Managing Assets for Maximum Performance and Value

Managing Assets for Maximum
Performance and Value
In asset-intensive industries, lifecycle management is the
foundation of success
SUMMARY
Catalyst
State-of-the-art asset management is critical in industries such as oil and gas exploration and
production, oil refining and gas processing, and utilities that rely heavily on expensive and aging
physical assets. Among other benefits, effective asset management reduces costs and risks, improves
process flows and business continuity, increases profit margins, and aids in regulatory compliance. As
these industries become more complex and competitive, and as more of their assets reach the end of
their useful life, end-to-end or lifecycle tracking of asset data grows steadily more important. So does
the need to align this approach with established and emerging industry standards and to develop a
clear plan or maturity model to guide investment, track progress, and ensure compatibility with overall
corporate strategy. Despite its many benefits, however, asset lifecycle information management
(ALIM) is an immature discipline and is currently underutilized in asset-intensive industries.
Companies that effectively implement a lifecycle model have a substantial opportunity to gain
competitive advantage.
Ovum view
Historically, the complexity of asset management has grown more quickly than the technologies
required to tame it cost-effectively. Custom solutions have been expensive, forcing companies to
make cost/benefit tradeoffs and accept greater risks (in factors such as compliance, downtime,
environment, health, and safety) and higher costs than they would prefer. Paper records are still
prevalent in these industries, which can delay critical processes and increase risk. Some companies
have chosen to risk safety and compliance fines rather than invest in information technologies to
reduce their exposure.
However, today the IT tools are catching up – growing in capability and declining in price. Investments
in asset management software can provide benefits that far exceed the costs and technical challenges
they entail. Key to this approach is to manage assets on a lifecycle basis, tracking all relevant data

from concept and commissioning through end-of-life and disposal. Such an approach can optimize
visibility into current operations and create a solid platform for master data management, business
intelligence, and analytics.
ALIM cannot exist in a vacuum, however. It should be aligned with well-developed asset management
standards such as PAS 55 and ISO 55000 (recently published by the International Standards
Organization) and related standards such as ISO 27000, which deals with information security, and
ISO 15926, which addresses the exchange of data among organizations. ALIM also should be aligned
with a well-thought-out maturity model that helps the enterprise to map out an ALIM investment
strategy. This will ensure that the ALIM solution is comprehensive and meshes with existing
infrastructure and corporate strategy and that there are clear milestones against which the enterprise
can measure its progress. This approach also enables flexibility so that the ALIM system can adapt to
likely future developments as well as uncertainties and can support related elements such as staff
training and change management.
Such an approach benefits both sides of the ledger, reducing costs and risks while improving service
and operational performance. But too many companies are stuck at the wrong end of the ALIM
maturity curve. In November 2013 Ovum conducted a survey of 100 IT decision-makers and
influencers in three industries – utilities, oil and gas exploration and production (E&P), and oil
refining/gas processing – and found that the ALIM approach is not yet widely adopted or even
understood. Accordingly, while most companies in these industries are not achieving the benefits
ALIM can provide, they still have substantial opportunity to gain competitive advantage by adopting
ALIM ahead of their peers.
Key messages
 The current state of asset management is far from ideal, leaving companies exposed to
greater costs and risks than necessary.
 Multiple factors are driving demand for asset information technologies.
 In scope, ALIM must be as broad as possible; in function, it must be accurate and
relevant.
 ALIM plans must align with standards and models that guide investment and mesh with
overall strategy.
 Companies that have adopted ALIM report strong benefits and satisfaction.
 Despite its advantages, ALIM is not yet widely adopted; fast followers can gain significant
competitive advantage.

