Top Strategies for Asset Performance Management (APM)

1. Top Strategies for Asset Performance Management (APM) Mehul Shah, Research AnalystAberdeen Group February 24th, 2010

2. Agenda • Introduction • Polling Questions • Define Asset Performance Management • Challenges • Aberdeen Research Frameworks • APM Research Results • Recommendation for Action

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

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

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

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

7. 6 Major Roadblocks to Asset Management Asset management is still viewed as a cost center by senior management Change in culture required to move from break fix to proactive maintenance Lack of communication among production, maintenance, engineering and IT departments Complex and disparate data sets present a significant road block to decision making Lack of awareness of how asset management can reduce environmental impact Transfer of knowledge from a few experienced employees to others

8. Our Research Methodology • 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

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

10. Pressures: External and internal forces that impact an organization’s market position, competitiveness, or business operations. Actions: The strategic approaches that an organization takes in response to industry pressures. Capabilities: The business competencies (organization, process, etc…) required to execute corporate strategy. Enablers: The key technology solutions required to support the organization’s business practices. Aberdeen’s MethodologyEnd-User Investigation: PACE Framework P A C E

11. Aberdeen Maturity Class Framework Asset Downtime OEE Return on Assets • 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?

12. 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 Study Demographics Current Survey Respondents: 139

13. Top Objectives of CFO’s Source: Aberdeen Group, October 2009

14. 47% 50% 38% 40% 36% 35% 32% 31% 28% 27% 30% 22% 20% 10% 0% Capital Expenditure Operational Expenditure Maintenance Budget Percentage of Respondents, n=139 Decreased Increased Remained Same Budget Changes Source: Aberdeen Group, October 2009

15. Top Pressures Driving Improvement in Asset Performance Management Source: Aberdeen Group, October 2009

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

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

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

19. Process Capabilities Source: Aberdeen Group, October 2009

20. Organization Capabilities Source: Aberdeen Group, October 2009

21. Knowledge Management Capabilities Source: Aberdeen Group, October 2009

22. Performance Management Capabilities Source: Aberdeen Group, October 2009

23. Sustainability Source: Aberdeen Group, October 2009

24. Enterprise Wide Technology 73% 80% 71% 65% 63% 70% 62% 60% 50% 48% 43% 50% 42% 40% 32% 31% 30% 22% Percentage of Respondents, n=139 20% 10% 0% EAM - Enterprise EHS - Environment BI - Business Energy Management Health and Safety Intelligence Asset Management Best-in-Class Industry Average Laggard Source: Aberdeen Group, October 2009

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

26. 81% Alerts and Alarm 44% Management 46% 43% Spare Parts Optimization 42% 32% 43% Asset Analytics 31% 22% 43% Asset Dashboard 41% 19% 38% Master Data Management 31% 22% Best-in-Class 33% Mobile Solutions 17% Industry Average 12% Laggard 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Percentage of Respondents, n=139 Enablers Source: Aberdeen Group, October 2009

27. 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

28. 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

29. 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

30. Thank You Research Contact: Mehul Shah Research Analyst mehul.shah@aberdeen.com 617-854-5212