© AberdeenGroup 2009 Top Strategies for Asset Performance Management (APM) Mehul Shah, Research Analyst Aberdeen Group February 24 th, 2010

© AberdeenGroup Agenda  Introduction  Polling Questions  Define Asset Performance Management  Challenges  Aberdeen Research Frameworks  APM Research Results  Recommendation for Action

© AberdeenGroup Polling Question # 1  What are your CFO’s TOP THREE (3) OBJECTIVES for the next 12 months? 1.Revenue growth 2.Reduce operating expense 3.Improve profitability 4.Customer satisfaction 5.Risk Management 6.Maintain or improve product and service margins 7.Sustainability / Corporate Responsibility

© AberdeenGroup Polling Question # 2  What are the TOP TWO PRESSURE driving you to focus on asset management? (Select two) 1.Maximize Return on Assets (RoA) 2.Reduced operational and maintenance budgets 3.Aging assets 4.Need to comply with safety and regulatory requirements 5.Increasing demand variability

© AberdeenGroup Polling Question # 3  What are the TOP TWO STRATEGIES that your company is establishing to address the pressures? 1.Implement advanced asset performance management and analytical capability 2.Establish a risk based strategy 3.Create / improve real time visibility into asset performance 4.Improve collaboration across maintenance, production and financial groups

© AberdeenGroup What is Asset Performance Management? Approach that synchronizes operations, maintenance, and engineering goals Visibility into complete lifecycle of asset – Understanding the Economic Value Add Balancing asset availability and asset utilization Aligning asset performance to corporate performance Risk Management – Maintenance based on criticality of asset

© AberdeenGroup Major Roadblocks to Asset Management Change in culture required to move from break fix to proactive maintenance Asset management is still viewed as a cost center by senior management Complex and disparate data sets present a significant road block to decision making Lack of communication among production, maintenance, engineering and IT departments Lack of awareness of how asset management can reduce environmental impact Transfer of knowledge from a few experienced employees to others

© AberdeenGroup  5,000+ Executives surveyed  10,000 + data points collected per study  12 Benchmark Reports planned for 2010  Library of 15,000 benchmark survey responses and 200,000 data points Our Research Methodology

© AberdeenGroup Aberdeen Maturity Class Framework Selected Performance Criteria (KPI) Unscheduled Asset Downtime OEE Return on Asset Goals Total Respondents: - Top 20% - Middle 50% - Bottom 30% Respondents are scored individually across KPI Best-in-Class Industry Average Laggard

© AberdeenGroup Aberdeen’s Methodology End-User Investigation: PACE Framework P A C E P ressures: External and internal forces that impact an organization’s market position, competitiveness, or business operations. A ctions: The strategic approaches that an organization takes in response to industry pressures. C apabilities: The business competencies (organization, process, etc…) required to execute corporate strategy. E nablers: The key technology solutions required to support the organization’s business practices.

© AberdeenGroup Aberdeen Maturity Class Framework  What are Best-in-Class companies doing differently?  What pitfalls are they avoiding?  Why are they achieving greater success?  What technologies and services are enabling them to succeed? Asset Downtime OEE Return on Assets

© AberdeenGroup Study Demographics Job Title:  26% Upper Management (CEO, COO, CFO, CTO, President, VP, Partner/Principle)  22% Director  23% Manager  10% Staff Revenue Size  30% Small (under $50 Million)  38% Medium ($50 Million - $1 Billion)  33% Large (Over $1 Billion)  Geographies:  55% North American  17% Asia Pacific  17% Europe  9% Middle East, Africa Industry  21% Oil/Gas  11% Consumer Packaged Goods  8% Utilities  5% Chemicals  4% Metal and Metal Products  4% High Technology Manufacturing  2% Automotive Current Survey Respondents: 139

© AberdeenGroup Top Objectives of CFO’s Source: Aberdeen Group, October 2009

© AberdeenGroup Budget Changes Source: Aberdeen Group, October % 47% 36% 35% 31% 32% 27% 22% 28% 0% 10% 20% 30% 40% 50% Capital ExpenditureOperational ExpenditureMaintenance Budget DecreasedIncreasedRemained Same Percentage of Respondents, n=139

