To ERP or ALM? That Is The Question

As a Software firm, we specialize in empowering organizations across all industry sectors to get smarter about the way they manage their company’s physical assets.

Physical Assets is the single largest cost on your company’s Balance Sheet.

It can be a surprise to some organizations to learn that no less than 75% of the total cost of ownership of their physical assets lies in the Operation & Maintenance of those assets alone.

We are often challenged to help business leaders understand how implementing an #ERP system, may not necessarily be the only or even optimum solution for managing assets throughout their lifecycle and reducing the cost of asset ownership.

A new year has begun, and everyone we speak to is talking about ways to streamline operations, cut costs, and increase profits.

Technology offers a wide variety of solutions, but which software provides the highest return on investment and justifies the costs of implementation and rollout? What should Software actually deliver that makes a visible difference to asset maintenance costs?

For companies that own a lot of physical assets, once industry specialists (Asset/FM experts) uncover real process inefficiencies and bottlenecks caused by inefficient maintenance of their assets, the penny drops – that ‘ah ha’ moment.

The Answer Is Simple

The most efficient companies have the right information on hand to determine where to eliminate the waste, automate processes, and to focus their employees’ attention. For many of these companies, Asset Lifecycle Management (ALM) software makes sense. #ALM software is a variant of the more commonly known Computerized Maintenance Management Software (#CMMS), and it captures the mindshare of the ‘C’ suite for several compelling reasons.

What Is Asset Lifecycle Management (ALM) Software?

In any business, maintenance is an enormous job. In most cases, maintenance can refer to anything from repair of facilities and faulty factory equipment, to routine maintenance of fleet vehicles.

A #CMMS can store data about every asset belonging to a company and automate the management of repair and maintenance schedules.

Asset Lifecycle Management (#ALM) software works like a #CMMS, but considers the entire lifecycle of an asset, from acquisition right through to decommissioning or disposal.

It does this by keeping a comprehensive #AssetRegister of all the assets owned by the company and managing their maintenance and repair schedules in such a way as to prolong the life of an asset as much as possible.

ALM Software Benefits

  • Several labour intensive, time-consuming and error-prone activities such as raising #workorders and processes are automated, saving man-hours and cost.
  • Helps technicians and ‘crew’ members in the field, prioritize and schedule routine maintenance and repair, so that their attention can be focused more on hands-on technical work, and less on scheduling and paperwork.
  • Reduces #downtime. Take expensive specialist machinery for example, in a manufacturing plant. Being able to carry out preventative maintenance activities as opposed to costly emergency repairs ensures ‘business as usual.’ Reducing downtime will save thousands if not hundreds of thousands in lost revenue with staff working efficiently on schedule.
  • #Scheduling and prioritizing regular maintenance also increase the life of assets within an organization, thus reducing the costs of repairing and replacing assets, instead boosts a company’s profits.
  • Manages the status of work orders and allows supervisory staff to generate real-time reports on everything from inventory to schedules. This helps businesses determine how to maximize efficiency in all areas.
  • Maintain efficient #inventory levels, and notify the correct employee when it is time to reorder. This efficiency can help eliminate wasted expenditures while also making sure that necessary parts are always kept on hand. Not only does this save time and improve productivity for technicians, but also keeps vital maintenance work from being stalled while a spare part is on order. Improved inventory levels also reduces risks of downtime.
  • An ALM can provide visibility into the efficiency of an asset and compare it to the asset’s planned ability across its lifetime. ALM software can also accurately calculate the costs of maintenance of an asset and compare it to the asset’s planned maintenance costs.

Assets that have reached the end of their useful life can be decommissioned and replaced at precisely the right time so that the company neither loses money, trying to utilize an asset that has passed its active life, nor replacing assets that still have time left in them.

ALM software can help companies maximize their return on investment from assets and curb what can be massive CAPEX spend. This will help the company’s books look as good as they possibly can.

How Does ALM Software Differ From ERP Systems?

ERP stands for Enterprise Resource Planning.

ERP systems collect and store data from across every department in a company, including:

  • Human Resources
  • Finance
  • Operations
  • Maintenance
  • Marketing and more.

An ERP is a vast and comprehensive system comprising a suite of ‘modules’ for managing data and automating many different types of back-end processes.

ERP software has been around for decades, but with the rise of mobile technology, this software has recently begun to offer another benefit to its consumers – mobile applications.

These applications allow executives and employees to access data from a wide variety of departments on the go.

ERP systems are sold to companies as a single solution to improve the flow of data across all the departments.

