Managing utility assets

The utility industry is perhaps the most capital asset intensive of all industry verticals with its traditional regulatory business model of revenues from rates charged to ratepayers based on recovery of depreciation of assets and O&M costs, plus a fair rate of return.

The challenges of aging infrastructure and workforce, increasing capacity demands, power quality and reliability, the need for controlling expenses, increasing capital recovery and transparency at all levels to support good decision-making are mission critical to utility executives today.

Given this environment, a complete and detailed understanding of investments in
asset infrastructure over their entire asset lifecycle is paramount. Unfortunately, the business processes used across many utility enterprises and the asset’s lifecycle seldom support this “cradle to grave” view of asset data. This practice often leads to islands of information that are not coordinated to maximize corporate performance and customer satisfaction.

This data deficit – which creates a lack of comprehensive knowledge and transparency of capital projects, operations, and maintenance – prevents executives from making informed decisions. The problems are pervasive. Inadequate management of information regarding the asset across its lifecycle from poor handoff of the design, as-built, operational and maintenance information to key personnel in the utility’s value chain undermine collaboration between stakeholders, both internal and external. This prevents executives from achieving the mandates for customer, shareholder, and corporate interests.

Is there a simpler way to increase network reliability?

Network reliability is a function of asset performance. This, in turn, is driven by many elements of utility operations that are, unfortunately, sometimes “stand alone islands” from an operations perspective and in their supporting systems. Information on design engineering, construction, operations, and maintenance should be integrated with each other to drive efficiencies and collaboration over the course of the network lifecycle. These collaborative efforts need to be supported by procurement, document management, finance and other functions throughout the utility.

An integrated view of network/asset performance does not stop with the upfront construction/work management/compatible unit view of asset creation or reside in maintenance only. In the most thoughtful way, a comprehensive view of the enterprise asset infrastructure is a powerful tool in addressing reliability concerns. Capabilities such as asset design and documentation, history, failures, root cause, use conditions, cost of maintenance, activity based management and reliability-centered maintenance (RCM) are capabilities provided in leading edge suites such as IFS Applications™ that focus on true Enterprise Asset Management (EAM). These capabilities go straight to the heart of improving network uptime while minimizing costs.

How important is it to have a fully integrated system while managing the entire asset lifecycle?

Enterprise system integration is critical if executives are going to maximize their return on capital assets and level of service. Data must flow freely across the entire design, operate, and maintenance continuum among all stakeholders from the asset’s initial design throughout its lifecycle: engineering, construction, operational staff, service contractors, maintenance, procurement and finance.

Total visibility of an asset, its history, associated procurements, work orders, materials,
resources, PMs, etc. are critical to decision making and optimization of uptime and minimizing costs. Lacking this level of integration, design and operations cannot be streamlined. Even more critical to cost recovery and share price is an accurate understanding of costs of the asset and its operations will not be captured. This cost data is the basis for plant accounting, rate making, and predicting future expense.

Intelligence from integrated systems also provides a baseline for fundamental decision making relative to capital expenditures and operations coordination. A lack of integration across systems hampers the ability of operations staff to schedule around planned outages and to weigh decisions regarding the desirability of hiring additional staff or contractors to shorten the duration of planned outages.

In major capital projects environments, coordinated management of critical elements – cost, resources, manpower, risk, time, materials, external contractors and procurements --requires integrated systems. Lacking integration of all stake holders, data essential to managing the asset in optimal fashion will be lost, contributing to problems or inefficiencies in commissioning and operations. These issues can be minimized with integrated systems eliminating inadequate communications and lack of collaboration.

What is the best way for utility executives to align maintenance and optimization of their assets with organizational objectives?

Technology can only go so far to achieve organizational goals. True, the right enterprise technology platform can provide the agility to grow and to adapt with an organization as its business mandates change – while being cost-effective to implement and easy to adopt. But the basis for alignment should be couched in terms of enabling the organization’s business strategy while providing the freedom and flexibility to adapt in the future as your mandates change.

At IFS, we provide our clients the option of using business modelling tools in the system to model their business processes. This allows them to use their current operations or the desired future state as a basis for the configuration of the new integrated system. Use of these tools also provides a powerful technique for addressing critical issues that are part of adopting new enterprise platforms such as knowledge transfer and training, cost impact/benefit analysis and continuous process improvements. Business modelling is also useful in addressing human factors such as culture change management and consensus building in adoption that increase buy-in and decrease time to ROI.

