CONTRIBUTORS
Asset investment plans :
Do your operations speak the same language ?
By Phil Lewis , Infor ’ s VP of Solution Consulting EMEA
When managed correctly , asset investment planning ( AIP ) should deliver three key benefits . It should enable asset-intensive organisations to determine which investments will allow them to best meet service level objectives , with the right level of expenditure , while minimising the risk of asset failure .
AIP can also help determine the best time to invest in order to smooth capital expenditures over time . Modern AIP solutions simplify the process of developing asset investment plans by allowing organisations to leverage the data that is already in asset registries in the enterprise asset management ( EAM ).
Teams can use that data to quantify four key inputs : asset condition , asset criticality , business risk , and level of service .
Asset condition allows organisations to visualise deterioration over the asset ’ s lifetime and establish where intervention is necessary . Asset criticality determines the impact the failure of an individual asset will have on an organisation ’ s ability to realise its business objectives .
Business risk determines the consequences of asset failure . The level of service required enables an organisation to operationalise its policies , strategies and objectives , tie those to KPIs and then link that to the level of service requirements .
Once the inputs define and quantify these inputs in the AIP solution , the outputs are reports that will provide visibility into the consequences of taking one action or another so teams can develop a list of projects . For example , consider a transit agency with trucks and trains that it uses to deliver service 24x7x365 . The AIP will tell the company how much it will need to invest to achieve its service ( LOS ) goal .
Organisations can also create scenarios that show how they will need to invest to meet LOS goals over time . For example , the organisation may need to spend R1 million next year , R20 million in three years , and R100 million in five years . Having this information enables the organisation to adjust its expenditure patterns to smooth out annual budgets and make them more consistent .
Data can also be taken from the EAM , pushed into a central repository , and then teams can perform optimisation (“ what if ”) analyses to compare different scenarios and outcomes to determine the best outcome in the face of various constraints .
For example , consider a water utility company ’ s analysis which determines that it ’ s going to have to replace all of its water pipes in a particular region , at a cost of R1
Gino Crescoli | Pixabay billion over the next 10 years . However , when the need for this capital expenditure is explained to the CFO , they only allow for a spend of R500 million .
Now expenditures must be prioritised . AIP planning wills the organisation to do this by looking at what will happen in five , 10 , and 15 years if money is not spent on X part of the project , and then compare that to what happens if investments are made in Y or Z .
It is clear that optimisation will allow organisations to balance various investments against their impact on service levels to determine what spending should be prioritised . The first step to building an AIP strategy is by storing all the necessary data , tracking the key metrics , and creating advanced reporting that holistically determines which assets to invest in , and how much to invest over the short and long term , to reduce risks and meet service level objectives .
ENSURING YOUR OPERATION SPEAKS THE SAME LANGUAGE Now , as your AIP has shown the road forward , and as the manufacturing and processing world continues to evolve to meet new challenges , there ’ s a stepchange in innovation for the products and services that are delivered and supported . Many industry insiders are expressing the need for a focus on driving sustainable ( and profitable ) business growth . Deloitte suggests digital investment and supply chain resilience as the key pillars .
Partnerships are also increasingly important to achieving sustainable business growth , whether that ’ s upstream or downstream within the supply chain or enabling partners such as application and technology providers .
In all of those partnering scenarios , it ’ s important to have a common understanding of the desired outcomes , to ensure everyone is speaking the same language . This dramatically shortens the time to value . Manufacturing is shifting towards industryspecific applications , now nearly always delivered in the cloud to maximise adoption , flexibility , availability , and security , while reducing through-life cost of ownership . In fact , Gartner forecasted end-user public cloud spending to grow by 18 % through 2021 .
If the organisation is a well contained , low risk , low complexity business with customers who will continue to remain happy with the status quo and there ’ s no real threat of disruption , a horizontal , one-size fits all approach to enterprise resource planning ( ERP ) may still suffice . However , most companies need to simplify the management of their complex business and are looking to differentiate through the application of technology .
Access to data enables an organisation to adjust its expenditure patterns to smooth out annual budgets and make them more consistent over a period .
Infor
Phil Lewis .
Horizontal applications can manage a particular business function : typically finance and procurement , with everything else just bolted-on . Yet many of today ’ s organisations are coming to the realisation that industryspecific capabilities and new technology are needed . Old methods are no longer fit for purpose . Industry-specific cloud ERP offers capabilities that match the way business should be done . This drives efficiencies , empowering businesses to operate in real time and unlock true potential . It ’ s also faster to implement , offering success more rapidly .
Partnerships are also increasingly important to achieving sustainable business growth .
COLD LINK AFRICA • May 2022 www . coldlinkafrica . co . za 41