by Doug Mitchell

There is no surer sign that a technology has arrived than when industry giants begin adding it to existing products as a "feature."  Take computerized maintenance management system (CMMS) software.  In recent years, business computing behemoths like SAP and Oracle have added physical asset management tools to their vast enterprise resource planning (ERP) systems.  

A look at the market shows why ERP vendors want a piece of the pie: The total value of the maintenance management software industry approached $1 billion in 1998.  Projections for 2002 are $1.9 billion. 

"The maintenance management market grew up fast in the early 1990s and it shows no sign of slowing down," says Steve Clouther, vice president of business systems at Automation Research Corporation, a company based in Dedham, Mass. 

CMMS vendors countered the ERP vendors' expansion efforts by adding corporate features to their systems.  Efforts to bridge the gap between the two technologies has created an emerging paradigm, enterprise asset management (EAM). 

EAM is frequently tabbed EAM/CMMS because of its tight ties to and emphasis on the maintenance function.  Many refer to it as "high-end CMMS."  It integrates classic CMMS features with corporate systems such as financials, ERP, human resources, and time and attendance.  

There are currently more than 20 vendors in the EAM category. That group predominantly comes from the CMMS side of the fence, but ERP vendors are beginning to move in that direction. 

The EAM market is booming primarily because the technology addresses a growing realization in the corporate offices of industry: Even small reductions in maintenance costs translate directly to bottom-line profits.  Long viewed as a revenue "black hole," maintenance budgets consume up to 40 percent of revenue in extreme cases. 

As the world's largest companies continue to consolidate, restructure processes and downsize operations in the name of profitability, the nature of corporate spending also changes.  Capital expenditures that once emphasized machinery, plants and factory equipment are swinging toward automation.  Today, out of every dollar spent on durable goods production in North America, nearly half goes to computing, communication and automation equipment. 

"The arrival of the EAM paradigm demonstrates a growing realization that maintenance is the last frontier for cost reduction," says Don McDonnell, director of North American marketing for Mincom, an Australia-based EAM vendor.  "Business took a deliberate look at supply chain optimization on the materials side using MRP (materials resource planning) and ERP.  What's coming to light now is that EAM/CMMS is also about optimizing the supply chain -- by improving performance metrics not just in traditional, capital-intensive industries, but every industry dependent on mission-critical physical assets."

C.C. Wilson, president of Digital Inspections, a Corvallis, Ore., CMMS vendor, maintains a similar stance on what the current crop of asset management tools offer to the bottom line. 

"Maintenance is the one place where a considerable amount of money can be saved while you're also increasing reliability, and the reliability of your infrastructure is the key to survival in any asset-intensive business," he says.

Dividing up the maintenance 
management marketplace 
The vast number of computing tools available to improve maintenance management, including CMMS, ERP and now EAM, poses a problem: Which one is best suited to handle the job? 

Consider the origins and purposes of CMMS and ERP software.  CMMS evolved in the maintenance shop, automating processes for infrastructure upkeep.  ERP is defined by its ability to streamline business processes in support of corporate reorganization.  The EAM paradigm owes more to CMMS than ERP, as EAM evolved out of CMMS technology, then added ERP features to asset-oriented maintenance systems. 

"Instead of offering a single generic maintenance module as one of 40 or 50 enterprise modules, EAM/CMMS typically comes from a business whose product and expertise has been focused on physical asset management," says Clouther. 

SAP and others currently position themselves as maintenance automation providers by offering tightly integrated "add-on" maintenance modules as a single piece of monolithic business management systems. 

"ERP vendors aren't focused on maintenance.  They're trying to re-engineer your business processes," says Paul Cisternelli, director of strategic business development at EAM vendor PSDI. 

Digital Inspections' Wilson says that while EAM systems go far beyond the classic CMMS model, there are still basically two kinds of maintenance systems available. 

"The first are generic asset management systems that meet a few basic, high-level needs," he says.  "With basic or customizable asset data structures, standard maintenance algorithms and a way to record work, these systems are adequate for firms where asset data needs aren't intricate or specialized, or where there are already underlying systems for specific equipment.  For the most part, ERP maintenance modules fit this category. 

"The other type provides customers with equipment-specific data structures, as well as diagnostic and analytical tools designed for organizing, maintaining and utilizing assets unique to their business infrastructure.  These products provide for high-level needs, while also meeting the requirements of specific, mission-critical equipment." 

When making the final decision about whether ERP, EAM or CMMS is best suited to manage the company infrastructure, the actual physical size and shape of the application -- as well as the level of data migration necessary and the timeline -- usually sit at the top of the evaluation checklist.  Typically, the larger the implementation, the longer it takes to achieve return on investment.

"If you're an SAP R/3 customer, you bought the system for the financials and it probably will take 18 months to get it up and running," Cisternelli says.  "By the time it's integrated into your business and you're adding a maintenance module, it could be 36 or 48 months.  If I purchase and implement an EAM/CMMS system, it's not unrealistic to expect quicker installation and faster ROI."

Wilson says "configurability," as opposed to "customization," will become the key component in the "continual redeployment" of ERP, EAM and CMMS systems, as businesses become increasingly sensitive to the ability of vendors to support and upgrade their systems. 

"Businesses measure themselves in terms of how fast they can react to market changes, and their ability to redeploy assets will be paced by how quickly they can change the system that controls those assets," he says. 

Current industry numbers back that assessment.  In 1998, for the first time, the dollar value of the service and support contracts attached to EAM/CMMS software exceeded the total value of actual software licenses.  

As the market keeps expanding, return on investment and return on asset continue to be major strategic elements requiring attention from software suppliers and end-users.  The evolution of CMMS to EAM also plays a significant role in lowering total cost of ownership by encouraging the integration of maintenance management into the larger corporate strategy. 

Can ERP, EAM and CMMS all get along? 
Recent competitive alliances between a small number of EAM and ERP vendors, like PSDI and Oracle, are making EAM maintenance management tools available to existing ERP customers. 

Another recent development is enterprise application integration (EAI) processware.  This presents a viable option for companies invested in ERP that need high-level industry maintenance expertise.  Since the overlap between ERP and CMMS is almost non-existent, rather than dumping ERP in favor of EAM, companies can use EAI to run CMMS alongside ERP, effectively forming an EAM system. 

This article appeared in the August/September 1999 issue of MRO Today magazine.  Copyright, 1999.

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