Enterprise Asset Management Benchmark Survey Report 2004

Is maintenance worth doing?

Enterprise Asset Management Benchmark Survey Report 2004

Intentia

Introduction
In 2003, Intentia set out to create the first global enterprise asset management survey. Now in its second year, the survey is continuing to provide maintenance professionals with the only guide to help benchmark and judge their performance on key maintenance and asset management issues. In this report, we will consider whether organisations actually regard maintenance as worthwhile, and if so, how they view its effectiveness. The management of plants, equipment, facilities and other assets to maintain peak performance is vital to productivity and profit. Organizations continue to strive for best practice, deploying advanced management software, cutting-edge management practices and the latest equipment. As one of the worlds leading enterprise application providers, Intentia takes a keen interest in helping establish, and assisting our clients in achieving, industry best practices. Our second survey was conducted during AugustSeptember 2004 and includes responses from over 400 global manufacturing and operations-related organizations. We hope that the results of this, our second Intentia Global Enterprise Asset Management Survey, constitutes a source of powerful information to help you improve the way you do business.
Disclaimer: Intentia has compiled the information contained in this document using data which, to the best knowledge of Intentia was current and accurate as at the date of this report. Intentia disclaims all responsibility for any harm or loss arising from use or otherwise of the information provided. All warranties, express or implied, statutory or otherwise are excluded to the extent permissible under the Trade Practices Act 1974 and any other relevant legislation. The contents of this document are protected by Copyright 2004.

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Enterprise Asset Management Benchmark Survey Report 2004

Is Preventive Maintenance Worth the Effort?

A key question to begin the review of the 2004 Global EAM Survey is to consider this: Is maintenance actually worth doing in the first place? Preventive maintenance can take many forms and over the years has gained many names. Ultimately, its a process that provides the business with the right asset availability at the right time.

Question: Does your preventive maintenance increase plant production / operations capacity?
For preventive maintenance to be worth the effort, it has to provide clear and undeniable benefits. For many years, industry has taken for granted the fact that preventive maintenance increases operational capacity by improving uptime, thus allowing the operations team greater confidence in achieving the operations plan and increasing the equipments operational tolerances, therefore producing a better end product with less scrap. This increases the equipments average speed in producing more product and so on. However, is this view too generic? Could preventive maintenance actually be ineffective in some industries or types of plants?

"Over 85 percent of all survey respondents agree that preventative maintenance increases their plant production or operations capacity."

Over 85 percent of all survey respondents agree that preventive maintenance increases their plant production or operations capacity. Nearly half strongly agree with the notion that they can achieve increased capacity through preventive works. Interestingly, power generation and utilities organizations disagree most with the notion that preventive maintenance increased production/operations capacity, although they were the most likely to spend the largest percentage of their maintenance budget on it. Can we therefore conclude from this that preventive maintenance in asset-intensive industries may not be as effective? Probably not. Intentia believes that in these types of industries, preventive maintenance on its own does not increase operational capabilities. Our survey has shown that power generation and utilities organizations use preventive maintenance in conjunction with a high level of stand-by systems to provide an optimum level of equipment availability. This is shown later in the survey by achieving one of the highest proportions of zero-downtime results.

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In a more positive light, facilities and infrastructure and food and beverage organizations were the most likely to agree that preventive maintenance increases capacity. These are industries that also invested heavily in preventive maintenance in terms of their overall maintenance budget, telling us that those who invest in preventive maintenance are doing so because they believe that it is providing them with an economic advantage.

The analysis of an organizations size shows a general agreement that preventive maintenance does increase operation capabilities with the 251500 size companies leading this view.

"This provides a clear competitive advantage over those suppliers with less reliable plants."

European organizations were the most likely to strongly agree that preventive maintenance increased operational capabilities although, in general, there was an even view across all geographies that it did make a difference.

Can the use of preventive maintenance do more than increase the operational capabilities of the business? Can it go further and actually give us a competitive edge? Increasing the availability of equipment can clearly have an impact down the entire supply chain. Reliable equipment enables the operations group to complete customer orders on time and at the pre-determined unit cost. This, in turn, delivers what the customer wants, when they want it, at the right price. This provides a clear competitive advantage over those suppliers with less reliable plants.