© AberdeenGroup Top Pressures Driving Improvement in Asset Performance Management Source: Aberdeen Group, October 2009

© AberdeenGroup Defining the Best-in-Class: Best-in- Class Industry Average Laggard Performance Criteria Used to Identify Best-in-Class Operational Equipment Effectiveness (OEE) 88% 81% 75% Unscheduled Downtime 2% 11% 18%

© AberdeenGroup Results Achieved by Best-in-Class: Estimated performance against corporate plan.. Over achieved by 25% Over achieved by 7% Missed by -10% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% Return on Assets (RoA) Percentage of Respondents, n=139 Best-in-ClassIndustry AverageLaggard

© AberdeenGroup Actions – The “A” of PACE Initiatives the Best-in-Class Leverage to Outperform Peers 32% 23% 41% 23% 40% 26% 39% 57% 0%10%20%30%40%50%60% Synchronize asset performance with corporate performance objectives Create / improve real time visibility into asset performance Establish continuous improvement programs Establish a risk based strategy Implement advanced asset performance management and analytical capability Percentage of Respondents, n=139 All OthersBest-in-Class Source: Aberdeen Group, October 2009

© AberdeenGroup Process Capabilities Source: Aberdeen Group, October 2009

© AberdeenGroup Organization Capabilities Source: Aberdeen Group, October 2009

© AberdeenGroup Knowledge Management Capabilities Source: Aberdeen Group, October 2009

© AberdeenGroup Performance Management Capabilities Source: Aberdeen Group, October 2009

© AberdeenGroup Sustainability Source: Aberdeen Group, October 2009

© AberdeenGroup Enterprise Wide Technology Source: Aberdeen Group, October % 71% 50% 43% 62% 65% 31% 42% 48% 63% 32% 22% 0% 10% 20% 30% 40% 50% 60% 70% 80% EAM - Enterprise Asset Management EHS - Environment Health and Safety BI - Business Intelligence Energy Management Percentage of Respondents, n=139 Best-in-ClassIndustry AverageLaggard

© AberdeenGroup Real Time Interoperability 4% 7% 17% 14% 28% 33% 18% 16% 23% 42% 31% 25% 33% 35% 38% 50% 55% 0%10%20%30%40%50%60% Wireless Sensors and CMMS/EAM Energy Management and CMMS/EAM CMMS/EAM and BI CMMS/EAM and Mobile devices Control System and CMMS/EAM CMMS/EAM and ERP Percentage of Respondents, n=139 LaggardIndustry AverageBest-in-Class Source: Aberdeen Group, October 2009

© AberdeenGroup Enablers 12% 22% 19% 22% 32% 46% 17% 31% 41% 31% 42% 44% 33% 38% 43% 81% 0%10%20%30%40%50%60%70%80%90% Mobile Solutions Master Data Management Asset Dashboard Asset Analytics Spare Parts Optimization Alerts and Alarm Management Percentage of Respondents, n=139 Laggard Industry Average Best-in-Class Source: Aberdeen Group, October 2009

© AberdeenGroup Laggard Step to Success  Establish executive ownership and sponsorship for asset performance and energy management strategies across the enterprise  Align goals and metrics across maintenance and production teams  Invest in analytics to provide predictive insights based on the captured asset data  Include energy data (consumption, costs etc) as part of the optimization process to schedule maintenance and production activities

© AberdeenGroup Industry Average Steps to Success  Provide on-demand asset lifecycle information to maintenance and production employees  Invest in centralized knowledge warehouse to store asset performance, energy and operations data  Include energy management in corporate wide sustainability initiative  Invest in automation with specific focus on alarm management, dashboards, analytics, and mobile solution

© AberdeenGroup Best-in-Class Steps to Success  Align operational performance with corporate performance to understand the impact of asset strategies on organizations financial goals  Manage energy consumption by developing initiatives integrated with the overall asset management strategy  Establish a risk based approach to ensure predictive asset management  Establish real-time interoperability between asset management and business systems

© AberdeenGroup Thank You Research Contact: Mehul Shah Research Analyst