APM: Don't Forget the Top Line!

Submitted by Paul Maurer on 27 October, 2007 - 14:24.

Asset Performance Management (APM) is an evolving software category that supports business processes, workflows, data capture, analytics, and optimization to improve production availability, reliability and output.

Sophisticated solutions are now available to support complex decision making by extracting value from large quantities of operational data stored in EAM, CMMS, and other plant floor or field based data collection systems.

Leading companies are deriving significant financial benefits by adopting APM solutions. In a recent Aberdeen Group Report on APM, Bharat Nair states that “Best-in-Class [companies] are three times more likely than Laggards to enjoy maintenance cost reduction in the >15% range measured year over year. This is in addition to the 31% gains in overall equipment effectives the Best-in-Class enjoy compared with Laggards as a direct result of their investment in APM capabilities.”

While these statistics are impressive and should motivate more operations managers to increase their focus on APM, we believe that the business case for APM is even more compelling if it targets top-line impact. APM solutions that include corporate Key Performance Indicators (KPIs) in their analysis can enable mid-level operations managers to make much more effective resource allocation, scheduling, and maintenance decisions in a typical operational environment.

Linking operational decision making to corporate KPIs allows managers to uncover solutions that they might otherwise miss because they are either too focused on their own narrowly defined performance objectives, or focused solely on cost reduction. We have observed examples in large, complex plants where increasing short term costs results in significant improvement to long term production or measurable reduction in operating risk.

For executive management focused on meeting production targets to maximize shareholder value, having operations managers focus on corporate KPIs is critical. Giving them the tools to do the job is therefore common sense.