In our last blog, we discussed the reasons for failures of CMMS/ EAM systems to produce the results for which they were purchased. In this blog, I would like to take a different focus –The impact a CMMS/ EAM system has on Asset Management. How are the two interrelated? Consider (from the previous blog) the common reasons CMMS/ EAM systems fail:
- Lack of management support (55002 – 5.1)
- Lack of business processes to support the system (55002- 5.3)
- Insufficient implementation resources (55002 – 7.1)
- Insufficient staff to properly utilize the system (55002-7.5)
To understand how these four reasons impact asset management, we first need to understand why the EAM system is important to asset management. (For the sake of this blog, we will focus on physical assets.) In the ISO-55000 document, section 2.4.1 mentions the need for analytical approaches across the life cycle of the asset. The life cycle of an asset begins with the conception of the need for the asset through to the disposal of the asset.
The conception of the need for the asset implies that there is a business need and the purchase of the asset will add value to the organization. It could be that there is a market demand for a product we are producing and our current asset base cannot meet the demand. It could also be that the assets we current have are aging and are no longer capable of meeting the existing market demand. A third reason may be that the business processes for the life cycle activities of the asset are inefficient and ineffective, resulting in excessive maintenance, repair and refurbishment expenditures. (The ISO sections are mapped to this list)
For the sake of the brevity of this blog, let’s focus on the second item: the business processes for the life cycle activities of the asset are inefficient and ineffective, resulting in excessive maintenance, repair and refurbishment expenditures. Various publications state that up to 95% of the life cycle costs of a physical asset are incurred in the operational and maintenance phase of a physical asset’s life cycle activities. An organization’s failure to allow inefficient and ineffective operational and maintenance procedures to exist will have a negative impact on the value that the physical asset will provide the organization. This indicates there is a significant financial impact that reliability/ maintenance policies and practices can have on the cost to manage an asset or asset portfolio.
Now continuing this line, what is likely to happen to the organization’s maintenance expenditures if there are poor business processes in place when a CMMS/EAM system is implemented? Don’t these poor practices become “institutionalized” locking in higher than necessary maintenance and repair costs? Consider the impact that a reactive reliability/ maintenance organization can have on maintenance and repair costs.
A reactive reliability/ maintenance organization will have a “hands-on” time of about 20%. A proactive organization with good planning and scheduling processes may achieve 60%. This basically triples the amount of reliability/ maintenance activities that they perform: ultimately lowering the reliability/ maintenance expenditures necessary for the asset to achieve the business goals it was purchased to achieve.
This is only one example of how CMMS/ EAM systems are needed to support Asset Management and how improper CMMS/ EAM system implementations can impact asset management. We could list many additional examples. However, if organizations don’t have CMMS/ EAM systems implemented correctly, delivering the data necessary to manage their assets, they will surely fail at asset management as they have at implementing and utilizing their CMMS/ EAM systems. It is no wonder the failure to learn from past mistakes will continue to give managers a headache.
For additional information reference the IAM’s Subject Specific Guidelines (SSG) on asset information. It can be found at: https://theiam.org/knowledge/iam-project-work/Subject-Specific-Guidelines