THE CURRENT STATE OF ASSET MANAGEMENT IS FAR FROM
IDEAL
Many current systems are outmoded and inefficient
The utilities, E&P, and refining/gas processing industries are many decades old. For example, the
newest large refineries (having capacity of 100,000 barrels per day or more) in the US were built in the
1970s. The same is true of US power plants, about half of which are at least 30 years old. In both
industries, key processes long predate the era of information technology and still rely on paper records
for asset management. And for many years, a relative lack of data forced them to manage assets on a
"break/fix" or "run to failure" model.
Many companies in these industries have left "break/fix" behind and progressed to scheduled
maintenance based on data from equipment manufacturers or from their own experience. This model
is a big step forward, but it still is based on approximations and generalizations. These limitations can
lead to higher costs and more downtime when assets are serviced or replaced sooner than needed or
when they fail sooner than expected – for example, when used in unusually harsh environments.
A handful of companies have taken further steps in asset management, moving toward models based
on realtime condition data and/or predictive analytics that enable just-in-time service or replacement to
minimize delays and cost increases and to maximize business continuity. At the leading edge, a few
enterprises are adopting prescriptive analytics that generate recommended actions to achieve a
defined goal, such as maximizing production and minimizing operating costs. In one early test, a major
oil producer is using prescriptive analytics technology in its worldwide oil fields to minimize the failure
of electric submersible pumps (ESPs) and the associated loss of production. Neither the producer nor
the analytics vendor has released details, but they say the project has enabled significantly higher
production from the wells where the prescriptive technology has been applied. The new technology
helps the producer make better decisions about which ESPs to deploy and how to maximize
production using existing ESPs.
But such applications are not yet in wide use. In his 2008 book Physical Asset Management for the
Executive, author Howard Penrose calls proper management of physical assets "the single largest
business improvement opportunity in the 21st century." Penrose estimated the size of the US asset
maintenance industry at $1.2 trillion in 2005, of which $750bn – more than 60% – stems directly from
poor physical asset maintenance and management.
Similarly, according to a study of the capital facilities industry (not unlike the asset-intensive industries
covered in our survey) by the US National Institute of Standards and Technology, some 40% of
engineering time is spent locating and validating information. If our three target industries face similar
problems – their cost in reduced engineering productivity alone could reach into the billions of dollars
worldwide.

Faulty asset data can cause or worsen a wide range of problems
In many cases, gaps and conflicts in asset data are unavoidable, the cumulative result of decades of
inadequate tools and human error. Often these problems are so deeply embedded that they are no
longer noticed.
But consider for a moment some of the ways an enterprise suffers when asset data is incomplete,
hard to find, incorrect, or inconsistent. Procurement orders too many spare parts, or too few. Project
planners can't be certain that a required piece of equipment will be available when needed or that it
will be in good working order. Maintenance crews spend inordinate amounts of time searching for
information, only to discover that it isn't correct, making it impossible to accurately estimate project
completion times and resources. Accounting is less precise. Plant operators use incorrect versions of
standard operating procedures, which can increase costs and risks. Production and service levels may
suffer, and the company may face higher costs to catch up or re-establish goodwill or, even worse, to
deal with a catastrophic event.
Poor asset management does not just raise costs and erode profits. It also can increase risks to
people and the environment. The Deepwater Horizon explosion in the Gulf of Mexico in 2010 took 11
lives and spilled nearly 5 million barrels of oil into the gulf, making it the largest accidental spill in
history. Penalties, legal fees and settlements, and remediation programs have cost BP more than
$40bn.
The spill has been attributed to a bad cement job and a failure of the well's blowout preventer (BOP).
For purposes of this discussion, a key point is that top BP officials were not aware of significant
modifications to the BOP until after the spill, according to testimony before a committee of the US
House of Representatives. That information gap contributed to uncertainty and delay in efforts to cap
the well. This is a clear demonstration of the linkage between complete asset information and strong
asset management.
This example comes from the E&P industry, but asset management challenges are endemic in all
three asset-intensive industries addressed in this report. In the utilities industry, many organizations
lack accurate records on the condition of their transmission and distribution systems. As a result, their
systems are less reliable, and they face higher costs for spare equipment and maintenance teams
than they would if they had better asset information. Last year the Southern African Asset
Management Association estimated that poor asset management increases utilities' costs of product
and service delivery by as much as 25%.
In refining and natural gas processing, numerous core processes require high temperatures and
pressures. After a Venezuela refinery explosion in 2012 that killed more than 40 people, critics said
part of the cause was poor maintenance oversight. Refineries elsewhere may be subject to closer
regulation and inspection, but the US Bureau of Labor statistics recorded more than 120 work-related
fatalities in US refineries in 2008 and more than 4,000 recordable injuries in 2007.