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Enterprise Asset Management Benchmark Survey Report 2004

Question: Do you believe that your preventive maintenance program gives you a competitive advantage over others in your industry?
Almost two-thirds of the organizations surveyed reported that their preventive maintenance program gave them a competitive advantage over others in their industry. Clearly, there is a direct link between preventive maintenance and a competitive edge.

Obviously, there is a direct link between preventive maintenance and a competitive edge

In general, there was a consistent view across industries that preventive maintenance provided a competitive advantage over others in their industry. Overall, pharmaceutical and chemical companies believed it gave them more of an advantage, although in practice these industries indicated that they performed a high level of corrective maintenance. Food and beverage organizations believed that it gave them the most significant advantage.

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Medium-sized (251-500 employees) firms were the most likely to think that they had a competitive advantage with almost three-quarters expressing this viewpoint. Small companies were then most likely to think that they were at a slight disadvantage as a result of their preventive works, while larger organizations were more likely to be indifferent as to any competitive advantage acheived as a result of their preventive maintenance program.

From a geographical point of view, Europe had the strongest view that preventive maintenance gave them an advantage. This may in part be due to the fierce cross-border competition faced by many European companies. From these results, preventive maintenance is clearly worth the effort both in terms of its ability to increase operational output (which could also be translated by some businesses into a lower cost unit) and also in its providing a competitive advantage over competitors in their own industry. It is also clear that in certain industries, notably the asset-intensive ones, preventive maintenance on its own cannot deliver optimum results.

"From these results, preventive maintenance is clearly worth the effort"

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Enterprise Asset Management Benchmark Survey Report 2004

Is Industry Spending Enough on Preventive Maintenance?

If maintenance is worth the effort and can provide a competitive advantage, are companies putting enough effort into getting results? In this section, we wanted to find out how much organizations were spending on maintenance, and how much of this was spent on preventive maintenance.

Question: Approximately what percentage of your cost of operations is attributable to maintenance?

"The majority of survey respondents are spending less than 10 percent of total cost of operations on maintenance."

The majority of survey respondents are spending less than 10 percent of total cost of operations on maintenance.

Power generation and utilities organizations were the most likely to spend 50 percent or more of their cost of operations on maintenance, which is endemic in asset-intensive industries.

Smaller organizations were the most likely to spend the least on maintenance, as they may have a lower cost base and achieve higher efficiencies. The survey indicated that almost 60 percent of smaller organizations spend less than 10 percent on maintenance.

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European firms were more likely to spend less on maintenance than Australasian firms. This is surprising because this survey shows that European firms see preventive maintenance as providing more of a competitive edge and believe it increases operational capabilities. From these results, we can see that the majority of organizations spend relatively small percentages of their operational costs on maintenance. We wanted to understand how maintenance spending was being allocated.

Industry Spotlight: Power Generation and Utilities

Power generation and utilities organizations have strong views regarding maintenance as being an investment, however, in the case of a maintenance strategy, they are inclined towards the use of redundancy systems to maintain output. This view is backed up with their attitude towards preventive maintenance on its own, not increasing operational capacity. Clearly this is an appropriate strategy when you consider that that they claim very low plant downtime and have the highest percentage of all industries able to claim zero downtime. These asset-intensive organizations also outsourced the highest percentage of their maintenance compared to the other industries. However, when these organizations have a stoppage, they are typically very protracted and carry a severe cost penalty. The major issues for the maintenance managers within these industries is highlighted as poor management techniques and a lack of funding, however, unlike most other organizations, maintenance was seen to be given sufficient weight.

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Enterprise Asset Management Benchmark Survey Report 2004

Question: Of your total maintenance budget per annum, what percentage is allocated to preventive maintenance as opposed to corrective maintenance?

