No Tricks to Achieving EAM Treats

Study points to key success factors for reaping best returns from enterprise asset management strategy

Study points to key success factors for reaping best returns from enterprise asset management strategy

Boston, MA — October 30, 2003 — Companies using Web-based automation solutions as part of their enterprise asset management (EAM) strategy are more than 60 percent more likely to see improved asset performance than those enterprises not using such tools, according to a recent study from technology consultancy Aberdeen Group and Supply & Demand Chain Executive magazine.

In a survey for the study, just 18 percent of companies reported using Web-based EAM solutions. However, 71.1 percent of those companies that had implemented an EAM solution reported improved asset performance, compared to just 44.4 percent of companies that had not implemented such a solution as part of their asset management strategy.

"To proactively manage assets over their entire lifecycle, firms must strive for enterprisewide visibility into asset utilization and performance," writes Mark Vigoroso, a senior analyst for supply chain research at Aberdeen, in the report "The Enterprise Asset Management Benchmark Report," which was based on the study conducted jointly with Supply & Demand Chain Executive.

"Unfortunately, neither stand-alone spreadsheet applications nor paper-based systems provide this kind of dynamic visibility," Vigoroso continues, adding, "The availability and connectivity of Web-native enterprise asset management solutions — which allow firms to leverage Web-native technologies to keep real-time tabs on asset performance — are giving some firms a competitive edge."

Elsewhere, 80.0 percent of companies using EAM solutions reported improved asset utilization, versus 62.8 percent that did not use such solutions. A little over half (55.6 percent) of the survey respondents who said their companies were using the solutions reported that their companies saw improved budgeting and planning, versus 44.0 percent of those respondents whose companies were not using EAM solutions.

These solutions had a significant impact in increasing inventory turns and accelerating repair cycles too: 48.9 percent of companies with EAM tools reported increased inventory turns, and 46.7 percent saw faster repair cycles, versus 21.7 percent and 16.4 percent, respectively, for companies without an EAM solution.

In explaining how EAM solutions help produce these improved results, Vigoroso writes that these applications offer the asset visibility and control required for strategic and proactive decision making. By contrast, he notes, "Ad hoc or reactive asset management strategies can negatively affect manufacturing capacity, inventory optimization and overall profitability."

Clearly many supply and demand chain executives have reached similar conclusions, since the survey, as well as other Aberdeen research, indicates that nearly 40 percent of enterprises will be using EAM solutions by 2005, and nearly one-third of respondents (31.7 percent) said that their budgets for such solutions would be increasing in the year ahead.

All that said, respondents to the Aberdeen/Supply & Demand Chain Executive survey emphasized that technology alone was not a panacea for their asset management issues. On the contrary, respondents appear to view technology as just one component of an EAM strategy, along with solid business processes and a high level of product- and industry-related expertise.

"In fact," Vigoroso writes in the study, "when asked to rate the relative importance of process services [i.e. business methodology expertise], knowledge services [i.e., asset domain expertise] and technology [i.e., the software and hardware] in an asset management solution, survey respondents rated process services the highest." Technology came in second.

Moreover, the study cites several other success factors for enterprise asset management, including tracking and monitoring more than half of an enterprise's assets, breaking down asset management silos and taking into consideration the interdependence of assets with the enterprise, among others.

Wrapping up the study, Vigoroso writes: "Companies with significant investments in fixed, physical and capital assets can no longer rely on outdated systems and processes to procure, maintain, repair, refurbish and dispose of assets. Inefficiencies will be laid bare on corporate balance sheets."

Those enterprises that are employing EAM best practices, on the other hand, are reporting bottom-line benefits, which at the least should prompt any company with substantial asset investments to benchmark themselves against those best practices, the analyst concludes.

"The Enterprise Asset Management Benchmark Report" is available on the Aberdeen Web site.