Yet another dimension of the asset management challenge involves business analytics. At a time of
growing business complexity, economic uncertainty, and ever-fiercer competition, enterprises are
striving to make better use of analytical tools. These tools are becoming steadily more capable, but
every analytical query, no matter how simple or complex, depends on reliable data to yield an
accurate answer.
MULTIPLE FACTORS ARE DRIVING DEMAND FOR INFORMATION
MANAGEMENT TECHNOLOGIES
Key technology goals include better document management and data
storage and support for analytics
Our survey found that a wide range of factors are driving demand for ALIM and several other types of
information management applications. Out of seven technology-related factors, the two that most
respondents considered "critically" or "very" important were document and records management, and
data storage/warehousing. Their third-highest priority was improving analytics, with data integration
and consolidation close behind.
Figure 1: Technology needs driving demand for information management
Source: Ovum
But the striking thing is that across all seven categories, more than half of respondents view these
applications as either "critically" or "very" important. In addition to the four already mentioned, other
drivers are to simplify archiving, manage large data sets, and migrate documents from one system to
another. Taken together, the results suggest that respondents have a realistic view of the benefits they

can achieve and the steps required to get there – that is, they see that analytics must be based on a
solid foundation of document management, reliable storage, and integrated data, among other factors.
Business factors
Mobility, operating expenses, and transmittals top the priority list, followed by
environment, health, and safety
We also asked respondents to rate the importance of 16 different business factors in driving demand
for application information and performance management capabilities. In application information
management, the top two concerns (again, measured as the total of "critically" and "very" important
ratings) were reducing operating expenditures and improving mobile capabilities, with little difference
between the two ratings. In application performance management, respondents identified the same
two issues as top priorities, but in the reverse order – mobility first, then opex – but again with little
difference in ratings.
The differences may reflect individual circumstances, and the categories are not necessarily mutually
exclusive. One company might identify opex as its top concern, while another might focus on mobile
technologies as a way to improve field crews' efficiency, which also would reduce operating costs.
Figure 2: Business goals driving demand for information management
Source: Ovum
Respondents also placed high importance on tools that help them manage transmittals of the various
types of information involved in managing a given asset: documents such as design drawings, as-built

drawings, contracts, emails, and the like that are involved in managing any given asset. Respondents
want to be able to track such transmittals more closely, reliably, and securely and to better understand
the information they contain – for example, by searching and analyzing unstructured text.
Environment, health, and safety issues also are a high priority. This is to be expected, given the
inherent dangers in all three industries – high temperatures, pressures, and voltages to cite but a few.
The big crew change
Another key challenge affecting many asset-intensive industries is the one known in the E&P business
as "the big crew change": the accelerating retirement of baby boomers, who take decades of
institutional and asset knowledge and experience with them when they leave.
During years of relatively low oil prices and profits, the E&P industry was not seen as offering
attractive career opportunities, so the workforce was not steadily replenished by young college
graduates who could rise through the ranks. The industry has become more lucrative in recent years,
and E&P companies are able to attract larger numbers of well-trained younger workers. But it is not
enough to offset the loss of knowledge and expertise they face today as retirement rates increase.
They recognize that they must make better use of technology to retain critical information and make it
more widely accessible.
Similar dynamics affect the utilities and refining/gas processing industries. Across all three, this loss of
experience is driving investment in information systems that can capture and utilize the troves of asset
knowledge and expertise now stored in their employees' heads.
IN SCOPE, ALIM MUST BE AS BROAD AS POSSIBLE
In business, as elsewhere, a solid structure requires a good foundation
The power of asset lifecycle information management in asset-intensive industries is that it is so
fundamental. Properly designed, ALIM can provide a solid foundation on which to successfully track,
analyze, understand, and manage the business. Properly used, ALIM offers not just a foundation but a
structure within which to organize the asset-intensive business. Fully exploited, ALIM acts as an
observation tower, if you will – a layer above the foundation and structure – from which to view the
business and understand the complex process interactions that enable or impede success.
Ideally, ALIM should encompass and thoroughly document everything that defines these industries. In
E&P, this means drilling rigs, platforms, and drill ships; pumps and drill bits; drill pipe and casing;
bottom-hole assembly components, kelly drives, elevators, and everything else down to the last nut
and bolt. In a utility, ALIM must cover everything from generation plants to customers' meters and all
of their component parts. In refining and natural gas processing, an ALIM system must span every
process unit from desalting and distillation to catalytic reforming and alkylation; every storage and
wastewater treatment unit; and every pipe, valve, and storage tank.

