Understanding the Real Risk for Asset-Intensive Companies

IBM configuration management solutions White paper
Understanding the real risk
for asset-intensive companies.
March 2007Understanding the real risk for asset-intensive companies.Page 2
Executive summaryContents The goal of having one enterprise resource planning (ERP) solution for all business processes is still popular, yet the idea is no longer practical, particularly 2 Executive summary in asset-intensive industries. Changing requirements in the areas of compliance 3 Myth 1: ERP solutions are sufficient to and risk management are increasing the pressure on an enterprise's operations manage the infrastructures of asset- group to manage their assets to higher standards and to demand the best intensive companies available solution for people, process and technology. 4 Myth 2: An ERP solution will lower IT cost and risk Changes in technology such as service-oriented architecture (SOA) and Web 7 Myth 3: Integration of best-in-class services eliminate the need to compromise operational effectiveness. Platform-solutions and ERP is complex, risky oriented strategies of the large enterprise software vendors, and the adoption of and costly standards-based architectures, blur the boundaries between what is developed by 11 Myth 4: EAM modules from large ERP the large ERP vendors versus those with specific business-critical functions.vendors are functionally rich and equal to Maximo There are some common misconceptions about the value, capabilities and 13 Myth 5: The best-run businesses use deployment of ERP solutions in asset-intensive industries. In this white paper, ERP only these myths are discussed and demystified so that decision makers in these asset- 13 Summary intensive industries can better understand what the real risk is. 15 For more information 15 About Tivoli software from IBM Understanding the real risk for asset-intensive companies.Page 
Myth 1: ERP solutions are sufficient to manage the infrastructures of asset-intensive companiesIn asset-intensive industries, failure of a critical asset infrastructure can have a detrimental impact on an organization not only from a financial perspective, but also from a social and environmental viewpoint. For a multi-national company, an asset failure can be the kind of event that makes headline news. This type of risk or failure can often be measured in the hundreds of millions of dollars, a risk that organizations cannot take lightly. When large companies look for asset management solutions, it is imperative that they implement the best technologies available.
Company executives, sometimes supported by reports from renowned analyst firms, may claim that the modules for managing assets that are part of the financial systems are sufficient. But for organizations that manage critical asset infrastructures, there is too much risk associated with this compromise. It increases the operational risk for the organization and sends the wrong message to its employees when a company selects an insufficient solution. The financial performance of the company, the safety of the workforce and the preservation of the environment are at stake.
Facts.An asset-intensive company that experiences a severe safety or environmental incident can easily incur a problem measured in the hundreds of millions of dollars. ® ®.Part of the IBM Tivoli software portfolio, IBM Maximo Asset Management is considered the "gold standard" for asset management.
Understanding the real risk for asset-intensive companies.Page 
Myth 2: An ERP solution will lower IT costs and riskHighlights Asset-intensive companies that use an ERP solution for asset management typically end up with only 60 to 80 percent coverage of their functional requirements. What about the remaining 20 to 40 percent? What do people do when they have a need for application capabilities that the ERP solution doesn't support? They create their own solutions. Independent departments use productivity tools to create applications "on the fly" to deal with changes in regulatory requirements or changes in business process. These applications are sometimes called renegade applications.
ERP solutions force asset managers to create These applications are created to fill a functional gap in a larger system, such unsupported applications in order to fill as ERP, in order to enable the company to better complete its operational ® ®functional gaps. mission... [download for more]