Breaking Down Barriers: Leveraging APM for Operational Excellence

Posted by Dan Miklovic on Thu, Dec 10, 2015 @ 10:45 AM

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asset-management-maintenance-1.jpgAt LNS Research we have blogged quite a bit about the value of Asset Performance Management (APM), such as:

Yet, our research shows that as little as 20% of the respondents to our APM survey are actually moving beyond paper-based systems, spreadsheets, and point APM applications.

Also, that small percentage is pursuing integrated APM platforms, an approach that moves APM out of the background and makes it part of an overall Operational Risk Management (ORM) approach. This is essential in any operational excellence program.

As I have previously posted, the pursuit of operational improvement is the number one objective when it comes to deploying APM. There are a number of challenges organizations list when it comes to achieving that objective.The number one obstacle is finding ROI, number two is a lack of visibility into the right metrics or knowing which metrics to measure. Cultural and organizational obstacles take four of the next six spots in the top obstacles list. The top cultural or organizational obstacles are:

#3 – Poor collaboration across departments
#6 – A culture that doesn’t support continuous improvement
#7 – Lack of executive support
#8 – No corporate understanding of what APM is

If you consider having an absolute ROI justification for APM, at least part cultural in nature, then these challenges can sometimes seem like a David & Goliath battle. 

Overcoming Disadvantages

In his book David and Goliath: Underdogs, Misfits and the Art of Battling Giants, Malcolm Gladwell explores the dynamics of ordinary people confronting seemingly powerful opponents. While the book is oriented to individual situations, the lessons presented can apply in the corporate world. Gladwell uses the biblical tale of David and Goliath to examine the perception of power versus the reality of power. He points out that any modern person, seeing David with a sling as his weapon, would not unilaterally assume the giant had all the power. In an interview with Wharton School of Business professor Adam M. Grant, Gladwell notes that compared to the general population a higher percentage of successful entrepreneurs have dyslexia, generally considered a disadvantage. In fact the dyslexia has forced those individuals to focus and take a unique perspective on how to do things, which has led to their success.

The fact that overcoming challenges can lead to greater success is also the conclusion from UCLA researchers Robert and Elizabeth Bjork, who studied learning theory. They found that many times, if the task of learning something is difficult a person’s performance is actually greater than if the learning task is comparatively easy. Taken together, these concepts provide the argument that to take on a “larger than life” opponent sometimes the best way is to think out-of-box. Paul O’Neill, former CEO of Alcoa and 72nd secretary of the US Treasury, took such an approach when he transformed Alcoa in the late 1980’s. Charged with improving Alcoa’s financial performance, O’Neill made safety improvement his primary focus despite board resistance. In a 2001 Business Week article the results of his tenure and singular focus on safety were reported and showed impressive six fold growth in revenues and profits over his 14-year tenure.

Applying These Lessons to APM

When faced with seemingly overwhelming corporate culture or organizational challenges to pursuing APM correctly, I suggest following some of the principles explored above. Consider changing the rules as David did when taking on Goliath or O’Neill did when turning around Alcoa. Don’t be discouraged when faced with challenges. Recognize that some of the most difficult tasks will develop skills that can come to serve you well over time.

Since the number one obstacle in pursuing APM is developing the ROI case, focus on understanding all the components that go into analyzing ROI. Often, as maintenance practitioners or engineers, we lack the financial skills (or interest) to build an adequate ROI case. We typically choose our discipline because we did not want to have to deal with tedious financial calculations. By biting-the-bullet and learning financial-speak we will be in a much better position to develop APM project ROI stories. On approach, what I have always found useful when developing an ROI story is to do the do-nothing ROI calculations. The common assumption is that because doing nothing has no immediate cost, it is free. More often than not this is not true. The do-nothing case can have a strong negative ROI over time. Particularly, if an extended period of doing nothing results in eventual capital costs or even worse, the ultimate decommissioning of the operation with its associated shutdown costs.

Since the majority of the other obstacles are culturally related, taking a page from O’Neills book, one way to overcome resistance is to change the rules of the game. Instead of focusing on reliability as the end-game, focus on another corporate objective. This can range from safety, to energy efficiency or environmental issues. Furthermore, propose a solution that addresses a specific problem the company is trying to address. For example: If the problem is excessive reportable safety incidents, examine your data to determine if your firm is holding true to industry norms. 50% of all safety incidents occur during transient conditions. If so, find out what percentage of the startup/shutdown period are caused by unplanned downtime.

If like most companies, you will find that your company likely has more than ½ of the disruptions to steady-state process flow due to breakdowns or poor quality caused by poorly performing equipment. Then demonstrate how a specific project you’d like to undertake will reduce transient operating periods by X%, which would reduce safety incidents by Y%. Of course, your solution to address this problem will be an APM project. In essence you have changed the rules of the game and can accomplish your APM objectives while contributing to addressing the overall corporate goal.

Understand the capabilities of twenty of the leading vendors in the APM space by downloading our APM Solutions Section Guide. The guide contains comparison charts for the factors listed above and the detailed profiles of the twenty vendors ranging from automation companies, to enterprise software providers and includes many specialized APM solutions as well.Asset Performance Management

Tags: Operational Excellence, Asset Performance Management (APM)