The ALIM system must capture and retain all relevant data about these assets: descriptive data such
as model numbers, serial numbers, sizes, weights, and so on; historical data such as operating
history, change orders, and service and repair logs; related intellectual property such as standard
operating procedures, repair procedures, inspection requirements, certification records, and test
results; current information on location, availability, condition; and so on.
As its acronym implies, an ALIM system must retain all of this information throughout the asset’s
useful life, in appropriate formats – project-based formats during design and construction, for example,
and tag-based formats for operations and maintenance. But enterprise responsibilities do not end
when an asset is retired. Careful decommissioning makes sure that assets with remaining value are
reused and that any toxic or regulated materials are handled in accordance with relevant regulations.
Legal liability may continue for years, further increasing the importance of asset data management
across the entire lifecycle.
Some data lives inside the ALIM system, some outside it
While an ALIM system should be as broad in scope as possible, no system can hold everything.
Enterprises frequently have asset-related data stored in systems they don't want to replace – product
lifecycle management systems, project management systems, procurement and supply chain
management systems, and the like. Additional relevant data will likely reside in their enterprise
resource planning (ERP) and financial management systems.
In the early stages of asset data management, it may be sufficient to know where the data resides and
to be able to access it, even if each database remains isolated from the others. But this state of affairs
leaves much asset data untapped. Central to the design of an ALIM system should be a roadmap or
maturity model to guide implementation and make sure the system integrates all relevant data so it
can support holistic analysis. It may be cost-prohibitive to do this right away, but it ought to be in the
plan.
IN FUNCTION, ALIM MUST BE ACCURATE AND RELEVANT
Rapid change can quickly make asset data unusable
Asset data is not static. It must be kept current as equipment is inspected, serviced, moved, or
deployed in new situations and operating conditions. It must be available to – and trusted by –
everyone who needs it: engineers, procurement officers, planners, schedulers, various managers,
duty holders (owners or operators), and more. A given asset may change hands many times during its
life, which makes it harder to ensure that the relevant data is kept complete and accurate.
Yet accurate asset data benefits everyone who handles or owns the asset. Service crews and
managers have an obvious interest in complete and accurate data, because they depend on it to
ensure they can complete their work safely and efficiently. Such information is also valuable when an
asset changes hands. If a piece of equipment is to be sold, it will command a higher price if its history

has been properly documented: Who would buy a significant piece of equipment without trustworthy
records showing that it had been properly maintained and not used in operating conditions that could
compromise its integrity?
Such documentation must not only be present, it must also be usable. Any sales contract should
specify not only that the relevant asset data be included, but also that it be provided in useful form –
not just thrown in boxes without rhyme or reason.
Moreover, the asset management system must maintain all this data indefinitely, long after an asset
has been sold or removed from service, until an informed decision can be made that the data will
never again be needed, whether for business purposes or to meet regulatory or audit requirements.
An ALIM system must organize and expose asset data in ways that support
multiple users, purposes, device types, and related applications
Different types of users – various managers, service teams, end users, buyers and sellers, lessors
and lessees, vendors, subcontractors, and the like – have different requirements for asset data, in
terms of form as well as content. The ALIM system therefore must be able to tailor both the
information it presents and the interface.
A service technician needs up-to-date diagrams, schematics, maps, and change-order histories to
make repairs quickly and safely. An inspection crew on an offshore rig needs a comprehensive list of
the assets in use and their history with regard to operations and previous inspections. A financial
analyst or accountant needs all the cost data associated with a particular asset in order to understand
and optimize its lifetime value. Users might need to access the data via different devices –
smartphones, tablets, laptops, PCs, and even barcode or RFID readers – depending on
circumstances.
The ALIM system also should support native collaboration across all relevant users, again covering a
range of devices and connectivity models, as well as out-of-the-box integration with asset
management platforms that customers and partners might already have in place. And it must place
information in context. For example, operating and safety-related data must be available instantly,
while data that is less time-sensitive (such as information required for periodic internal or regulatory
reports) can be stored until needed.
An ALIM system also should provide a foundation for process optimization, helping users find data
relevant to their needs and supporting asset and project information management tools, predictive and
prescriptive analytics, and more. All of these have roles to play in optimizing the use of enterprise
assets. None can achieve its intended purpose if it is not based on, or does not have access to, a
foundation of comprehensive, accurate data – in other words, an ALIM foundation.