However, even with the most progressive and agile of technology tools at their disposal, utility executives at senior levels are sometimes challenged in making the best and most informed decisions about maintenance initiatives . . . or in encouraging or empowering their staff to do so. The reason for this effectiveness gap is the fact that senior management and corporate boards sometimes have not made the cause and effect connection between “Operations and Maintenance” and the critical success factors strategic to their business – system reliability, power quality, capital spending, skyrocketing labor costs and customer satisfaction. They often reflect on asset management and maintenance as a necessary evil; fixing what’s broken rather than as a business initiative that can help them deliver on their corporate mission. In their eyes, maintenance is not seen as being of strategic value or a source of competitive advantage.
The point here is that asset management and maintenance managers need to position themselves as a strategic resource that can help meet business deliverables. This is true both for internal asset managers and of those external parties who would help those internal managers discharge their duties.
Asset management executives can win their seat as trusted advisors in the C suite and help to facilitate alignment of maintenance with corporate objectives by following guidelines well established for change management in adoption and integration of new technologies:
• Clearly articulate to senior management the qualitative and quantitative benefits in business terms. The establishment of financial and operation metrics and targets allow senior managers to ascertain performance and success of the initiative, while providing a tool for justification of ongoing funding and resource allocation.
• Strong and active executive sponsorship is required to foster a shared vision for the future, to break down organizational barriers, marshal senior level support across organizational boundaries, and insure the focus remains on bottom line impact.
• Use a strong and structured culture change management process to address the challenges in achieving broad adoption and support for the new way of doing business. Active involvement of the executive sponsor encourages clear and ongoing communications about the need for change. Be sure to address questions candidly, allay fears where possible and enroll employees as stakeholders in the process.
• Create ways for employees to become involved and to feel a sense of ownership, and pride in project success. Participation in user groups, support groups, focus groups, assessment teams, and process improvement reviews are all ways to engender buy-in and personal ownership.
• Structure the project to build ownership and consensus. Establishing an implementation steering committee staffed from the line organizations, plant representatives and other groups can ensure that end-user concerns are addressed, driving standardization and a shared vision for business processes.
• Project Governance in technology adoption is an issue that must be addressed. Project structure must address the barriers to adoption. Accountability of the project team for project goal attainment without empowerment by and support of executive management is a formula for failure.
• Enlist employees in making change a positive experience to increase the probability of success. Tying this change to things employees value, including job security and career potential, will make this task easier to accomplish.
• Communications is essential. Communicate clearly, communicate candidly, and communicate often to enrol employees in owning the future, rather than just telling them how it is going to be.
• Post Implementation Support and Governance is Critical. Implementation success relies on collaboration between multiple stakeholders including end users, I.T., business process owners and executive management. The broad organizational footprint of EAM systems means they touch a number of functions and business processes, so planning for post go-live support is critical at start-up and for ongoing operations.
Can you identify a new trend within the marketplace and the benefits executives should be seeing as a result?

Re-architecture of traditional corporate support systems to new Web-based, component-based enterprise systems facilitating ease of access and adoption is an increasing trend that promises huge benefit.

First, “Big Bang” adoption of a new enterprise platform for a utility enterprise is not for the faint of heart. These are large, complex, and costly initiatives. And while appropriate and justified in some business circumstances, they are not always the best approach. The flexibility to adopt component-based solutions augmenting existing capabilities to address need is a major step forward in technology’s ability to support the business and to provide incremental ROI for existing I.T infrastructure investments. The freedom of deciding whether to deploy a new enterprise applications footprint or to migrate over time as business needs and circumstances make changes prudent is a powerful new tool that helps technology providers partner with the business.

One criticism levelled at enterprise software of all types – including EAM – is a lack of ease of use. Some COTS packages in the market require monumental efforts to re-engineer your business to fit their rigid structure and even more effort to train and marshal users to adopt them in daily operations.

These issues defeat the purpose and value of an enterprise application. After all, if your enterprise application suite was designed to unite and facilitate communications and collaboration between departments and even external partners, it will not be very successful if hardly anyone has access to its information. Operations, maintenance, finance and all other parts of the company value chain need access to “one version of the truth” as it relates to your operations.

Most modern EAM systems offer utility experts very deep and powerful functionality. But there is only so much additional benefit to be gained from adding functionality to these software suites. Substantial productivity gains, however, can be achieved by making the technology easier to use, allowing corporate staff, line employees, business partners, customers and stakeholder access to their real-time information needs.

Enterprise software usability will be the next disruptive technology affecting EAM. As functionality itself becomes a commodity, the differentiating factor and competitive advantage will flow from the ease with which this functionality can be used. Usability will:

• Reduce the amount of time, effort and money spent on technology training and consultants.
• Ensure that more complete information on asset utilization, condition, maintenance cost and operational efficiency is available to senior management.
• Allow better real-time decision making by middle managers and individual workers as they access real-time information on what is happening within the utility.

WHITE PAPER:

How to Use Projects to Master Asset Management
Why project management functionality tightly integrated with Asset Lifecycle Management (ALM) tools is essential to executives of asset-intensive industries.