effective asset operations & maintenance will have a competitive advantage.
Enterprise software capable of supporting operations & maintenance, and not just financials, is part of the foundation for success.
These new assets should hopefully be smarter and more reliable than those seen before. Many will communicate directly back to the original equipment manufacturer and a collaborative approach to looking after plant and equipment will be required.
However, that is considering just a few links in the asset lifecycle management chain, says Colin Beaney, IFS Global Industry Director.
“An approach that looks at the full lifecycle is needed for all plant and equipment items. And, especially when you are spending all of that money, a primary focus has to be on the project management of the initial asset design.”
According to Beaney, who has just published a white paper on the subject, a modular, adaptable combination of Enterprise Resource Planning (ERP), Enterprise Asset Management (EAM) and Project Management solutions can help companies meet their asset lifecycle management challenges.
ERP solutions, while widely used to run companies, are often perceived as a poor fit for asset-intensive organisations because they lack a full-blown, integrated set of EAM modules and ERP vendors may lack experience serving industries such as mining.
To manage the installation of major new capital assets and complex equipment, asset-intensive sectors also employ best-of-breed Project Management solutions which often lack integration to ERP. As a result, what has often occurred is a fragmented mix of software, with ERP used for financials, EAM for maintenance, and standalone tools to manage projects.
Asset Lifecycle Management
Effective Asset Lifecycle Management (ALM) is not just a matter of effective maintenance procedures or having good equipment monitoring, but also of having tight control over capital projects, close collaboration with EPC firms, and effective handover of asset design data into systems for procurement and maintenance.
Excellence in ALM also spans a range of other processes, such as rationalising maintenance, repair and overhaul (MRO) suppliers, consistently measuring asset performance, and managing capital projects and human resources assigned to projects.
A standalone EAM system is not going to fulfil all ALM goals. Supply chain processes, HR master data and other areas are best handled by ERP systems. Yet, because of ERP’s perceived asset management shortcomings, a standalone EAM system is often considered the most “critical” business system by asset-intensive organisations.
With a modular EAM/ERP solution, the organisation has a consistent asset record and hierarchy that can be tapped for everything from procurement, to projects, to HR records that track who is certified to run or maintain specific assets.
And when an asset is due for a major upgrade, you want the related asset data to flow right into the project control and costing for the upgrade project.
EAM works best when integrated with a company’s ERP level processes. For example, while a standalone EAM system might be able to trigger an order for a critical piece of equipment that has failed, it’s also crucial to operations that managers have visibility into exactly when it is going to be delivered.
The ERP system often holds additional data about supplier performance, or can provide visibility into logistics or global trade issues. A combined EAM and ERP solution is also well suited to rationalising which spare parts are held, how many are held, and where.
Better master data for ALM and maintenance is also essential to regulatory compliance and adherence to safety standards. A combined EAM and ERP solution supports this by establishing one single source of truth for asset data and should be capable of tracking the tasks handled by subcontractors. A software system is not going to make a company compliant. However, regulators and auditors are looking for established processes, and proof of how certain events or tasks are handled.
Perhaps the biggest software selection criterion is that the system be a cohesive solution that brings together project management, EAM, and ERP under one integrated software suite. This allows for better asset management over the entire lifecycle and keeps maintenance, production operations and corporate processes aligned. By choosing a modular architecture, organisations also have the flexibility to implement only what they need in a best-of-breed manner, or gradually phase in the whole suite.
Finally, the applications themselves should be intuitive and easy to navigate. Users should have a graphical, role-based interface that simplifies the top action items, workflows and metrics of interest. When an ERP solution can combine these ease-of-use qualities with the business-critical EAM and project control functions that asset-intensive companies absolutely need, then it becomes a highly effective applications platform.
*Rob Stummer is Managing Director, Australia and New Zealand for global enterprise applications company IFS