ALIM solutions must avoid key adoption inhibitors
In our survey, we queried respondents about seven business challenges that can impede the adoption
of information management technologies. The biggest obstacle they identified – the one that drew the
largest share of "critically important" ratings – is a lack of clear benefits. Next on the inhibitor list was
manager support – just 7% designated this as "critically important," but fully 61% said manager
support was "very important." The ratings for benefits of and managerial support for ALIM may well be
related, and both may reflect the early stage of the market -- that is, it would be difficult to enlist
managerial support for an investment of uncertain benefit. This underscores the importance of
identifying clear near-term goals and business benefits as part of developing and implementing a
maturity model.
End-user acceptance was rated third-highest in importance among ALIM adoption inhibitors, which
points to the benefit of involving as many users as possible in the goal-setting process and the
development of the maturity model. One other factor – ease of integration with enterprise applications
– also drew a large share (58%) of "critically" or "very" important ratings.
Nearly half of the respondents, 49%, cited deployment challenges as critically or very important; 47%
cited cost. Even the least important inhibitor on our list – ease of integration with analytics applications
– was rated critically important by 10% of respondents and very important by another 36%.
Figure 3: Inhibitors to adoption of information management technologies
Source: Ovum
These ratings suggest that most respondents are being pragmatic: They want to be clear about the
benefits they can expect from an investment in information management, they are concerned that
managers may not support such initiatives, and they are skeptical about whether end users will
embrace them. These make sense as first-order concerns. We expect the integration-related factors to

grow in importance, however, as more enterprises become aware of the potential value of asset
information management technologies. As that awareness evolves, more enterprises will understand
that they cannot realize the full value of an ALIM investment unless it is fully integrated with both the
enterprise applications they already rely on – in particular ERP, maintenance management, project
management, supply chain, and financial management tools – and the analytics tools that are
becoming steadily more critical to success.
ALIM PLANS MUST ALIGN WITH STANDARDS AND MODELS
THAT GUIDE INVESTMENT AND MESH WITH STRATEGY
With asset management still at an early stage of maturity, it is important to
exploit current standards initiatives
The leading organization in the asset management field is the Institute for Asset Management,
headquartered in Bristol in the UK. The IAM led development of the standard known as PAS 55, which
was originally published in 2004 by the British Standards Institution. (PAS stands for Publicly Available
Specification.) The IAM has developed a framework for asset management, which it included in a
2012 publication titled Asset Management – an Anatomy. While IAM has continued to develop PAS
55, in recent years it has also aligned with the International Standards Organization, which recently
published its own standard, ISO 55000, based closely on PAS 55. ISO 55000 is likely to grow in
significance in asset-intensive industries; as more companies adopt it, compliance certification may
well become a requirement for regulators and insurance companies.
Even the IAM describes asset management as an "emerging" management discipline and is primarily
seeking, rather than distributing, case study information about the business benefits of asset
management.
Still, the IAM framework has considerable value, especially given that it is on the cusp of international
acceptance. Enterprises that align with it today can expect to reap benefits as more of their suppliers,
partners, and customers do so in the future.
The IAM describes PAS 55 in terms of seven key principles, which are also reflected in the new ISO
standards. According to the IAM, a well-developed asset management system is:
 Holistic: cross-disciplinary, focused on total value
 Systematic: rigorously applied in a structured system
 Systemic: assets are considered in the context of their systems, also total-value focused
 Risk-based: risk assessment is a standard part of all decision-making
 Optimal: able to seek the best compromise among conflicting objectives such as costs,
performance, risk, and the like