"Many organizations are either still in a firefighting mode not having changed to a more preventive approach"
Over two-thirds of organizations allocate less than half of their maintenance budget to prevention, which is consistent with the 2003 results. In our view, many organizations are either still in a 'fire-fighting' modenot having changed to a more preventive approachor, worse, are unconvinced of the benefits of preventive maintenance. Power generation and utilities organizations were the most likely to invest at least half of their maintenance budget in prevention, reflecting the importance of continuous operation in these industries, in which unscheduled downtime has very significant consequences on the bottom line. These organizations were closely followed in maintenance spending by facilities and infrastructure organizations. Only 7.1 percent of pharmaceutical and chemical firms spent half or more of their total maintenance budget on preventionthe great majority of spending going to corrective maintenance. Clearly, many of these types of organizations spend vast amounts of money developing new products. One view is that in a development environment, where large-scale changes to the equipment configuration are required regularly, preventive maintenance is less effective.

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Small organizations were the most likely to spend 10 percent or less of their total maintenance on preventive maintenance. This result confirms other indications that smaller organizations really are less focused on preventive maintenance and have a much higher reliance on the 'fix it when broken' approach.

By region the results were similar, indicating a common view across regions regarding expenditure on preventive and corrective maintenance. Intentia believes that organizations are still spending insufficient amounts of money on preventive maintenance. This is one of the few untapped areas of real improvement potential for many organizations, offering an opportunity to significantly improve the bottom line. Budget allocations for maintenance need to focus more on identifying preventive maintenance opportunities within the business and reducing the reliance on corrective maintenance.

Industry Spotlight: Facilities and Infrastructure

This survey has found that facilities and infrastructure organizations are the leaders in outsourcing their maintenance to third-party organizations. They are also very likely to believe in the benefits of maintenance as an investment that can increase operational capacity, which is confirmed by their heavy investment and reliance on preventive maintenance. On the surface, this maintenance strategy is supported by their ability to report a high percentage of months with zero downtime, as well as the smallest downtime cost of all industries. The maintenance profession within these organizations suffered heavily from poor comprehension of their problems from other line mangers. This is supported by a strong 'fix it when broken' attitude.

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What Is the Impact of Poor Maintenance?

The Intentia 2004 Global EAM Survey investigated whether plant and equipment failures were having a significant impact on the profitability of organizations in the current economic climate and, if so, to what extent. In this section, we will examine a number of factors in order to judge the impact of poor maintenance on organizations.

Question: What is your average annual cost (USD) for lost production due to plant equipment failure?

"Less than 30 percent of all firms surveyed responded that their cost for lost production ranged from zero to USD 10,000."

Production failure can be an expensive issue for many organizations. Less than 30 percent of all firms surveyed responded that their cost for lost production ranged from zero to USD 10,000. In addition, only around half of the organizations surveyed responded that their average annual cost for lost production was under USD 50,000. Of all firms surveyed, 6.5 percent reported that their average annual cost for lost production was more than USD 1 million, with power generation and utilities organizations leading this group. We believe that these figures are highly understated, and that many organizations do not fully consider the true cost of downtime, which can include scrap, lost customers, higher unit costs, additional labor and utility overheads, and so on. In reality, the situations faced by many organizations could be much more costly than they initially believe.

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Facilities and infrastructure organizations generally reported the lowest losses. By their nature, many of these organizations are least liable to suffer lost production or operational capacity in the same way as a 'production' facility. Power generation and utilities companies were most likely to average losses of more than USD 1 million. This clearly demonstrates the risk of poor preventive maintenance within asset-intensive organizations, a risk probably best characterized by the recent major US power outage. Pharmaceutical and chemical businesses reported losses greater than USD 10 million, a finding supported by the fact that they are also most likely to report substantial downtime. Clearly, ineffective maintenance in this type of industry can have a significant effect on profitability, at a time when these types of businesses can least afford it.

"This clearly demonstrates the risk of poor preventive maintenance within assetintensive organizations and is probably best characterized by the recent major US power outage"

There is a clear trend that smaller organizations have less of a cost for lost production, however, as a percentage of revenue, the impact may be just as serious as a large loss for a larger company. More than 10 percent of firms with more than 250 employees average in excess of USD1 million per year in lost productionan enormous cost to bear for most organizations.