However, for some enterprises, an ERP on its own can fall short.

Because of its sheer scope and complexity. The fact that an ERP needs to be able to store and manage all different types of data, ERP systems are often costly.

For a smaller company, these costs can be prohibitive. The fact that a single ERP system is used across every department in an entire company can make roll-out of this software not only costly but also time-consuming – taking several months to roll-out in most cases.

For larger organizations, the benefits of using an ERP can far outweigh the costs as increased cross-departmental visibility and collaboration yields improved efficiency and productivity. An ERP system serves corporations as a single-source of information for enterprise-wide functions and processes.

An Integrated Approach

Many companies that have already invested in ERP systems will see the highest return on investment coming from an integrated approach. Some ALM software solutions have been designed to integrate seamlessly with the most commonly used ERP systems.

Data from all the departments is uploaded into the ERP system, and this system stores and organizes all of that data.

The ALM software then takes the data from the ERP system and uses it to manage the maintenance, repair, and efficiency of all of the assets in an organization.

For example, ALM software connected to an ERP system can take data about fleet vehicles, manufacturing machines, and IT equipment from all different departments of a large organization and calculate how to maximize efficiency from every single asset.

It can manage reports and logistics related to care, maintenance, and acquisition of these assets, and save the company time and money across the entire organization.

How many hours are wasted each year on communication errors, broken equipment, and waiting for repairs?

Most executives will agree that any inefficiency is too much.

Businesses that use ALM software in conjunction with an ERP system find that their company operates at a much more efficient level, leading to higher profits and greater employee – customer satisfaction.

However, standalone ALM software deployments provide a much-needed boost to productivity, efficiency and hence profitability relatively quickly.

Organizations that find themselves unable to justify the expense and time to roll out an entire ERP system are likely to discover that implementing ALM software across business operations makes an enormous difference and is more than worth the investment.

So How Serious Are You About Managing Your Physical Assets Smartly?

Everyone talks about selecting the right tool for the job at hand. For larger organizations in particular, there is no denying that getting the back-office in order is critical. That’s exactly what ERP systems are designed to do – automate back-end processes and improving the management of enterprise resources.

But, are ERP systems really suited to helping companies manage day-to-day asset operation and maintenance activities? Are ERP systems designed to specifically reduce the total cost burden of asset ownership that arises from inadequate maintenance?

Think about it this way – when you visit a doctor for an overall health check, you will likely be prescribed a balanced diet and regular exercise that will help you maintain a healthy body and lifestyle.

If the doctor suspects that you are suffering from something specific and severe such as a heart condition that requires further investigation, you will probably be referred to a cardiologist – a specialist.

Now, the cardiologist will need to address your specific ailment head on. An emergency procedure is unlikely to be avoided by simply changing your eating habits and taking a 30-minute brisk walk each day. The cardiologist will tell you,

“We need to operate on you, right away.”

For business leaders who actually get it, and recognize that 75% of the cost of owning assets merely comes from the way those assets are operated and maintained, and especially Facilities Management, Maintenance, Engineering, Technical, Asset Management execs who rely on field-based external teams of staff and an ecosystem of vendors, providers, and other third-party organizations, the prospect of implementing an ALM software solution is more than compelling.

These business leaders cannot afford to leave the ‘cancer’ of inefficient maintenance operations untreated.

Sure, ERP will be an integral part of the bigger operational efficiency picture. However, ALM software will help solve the specific, specialist area that is asset operations and maintenance which is a significant cost center on their books that can be optimized with ALM software.

For anyone mandated to boost a company’s profitability, ALM software truly helps treat a sometimes undetected and chronic corporate ailment and can offer relatively quick relief, with visible results that can be seen in terms of dollar value.

So, the two questions you need to ask yourself to identify whether your company is an ideal candidate to invest in ALM software or not are:

  • Do I know exactly how much money I am losing (or could save) if I can improve the way I operate and maintain my assets?
  • What’s the impact on my business by merely maintaining the status quo or just going the ERP way?

To help you answer both of the questions above, book a 60-minute consultation with one of SGE’s Industry Sector Specialists.

We specialize in supporting FM, Maintenance and CXOs get smarter when it comes to managing company assets and ensure maximum profitability.

Take advantage of a FREE, no-obligation customized Business case today, including a detailed Return-on-Investment (ROI) illustration showcasing five core business areas where ALM software will help you reduce costs and deliver triple-digit returns on your investment.

SGE Marketing Team
1 Comment
  • Posted at 10:54 am, April 9, 2019

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