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CMMS Cost Justification: How Do You Justify the Purchase of a New CMMS System?

by John Reeves

Questions

  1. Are you purchasing a new system which is “best of breed?”
  2. Are you after a different system because the current product is declining?
  3. Are you trying to improve process, utilization, analytics and decision-making capabilities (at the same time as purchasing a new product)?

A best of breed product could cost more, but it would also provide more capabilities, e.g., screen/report tailoring or electronic workflow. And product tailoring could be a key feature because a computerized maintenance management system (CMMS) seldom provides an exact match to your needs. Either way, upper management will need more information before releasing budget dollars. Software vendors often focus on features, functions and navigation, but not process improvement. So it is up to you, the project manager, to have a comprehensive plan for utilization. Often, the best time to consider process improvement is in conjunction with implementation of a new CMMS system. But my question to you is, “What is the real reason for the change?”

Understandings

  1. You most likely have an existing CMMS, but you want to make a change.
  2. You are after newer technology, additional functionality and improved ease of use.
  3. You want to use a product that accommodates a larger base (users) and more add-on choices.

Other Probable Circumstances

  1. Senior management is complaining about value for money (of existing system).
  2. Management is concerned that standardized value-added processes are missing across the enterprise.
  3. Very few, if any, meaningful reports exist.
  4. The current data (master data and transactional) is poor and impacting report analytics.

If these circumstances are correct, maybe the software isn’t totally to blame. Maybe the CMMS’s “rules for use” were never fully described. And maybe the administration is weak and the vision unclear.

COMPARING SOFTWARE PRODUCTS

You can always get cost comparisons between products. You can also compare costs to implement and to operate (annual support). In addition, you can get comparisons on product functionality as shown in Figure 1.

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Figure 1

LET’S REVIEW THE REASON FOR THE CHANGE

You could have the best product already, but still not achieving the desired results.

“Insanity is doing the same thing over and over again and expecting different results.” - Albert Einstein

So why exactly do you need to make a change? It is understandable that you desire new technology. But does purchasing a new CMMS really fix poor processes and procedures? If your current processes are weak, then purchasing this software will not make the data more accurate. In fact, you could be entering bad data on the second day.

SO, WHAT IS THE REAL QUESTION?

Wouldn’t it be great if you could just install the software and all your problems would be solved? Unfortunately, that is not likely. It is up to you (and other stakeholders) to create a meaningful strategy and establish value-added processes. But have you identified industry best practices? Have you conducted any form of benchmarking to identify areas of opportunity? Have you surveyed the internal user groups to verify buy-in and process adherence? And are you regularly meeting with the core team and formally tracking change requests? Computerized maintenance management systems are as simple or complex as you want them to be. Processes with the largest potential return on investment are usually complex in nature.

SOMETIMES A FRESH START IS NEEDED

I agree that sometimes a fresh start is needed. You may have reached a tipping point where confidence in the system is lost. Installing a new CMMS product would force a change of routines. But the underlying problems might still exist. Examples of some of these problems are:

  • Wide spread user frustration.
  • Staff was never fully trained on the purpose of a CMMS.
  • Mistrust—a lot of data is entered, but not sure what management is doing with it.
  • Meaningful reports do not exist.

The goal of upper management is to make more informed decisions regarding asset management. The stakeholders and project team need a strategy for improvement that accommodates not only software, but continuous improvement and optimized costs.

Maybe the CMMS project and cost justification should be as much about the surrounding process as about implementing new software. Additional activities might include:

  1. Conduct workshops to review asset management/reliability management, and goals therein.
  2. In these workshops, discuss problems associated with the software and process. Verify that roles and responsibilities are clear. Ask who owns the data?
  3. Also ask, How can the CMMS be converted into a true knowledge base that enables better decisions? Outputs could be identified and the steps to get there. In some cases, the processes would need to be refined or reengineered.
  4. Visualize “what could be.” Ask the question, How can the organization become more efficient, improve reliability and generate more product?
  5. Set stretch goals. Create a roadmap to reach these goals.

The above workshop series should be part of any CMMS implementation.

TECHNIQUES TO GET THE MOST OUT OF YOUR CMMS

More often than not, the focus is on (1) loading data, (2) altering some screens and (3) conducting training. The budget typically comes from the IT department. They have a good understanding of software, e.g., integrations, version upgrades and change requests. But what’s typically missing is a department called “Process Improvement” or “Asset Reliability.” Figure 2 provides an illustration of what should define a CMMS.

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Figure 2

In the circle diagram in Figure 2, Software includes data, reports, integration, mobile devices and other hardware elements. Process includes vision/mission statement, goals/objectives, KPI hierarchy, business rules, CMMS usage guides and CMMS definitions. Organization refers to CMMS administration (core team, power users, business analyst, management advocate, punchlist tracking and system change documentation), CMMS navigational training (including better/best practice training) and key roles within the operations and maintenance (O&M) organization, e.g., maintenance manager, maintenance supervisor, reliability team, planner/scheduler. All three circles are needed to make a complete computerized maintenance management system.

The techniques and strategies are also common challenges for many companies as seen in Figure 2. Business rules are often forgotten or unclear. These rules (or lack thereof) can have a dramatic impact on meaningful data. Many organizations fail to periodically survey the user community, which helps identify problems, ascertain buy-in and validate process. Most importantly, advanced processes are seldom discussed in adequate detail; however, they provide the best return on investment opportunity. Thus, if the organization is serious about CMMS benefits, then it should realize that accurate data requires a comprehensive plan and a new way of thinking – not just new software.

WHAT IS THE COST BENEFIT FOR IMPROVING PROCESSES?

The real struggle is in understanding best practices for your industry, creating a vision for operational excellence and then building a roadmap to get there. If you were to create such a roadmap and successfully implement a system that includes software, process and organization, then the cost benefits as shown in Table 1 would be realized.

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Table 1

As you can see, the areas of opportunity are mostly related to the way the software is deployed & utilized from a process perspective versus a software installation & data load project. So who is taking into account the “cost of lost opportunity?” With the savings gained from your annual maintenance budget, you could now spend this money elsewhere. And with this cost savings, upper management may have to decide between purchasing new technology/equipment, expanding R&D, or building more products. But isn’t that a good problem to have?


part2John Reeves is a seasoned professional with over 25 years of diverse industry experience with expertise in work, asset and reliability management system design. He is an avid student of EAM system purpose, best practices therein and methods promoting continuous improvement. As a working level consultant, he provides value-added information on a daily basis, interacting with clients across multiple industries and international locations.


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