The findings regarding lost production were not dramatically different between the European and Australasian regions. Knowing the magnitude in cost of equipment failures, this survey then investigated the amount of downtime being experienced.

Industry Spotlight: General Manufacturing

A mixed picture appeared from the general manufacturing group, with a high percentage of companies spending relatively small amounts on maintenance but achieving zero major downtime occurrencessecond only to power generation and utilities companies. Almost one-third of these organizations relied on repair-based maintenance. Does this therefore indicate some degree of excess capacity within these businesses, allowing them to rely on repairbased maintenance while still maintaining operational capacity?

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Question: How much downtime would your production/manufacturing resources experience monthly?

"Over 60 percent of all organizations reported that they experienced 5.0 percent or less downtime per month"

According to our survey respondents, the typical organization experiences between 0.1 percent and 5.0 percent downtime per month. Nearly 60 percent of all organizations reported that they experienced 5 percent or less downtime per month for their production/manufacturing resources.

A high percentage of facilities and infrastructure businesses reported that they typically had no downtime at all per month, reflecting their practice of preventive maintenance. These impressive claims could also reflect the nature of some facilities and infrastructure businesses, in which failures can have less significance on operational downtime. The other industry that strongly supported preventive maintenance, power generation and utilities, also reported very low downtime, with 63.9 percent reporting 2.5 percent or less. Although the levels of downtime are clearly lower in the power generation and utilities industries, nevertheless, based on the responses from previous questions, the cost of downtime is substantially higher than in most other industries. The pharmaceuticals and chemicals industries were the most likely to report substantial downtime problems, with 1.6 percent reporting more than 40 percent downtime per month, potentially having a crippling effect on productivity. These statistics are interesting as these companies, as this survey shows, have a strong tendency to practice preventive maintenance yet some

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still have significant downtime issues. Although this survey does not identify the exact type of organization within this industry sector, we believe one explanation of this finding is that mainstream chemical and pharmaceutical companies are benefiting from preventive maintenance, whereas specialized research-oriented organizations, with a high number of equipment configuration changes, find preventive maintenance to be less effective.

Larger organizations were most likely to experience more than 10 percent downtime per month.

Geographically, comparable results were shown across the board. A major breakdown that causes production stoppages in more than half of the plant is clearly a significant event that can have a dramatic effect on the bottom line. In this section, we analyze the scale of these types of failures.

Industry Spotlight: Food and Beverage

A clear belief in the investment qualities of maintenance and its ability to both increase capacity and provide a competitive advantage emerges from the food and beverage industries. We have to question whether these beliefs are being translated in reality, when we consider the higher-than-average unscheduled downtime of these industries compared to other industries, as well as when considering their preference for repair-based maintenance. A key issue affecting many maintenance professionals in the food and beverage industries was poor decisions regarding capital purchasing. Could these decisions be negatively influencing the success of the maintenance strategy?

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Question: How many times in the last year did you have a breakdown that stopped production in more than half of your plant?

"In total, over threequarters of all firms surveyed reported two or fewer major plant shutdowns in the last year."

Over 50 percent of firms surveyed were able to claim that they did not have a single breakdown that stopped production in more than half of their plant during the last year. In total, over three-quarters of all firms surveyed reported two or fewer major plant shutdowns in the last year. These results seem to add weight to the argument that preventive maintenance can prevent significant amounts of downtime in most industries.

Power generation and utility firms were the most likely to claim zero major shutdowns. These companies have indicated their reliance on redundancy systems, which gives them an edge. Food and beverage firms reported the most breakdowns, with over 14 percent of respondents indicating that they had more then ten major breakdowns in their plant in the last year. Although in this survey, food and beverage companies generally appear to believe in the ability of preventive maintenance to increase capacity and give them a leading edge, results show that they rely on repair-based maintenance. We believe that many of these organizations could significantly reduce downtime by focusing more of their efforts on effective preventive maintenance techniques.

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Smaller firms reported a much higher likelihood to have zero major shutdowns than 1000+ employee firms. Organizations with 251500 employees were significantly more likely to have more than ten major breakdowns per year.