 Sustainable: able to optimize asset life, systems performance, and environmental and
other long-term consequences
 Integrated: "joined up" so that asset data becomes more than just the sum of the parts
and functions as a whole.
We would add that such a system should be able to manage all types and amounts of asset data. It
also should support the use of analytics tools for any type of query, from simple to complex. A simple
query might be one in which a manager needs to know the repair frequency of a certain piece of
equipment; a complex one might involve predicting when an electric submersible pump might fail
when installed in an oil well with very high temperatures and highly corrosive and/or abrasive
substances.
A standardized approach fits naturally with the use of a maturity model
While adherence to standards allows a company to freely exploit years of expert thought and effort in
creating an ALIM initiative, a good maturity model can help a company ensure that its ALIM plan is
comprehensive, identifies clear milestones, and generates a return on investment sooner rather than
later. Corporate strategy should help to define the ALIM initiative, but the reverse is also true: an ALIM
initiative and a maturity model can clarify and improve overall corporate strategy.
A good maturity model helps the enterprise to understand its current capabilities in asset
management, define a desired "end state," and create a roadmap to reach it. Given the IAM's
description of asset management as an "emerging" discipline, most enterprises will be positioned
toward the "immature" end of the maturity spectrum. As shown in Figure 4, the immature stage is
defined by information silos and a lack of defined goals. At the mature end of the spectrum, enterprise
assets will be tightly managed and available to users through interfaces tailored to their needs and
responsibilities. Asset information will be thoroughly integrated with enterprise applications and
analytical tools, with the ALIM system providing a high degree of visibility and efficiency. In between
the immature and mature ends of the spectrum will be a series of clear steps that identify incremental,
affordable investments that deliver steady functional enhancements and business benefits. Included in
those steps will be milestones and checkpoints that the enterprise can use to gauge its progress and
change course as needed.
Finally, a well-designed maturity model will address additional capabilities and programs necessary to
a successful ALIM initiative, from testing and piloting through full deployment and ongoing operation,
including appropriate training for all users.

Figure 4: A maturity model can provide a useful roadmap for ALIM investment
Source: Ovum
Equally important to ALIM success are programs designed to optimize ease of use and win the
support of users and managers. This process is overlooked in many IT initiatives, or given only
cursory attention, but it deserves high priority and a clear place in the maturity model and
implementation plan.
Developers responsible for application functionality and UI can easily develop a "we know best"
attitude, but they should take care to validate their decisions with those who will actually use the
application and incorporate constructive "real world" input. If users view the system as an impediment,
not a help, and either refuse to use it or do so only grudgingly rather than enthusiastically, the
application will fail.
Enthusiastic support is both highly desirable and eminently feasible if end users are brought into the
design process early and developers genuinely address the points that end users identify as
cumbersome, inscrutable, or counterproductive. (It is also true, of course, that some elements of a
new system may be essential even if end users don't like them. Such concerns must be addressed
through training, explanation, and a willingness to modify such elements to make them less
objectionable while preserving their core function.)

Customers must choose carefully among a variety of maturity models and
sources
There are many places where an enterprise can look for a relevant maturity model. Several vendors
have developed their own; some industry organizations have as well. Executives planning an ALIM
implementation in one division or business unit may find a relevant model in use elsewhere in their
organization.
Whatever sources they consider for a maturity model, enterprises should recognize that PAS 55 and
ISO 55000 are the best-developed standards. They should study the components of these standards
and take advantage of tools available through the IAM.
COMPANIES THAT HAVE ADOPTED ALIM REPORT STRONG
BENEFITS AND SATISFACTION
ALIM users saw benefits across both business and technology factors
Business factors
Among the companies in our survey that have deployed or are trialing an ALIM solution, half or more
said they are completely or mostly satisfied with the business benefits achieved in all eight categories
we asked about.
The highest-rated categories were "improved overall asset value" and "reduced overall asset costs."
More than three-quarters of respondents said they were completely or mostly satisfied with their
improvement in overall asset value (78%) and their reduction of overall asset costs (77%). In the
highest-rated single category, 33% of respondents are completely satisfied with the reduction they
achieved in overall asset costs.
As shown in the Figure 5, respondents also reported high satisfaction in five other categories:
information value across the organization, user acceptance, reduced time and cost for service and
repairs, keeping projects on schedule, and improving the management of project costs. Even in the
lowest-scoring category, improved asset efficiency, half of respondents said they were completely or
mostly satisfied with the benefits they had achieved.