Australasian firms were notably less likely to report zero major shutdowns over the last 12 months compared to their European counterparts, and were also more likely to have more than ten. Intentia believes that when a breakdown occurs, particularly if it impacts more than 50 percent of the plant, it is imperative that organizations react quickly to minimize the impact of the stoppage. Organizations can reduce the impact of failures on critical plant processes by ensuring that key spare parts and tools are available, and that repair information and documentation are accessible, although this is, of course, no substitute for effective preventive maintenance. In the next question, the survey considered the extent of the downtime within the organizations surveyed. In our experience, we believe that many of these major stoppages could have been avoided with better preventive maintenance, or could have had less of an impact with better preparation.

"It is imperative that organizations react quickly to minimize the impact of the stoppage."

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Question: Last year, how many hours did your longest period of downtime last, which was caused by a single breakdown?

"Unfortunately, over 18 percent of all organizations surveyed reported some shutdowns that lasted for over 90 hours"

Just under 30 percent of all organizations reported that the longest period of downtime they experienced last year was one to ten hours in duration. Unfortunately, 15.0 percent of all organizations surveyed reported some shutdowns that lasted for over 90 hours.

It was the heavy industries that reported the longest shutdowns, with power generation and utilities organizations leading the group by some margin. However, by nature of their asset-intensive industry, it should be expected that equipment failures could have a dramatic impact on their ability to operate. Facilities and infrastructure organizations followed a similar pattern. Although it might be expected that pharmaceutical and chemical companies would report findings similar to other manufacturing industries, their potential for more lengthy shutdowns was notably higher. In 2004 no food and beverage firms were able to report zero downtime. This result is not surprising due to the nature of food and beverage equipment, often consisting of high-speed production and packaging machinery.

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Smaller organizations generally reported shorter shutdowns, whereas larger organizations reported much longer shutdowns, some lasting more than 90 hours.

European businesses were more than twice as likely as Australasian firms to report no hours of stoppages at all. However, in terms of the percentage of businesses reporting a period of downtime of 20 hours or less, both the European and Australasian regions ended up with almost identical results. In some situations, an alternative to preventive maintenance is the use of redundancy or standby systems that can be brought online in the event of a failure. In the next section, we consider how widespread this practice is and whether it is prevalent in particular sizes or types of businesses.

"Smaller organizations generally reported shorter shutdown."

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Question: How strongly do you rely on redundancy systems as opposed to preventive or repair based maintenance to maintain continuous plant operations?

"Almost 60 percent of all organizations surveyed indicated that they relied on preventive maintenance to maintain continuous plant operations."

Almost 60 percent of all organizations surveyed indicated that they relied on preventive maintenance to maintain continuous plant operations. Of this group, over one-quarter of respondents indicated that they had a high reliance on preventive maintenance.

A reliance on redundancy systems was most common among power generation and utilities organizations, which is not surprising for asset-intensive industries, where downtime costs can be very large and repairing an asset online may not be feasible. Preventive maintenance was most heavily relied upon by facilities and infrastructure organizations as well as by pharmaceutical and chemical organizations, which reported that they relied strongly on preventive maintenance to keep their plants operating. However, previous responses also indicated that chemical and pharmaceutical organizations were likely to spend the least of their budget on preventive maintenance, although they also suffered from substantial periods of downtime.

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This data indicates a definite split in the attitudes towards preventive maintenance across different types of industries, with asset-intensive industries opting for the redundancy approach, regulated industries using preventive maintenance and manufacturing organizations relying on repair-based maintenance.

Medium-large firms (500-1000 employees) and large firms (1000+employees) showed the strongest support for preventive maintenance.

European organizations were the most likely to report a reliance on repair based maintenance, while Australasian firms were more likely to indicate a reliance on redundancy systems. Industries in both geographical areas expressed similar responses regarding the use of preventive maintenance.

Based on our results, what can be learned about the impact of poor maintenance on global industries? Surprisingly, typical organizations experienced quite low levels of downtime of their operational resources. Over 60 percent reported 5 percent or less downtime per month, and over 50 percent reported that no breakdown impaired more than half of the plant during the last year. However, how did the less fortunate organizations fair? They saw significant financial penalties from poor maintenance, with over 7 percent of organizations reporting losses of over USD 1 million, a figure which we believe is understated. Some food and beverage organizations encountered ten or more significant breakdowns that closed down more than half of their production operations, while the asset-intensive businesses saw shutdowns of over 90 hours.

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What Are the Key Issues for Improving Maintenance?

In this section, we consider a number of key issues that may be preventing organizations from improving their current maintenance situation. In many cases, funds for improving the maintenance strategy may not be the primary obstacle for improvements. In our first question, we look at whether industries actually consider the money spent on maintenance as a real business investment. Intentia believes that organizations which see maintenance as an investment are much more likely to be successful in combating the causes of downtime.

Question: Do you describe money spent on maintenance as a cost or an investment?

"Over the last 12 months we have seen an increasing percentage of survey respondents beginning to view maintenance as an investment"
In general, nearly 60 percent of survey respondents view maintenance as an investment. From this proactive perspective, spending money on maintenance activities is seen as having a significant impact on equipment reliability, and therefore availability, which ultimately improves an organizations bottom line.

Over the last 12 months, we have seen an increasing percentage of survey respondents reporting maintenance as an investment. In particular, the number of respondents who strongly agree with the view that maintenance should be regarded as an investment has increased by over 10 percent. Hopefully, this indicates a continuing trend of organizations considering maintenance operations, particularly preventive maintenance, in a more positive light.

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The survey clearly shows that larger organizations are more likely to hold the view that maintenance is an investment, and that, overall, this perspective has increased slightly since 2003.

In total, Australasian organizations were the most likely to agree that maintenance was an investment, while European organizations were more than twice as likely to 'strongly agree' that it was a cost. Maintenance managers play a pivotal role in supporting higher equipment efficiencies. Intentias Global EAM Survey investigated which key issues these managers are facing.

"The survey clearly shows that larger organizations are more likely to hold the view that maintenance is an investment"

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Question: What do you believe is the greatest problem faced by maintenance managers?

"Poor comprehension of maintenance problems by other line managers is a growing problem for maintenance managers."

Poor comprehension of maintenance problems by other line managers is a growing problem for maintenance managersthe number of respondents holding this view increased by almost 10 percent compared with last years results.

Power generation and utilities organizations were the most likely to report poor management techniques and a lack of funding as the greatest problems faced by maintenance managers20 percent of respondents in each instance indicated that these were major issues. Making them the most likely industry to raise this concern, by a significant margin, 45.8 percent of facilities and infrastructure firms reported that a poor comprehension of maintenance problems by other line managers was the greatest problem they faced. Pharmaceuticals and chemical firms were the most likely to indicate staff shortages as their greatest problem, with 18 percent reporting this as their leading issue. 18.5 percent of food and beverage organizations reported poor decisions regarding capital purchasing as their greatest problemcompared to a cross-industry average of 8.4 percent.

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Poor comprehension of maintenance issues seems to be very prevalent in larger organizations. This may be a result of the more formal management systems of larger organizations, which are perhaps more removed from dayto-day issues than those found in smaller companies. This same prevalence in larger organizations carried across into the view on poor management techniques. Lack of funding was a significantly larger problem in smaller companies than in larger ones.

"Lack of funding was a significantly larger problem in smaller companies than in larger ones."

From a geographical perspective, poor management techniques in Australasia stand out by a substantial margin, which raises questions regarding whether the actual quality of the management is at issue, or rather the perception of its quality within the workforce. Staff shortages were more an issue for European firms, with 18.6 percent referring to this as their greatest problem, whereas the same figure for Australasian firms was only 12 percent. It is not clear from the survey results whether this shortage is due to skills availability or simply the result of downsizing. Continuing on the same theme, the survey delved deeper into the perception of managers regarding the maintenance process.

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Question: Do you believe that a 'fix it when it is broken' approach is still predominant among managers not directly responsible for manufacturing?