Figure 5: Companies that have deployed or are trialing ALIM saw strong business benefits
Source: Ovum
Technology factors
Asked about five technology-related benefits, more than half of the companies that have adopted or
are trialing ALIM said they are mostly satisfied with their achievements in integrating ALIM with
analytics and in cost reduction. Two-thirds said they were completely or mostly satisfied with what they
had achieved in terms of ease of deployment.

Figure 6: ALIM users also reported strong technology-related benefits
Source: Ovum
ALIM users also reported strong satisfaction in both business and tech
Business factors
After asking about the benefits they had achieved, we asked our survey group a similar question about
their satisfaction in terms of nine different business factors. They reported their strongest results in
service/repair times: 22% of respondents are completely satisfied with their investment, and another
61% are mostly satisfied.
Large majorities expressed high satisfaction with ALIM in terms of compliance management (6%
completely satisfied, 71% mostly so). More than 60% were mostly or completely satisfied in terms of
project scheduling and cost management.

Figure 7: ALIM users reported high satisfaction across nine business factors
Source: Ovum
Technology factors
In five out of six technology factors, more than half of the respondents said they were mostly or
completely satisfied. Some 61% said they were completely or mostly satisfied in terms of ease of
integration with analytics. In three categories – cost, integration with enterprise applications, and user
interface – 56% said they were completely or mostly satisfied. Cloud deployment was only one
percentage point lower, though 6% said they were not satisfied in this area. In the lowest-scoring
category – on-premise deployment – exactly half of respondents said they were completely or mostly
satisfied

Figure 8: Several technology factors contribute to ALIM satisfaction
Source: Ovum
DESPITE ITS ADVANTAGES, ALIM IS NOT YET WIDELY
ADOPTED; FAST FOLLOWERS CAN GAIN ADVANTAGE
ALIM is more ‘ready’ than its penetration figures suggest
In our survey, less than 20% of respondents said they have deployed or are trialing ALIM, a lower
proportion than those reporting that they are using information and performance management
technologies. We believe the lower ALIM figure reflects two main factors. One is that the entire field of
asset management is relatively new. The other is that the lifecycle approach may suggest to some a
daunting level of complexity, given that it must encompass every piece of relevant data for every
physical asset, across its entire useful life and beyond.
As to the first factor, although the field may be newer than categories such as ERP or CRM, the PAS
55 standard has been evolving for more than 10 years and is far beyond infancy. The ISO's recent
publication of the 55000 standard bespeaks a level of maturity that asset-intensive enterprises should
find reassuring.

As to the second point, there are well-recognized approaches for taming complexity. The utilities,
E&P, and refining/gas processing industries include some extremely large and technologically
sophisticated enterprises with strong track records when it comes to managing complex IT.
Clarifying benefits
We believe the single greatest challenge to ALIM uptake is the fact that many potential adopters are
not fully aware of the benefits to be gained. In part this reflects a "business as usual" attitude that grew
deep roots in the decades before information technology was widely available. Many inefficient
practices have been in place for so long, and have become so familiar, that they are rarely scrutinized.
However, we expect that competitive pressures, increased public scrutiny, regulatory oversight, and
market volatility will force many asset-intensive enterprises to shed complacency and thoroughly
reexamine all aspects of their operations. As they do, they will quickly realize the opportunity that
awaits them precisely because their operations are so asset-intensive and the technologies required
to manage those assets are maturing in capability and falling in price.
As this realization dawns, it won't take enterprises long to understand the cumulative value of
examining dozens of embedded processes and finding a percentage point or two of savings in each.
Addressing integration
There remains the question of integration – the steps required to smash data silos and harmonize
conflicting formats to gain a clearer view of operations that can lead to new efficiencies and savings.
This is not an all-or-nothing proposition; enterprises should be able to identify regions or business
units where they can start the ALIM process with confidence that their investment will generate a
positive return and also provide experience for broadening the implementation.
Embracing change
One key to success will be to understand the extent to which enterprises will have to modify existing
processes in order to achieve the benefits they want from their ALIM investment. Because ALIM is so
fundamental to an asset-intensive organization, these changes may be extensive, affecting everything
from accounting, procurement, and supply chain management systems to resource planning and
more.
Still, this is the kind of evaluation that well-run companies undertake routinely. And many of the gains
they are seeking may be hiding in plain sight. Companies assessing the potential advantages of ALIM
should pay particular attention to these aspects of their operations:
 Downtime due to unreliable assets and the financial effects of that downtime. This can
delay projects or degrade performance enough that the enterprise falls short of
contractual commitments. This is problem enough in its own right, but it can be
compounded by a loss of goodwill that affects future business.