"The fix it when it is broken approach is still predominant in most industries"

The 'fix it when it is broken' approach is still predominant in most industries, and is unfortunately becoming more prevalent, as a comparison with the 2003 survey results indicates.

Facilities and infrastructure firms were the most likely to agree72 percent that a 'fix it when it is broken' approach is still very common. In contrast, pharmaceutical and chemical companies were the most likely to disagree.

Smaller companies are the most likely to strongly agree that the 'fix it when it is broken' approach is predominant among those not directly responsible for manufacturing.

European firms were more than three times as likely to strongly agree that a 'fix it when it is broken' approach still dominates, as compared with their Australasian counterparts.

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Industry Spotlight: Pharmaceutical and Chemical

An interesting picture emerges regarding the success of preventive maintenance within the pharmaceutical and chemical industries. These organizations reported a strong bias towards preventive maintenance and strongly believed that it gave them a competitive advantage. They also did not agree with the 'fix it when broken' approach, however, the reality may not be as clear cut as these findings suggest. Their spending on maintenance was relatively low compared to other types of industries, and of this spending, few companies spent more than half on preventive maintenancethe majority opting for corrective strategies. The results of this strategy are evident in their indication that substantial downtime issues exist. The maintenance profession in these industries suffers greatly from a lack of staff. Could this lack of staff be due to cost-cutting measures, or staff leaving for other industries that have more stable operating environments?

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Question: How much of your total maintenance is outsourced to third party organizations?

"The majority of organizations surveyed outsourced less than onequarter of their maintenance services."

Outsourcing has now long been accepted as an alternative to internalizing services. Leading analysts such as Gartner have already identified that there will be a continued increase in the use of outsourced maintenance services. Outsourcing allows organizations to concentrate on their area of competitive advantage and, at least theoretically, maximize their returns. Of course, it also means that you can call on specialistssuch as with maintenance and managementwho have a higher level of proficiency. The majority of organizations surveyed outsourced less than one-quarter of their maintenance services.

Facilities and infrastructure organizations were shown to be the leaders in opting for maintenance services, with 25 percent of these organizations opting to outsource 75 percent or more of their maintenance work to third-party organizations. 81 percent of pharmaceutical and chemical firms outsourced less than half of their maintenance, however, this may be due to the nature of their businesses. Other types of organizations are less willing to outsource some or all of their maintenance work due to the highly secretive or complex nature of their operations, particularly in the chemical and pharmaceutical fields.

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Most likely underscoring the importance of concentrating on competitive advantage, smaller companies were more than twice as likely as large companies to outsource more than three-quarters of their maintenance work.

Australasian firms were nearly two-and-a-half times more likely than their European counterparts to outsource three-quarters or more of their maintenance work. 'Maintenance is a cost', 'poor comprehension of maintenance', and 'fix it when broken' are all views that clearly indicate that fundamental maintenance issues exist within many global industries. These attitudes form a platform of key inhibiters that are stopping many companies from making significant improvements to equipment reliability. Maintenance professionals clearly need to do more to prove that they can return significant benefits from investing in maintenance.

"Maintenance professionals clearly need to do more to prove that they can return significant benefits from the investment in maintenance."

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Does Maintenance Software Work?

This final section of the 2004 Global EAM Survey considers whether the investment that organizations make in maintenance software is actually worthwhile, and whether it has a positive impact on the manufacturing and operational processes.

Question: Do you believe that maintenance software has enhanced the capacity of your maintenance program in preventing downtime?

"This is a clear confirmation that well-implemented systems can provide significant benefits."

More than 65 percent of all firms surveyed reported that they agreed with the view that maintenance software had enhanced the capacity of their maintenance program in preventing downtime, an increase of 4.6 percent from 2003. This is a clear confirmation that well-implemented systems can provide significant benefits.

Facilities and infrastructure firms were the most likely to agree that maintenance software has enhanced the capacity of the maintenance program in preventing downtime. 80 percent of facilities and infrastructure firms either generally or strongly agreed with this assertion. 19.0 percent of pharmaceutical and chemical firms were indifferent as to the value of their maintenance software in preventing downtime, while 11.1 percent of power generation and utilities organizations believed that their maintenance software had not reduced downtime. A surprisingly high percentage of food and beverage and general manufacturing firms indicated that they did not have any maintenance software at all.

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Smaller organizations were the least likely to register their agreement, primarily because 22.6 percent of firms with zero to 250 employees had no maintenance software at all. This compares with only 6.3 percent of firms with 1,000 employees or more. 78.1 percent of all firms with 1,000 employees or more agreed with the notion that maintenance software had enhanced their capacity to reduce downtime.

While 89.4 percent of Australasian firms indicated they had maintenance software installed, only 80.8 percent of European firms were able to say the same. In total, 71.3 percent of Australasian firms thought that their maintenance software had helped them avoid downtime, while 62.4 percent of European firms reported the same view. Australasian and European organizations were equally likely to strongly agree with this assertion.

"Close cooperation between maintenance and operations during the planning process can reap significant rewards."

Close cooperation between maintenance and operations during the planning process can reap significant rewards, ensuring that production plan is fully optimized. If carried out correctly, this process provides a win-win opportunity for both operations and maintenance. Operations produce what they expect and when they expect it, without unplanned stoppages due to equipment failures. Maintenance gets the equipment when they need it, and can ensure they provide the highest level of availability.

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Question: How do you integrate your maintenance and production planning?

"Almost 40 percent of all organizations surveyed indicated that they integrate their maintenance and production planning using ITbased systems."

Almost 35 percent of all organizations surveyed indicated that they integrate their maintenance and production planning using IT-based systems. Integrated systems were most predominantly used in power generation and utilities organizations while paperbased systems were most popular among the pharmaceutical and chemical sector. This is surprising, as these types of systems are particularly effective when planning a wide variety of complex products in short batches, in which the maintenance requirements are also compared. It could be expected that food and beverage manufacturers would be the most prolific users of these types of systems, and that power and utilities manufacturers would be less likely to use them. Does this then indicate that manufacturers have really not seen the benefits that these types of systems can deliver?

Smaller organizations were the least likely to use integrated systems, and were also most likely to use informal word of mouth to integrate production and maintenance planning. It is clear from the survey that industries do see a benefit in computer systems to support the maintenance process. It seems, however, that asset-intensive organizations have actually made the move to use them, and it was these industries which were also most likely to report lower or zero downtime.

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Headquarters:

Intentia Vendevgen 89 Box 596 182 15 Danderyd Sweden Tel +46 8 555 250 00 Fax +46 8 555 259 99

Regional Headquarters: Northern Europe Denmark, Finland, Norway, Sweden Intentia Vendevgen 89 Box 596 182 15 Danderyd Sweden Tel +46 8 555 250 00 Fax + 46 8 555 259 99 Intentia Maanlander 45 3824 MN Amersfoort The Netherlands Tel +31 33 451 22 00 Fax +31 33 451 22 10 Intentia ProACTIV-Platz 3 D-40721 Hilden Deutschland Tel +49 2103 89 06 0 Fax + 49 2103 89 06 199 Intentia 10 Avenue Jules Cesar Le Louisiane BP 318 95526 Osny Cedex (Paris) France Tel +33 1 34 20 8000 Fax +33 1 30 38 28 67 Intentia 1700 East Golf Road Suite 900 Schaumburg, IL 60173 USA Tel +1 847 762 0900 Fax +1 847 762 0901 Intentia 8 Cross Street, #12-05/06 PWC Building Singapore 048424 Ph: +65 6788 8769 Fax: +65 6788 8757 Intentia 33 Herbert St St Leonards NSW 2065 Australia Tel +61 2 8437 5600 Fax +61 2 8437 5699

Northwestern Europe Belgium, Ireland, Netherlands, South Africa United Kingdom Central Europe Austria, Czech Republic, Germany, Hungary, Poland, Switzerland

Southern Europe France, Israel, Italy, Portugal, South America, Spain

Americas Canada, Mexico, USA

Asia Pacific China, Hong Kong, India, Japan, Malaysia, Singapore, Thailand

Intentia

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Enterprise Asset Management Benchmark Survey Report 2004