 Cost increases that stem from efforts to make up production losses, such as additional
personnel costs for overtime or temporary hires, subcontracting, or the purchase of
product from third-party suppliers.
 Fines, penalties, legal liabilities, lost time, workers’ compensation, and insurance costs
due to environmental violations or health and safety incidents.
Seizing opportunity
It is not just nature that abhors a vacuum; so does the business world. When a new market emerges,
smart businesses are quick to exploit it. When business conditions change, smart businesses are
quick to identify which doors are closing and which new ones are opening. When a new technology
creates an opportunity to reinvent old processes, smart businesses are quick to seize it. That is the
situation today with ALIM.
RECOMMENDATIONS FOR ACHIEVING OPTIMAL RESULTS
 Define your ALIM system: Start now; don't suffer through repeated asset-related
disruptions, delays, EHS incidents, and penalties/fines before acknowledging the
advantages of ALIM. Carefully define the benefits to shrink the uncertainty that is a key
inhibitor of ALIM investment today.
 Align ALIM with overall strategy: Don’t commit to an ALIM plan until you’re sure of that
alignment. This may require further definition/clarification of corporate strategy.
 Select or develop an appropriate maturity model: Search widely; look to industry
associations and other industries as well as vendors. Vendor models may be useful, but
they may foster lock-in – make sure you understand the trade-offs before committing.
 Define a comprehensive implementation plan: ALIM may entail major changes across
the business, in service/repair, procurement, accounting, etc. Exploit PAS 55 and ISO
55000 methodologies to ensure a holistic plan.
 Avoid scope creep: Plan carefully, then stick to the plan. Change in midstream is an
invitation to trouble such as higher costs, delays, and unexpected consequences.
 Eliminate custom coding: Any company can make a case that its uniqueness requires
custom technologies. The smartest ones get over themselves and stick with standard
technologies and configurable solutions.
 Get everyone involved: Include users at all levels in design/planning/implementation as
early as possible. Critical expertise is often held by the people who install cables and turn
wrenches. Many are reaching retirement age, so it is critical to move quickly.
 Build end-user support: Incorporate user testing and training from the start to build buy-
in and "debug" the system more quickly. This will speed deployment and raise both usage
levels and ALIM effectiveness.

APPENDIX
Survey methodology and demographics
 Sample size: 100
 Industry distribution: Utilities (50 interviews); E&P (25 interviews); refining/gas processing
(25 interviews)
 Scope of operations: 58 national, 24 global, 18 regional (10 Europe, 4 Asia-Pacific, 4
North America)
 Company size: 86% of respondents have annual revenues greater than $1 billion; 10%
have revenues of $500 million to $1 billion
 Industry breakdowns:
o Utilities: 46 regulated, 54 deregulated; 10 have ≥ 1.5 million meters deployed, 40
have 350,000 to 1.5 million meters
o Refiners, gas processors: 19 are independent, 6 are units within vertically
integrated companies
o E&P: 4 international oil companies, 21 national (state-owned) oil companies
Author
Warren Wilson, Lead Analyst – Energy/Oil & Gas Technology
warren.wilson@ovum.com
Ovum Consulting
We hope that this analysis will help you make informed and imaginative business decisions. If you
have further requirements, Ovum’s consulting team may be able to help you. For more information
about Ovum’s consulting capabilities, please contact us directly at consulting@ovum.com.
Disclaimer
All Rights Reserved.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form
by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior
permission of the publisher, Ovum (an Informa business).
The facts of this report are believed to be correct at the time of publication but cannot be guaranteed.
Please note that the findings, conclusions, and recommendations that Ovum delivers will be based on
information gathered in good faith from both primary and secondary sources, whose accuracy we are
not always in a position to guarantee. As such Ovum can accept no liability whatever for actions taken
based on any information that may subsequently prove to be incorrect.

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