The Mysteries Behind the CMMS – Part 2

After a brief and important interruption, let's get back to our CMMS series.

I start by asking the question: what are the differences between a CMMS and an EAM?

CMMS and EAM systems were very different. Today, with the advancement of Wi-Fi technology and IoT capabilities the differences between the two have diminished, but they still exist.

The CMMS can be a tool whose objective is to facilitate the management of asset maintenance, inventory and prolong the useful life of equipment. They are not meant to provide extended functionality beyond this scope.

Enterprise asset management (EAM) software, meanwhile, provides a broader range of capabilities to track, manage, and analyze asset performance and costs throughout the asset lifecycle, from inception (project), through acquisition, installation, commissioning, start-up, operation, maintenance, retrofiting, to disposal.

But Rodrigo, let's get to what matters: what is the cost-benefit of a CMMS?

One of the main reasons for hiring a CMMS is to reduce costs – and everyone likes that – especially on a long-term plan. To understand the gain of this process, it is necessary to know how many people would benefit from using the tool. In addition, listing KPIs that will be the basis for calculating this financial return is also essential.

Everything must be accounted for to evaluate the benefit of contracting the software. How much time for your team can be saved? How much of the company's revenue avoided being spent on unexpected maintenance? How did the inventory organization avoid emergency purchases of spare parts that could have been much more expensive? And above all, how much was the reduction in downtime achieved by good predictive planning and how much did this actually generate profits for the company?

Below are some research numbers on the impact of preventive maintenance and good inventory management on a company's economy:

- The latest ITIC survey data reveals that 98% of organizations say that a single hour of downtime costs more than US$100,000, with 81% of respondents indicating how 60 minutes of downtime costs the company more than US$300,000. 33% of companies report that an hour of downtime costs companies $1 million to $5 million. These numbers can be drastically reduced with a CMMS;

- 83% of organizations with managed inventory in a CMMS report significant improvements in parts availability. Best inventory management practices equate to adequate availability of parts to repair machines. Greater savings come from ordering bulk parts and fewer emergency parts orders;

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- According to the 2017 Plant Engineering Maintenance Study, the average time spent on scheduled maintenance is 19 hours per week. With good CMMS software it is possible to reduce this time by 50%.

So, when talking about the costs and benefits of implementing a CMMS, we can calculate the return on investment made in acquiring such a system. This is done using a simple formula: CMMS ROI = (CMMS Value – CMMS Cost), divided by CMMS Cost.

Let's look closer at the values of this formula:

- CMMS cost: It is the general amount paid for the acquisition and implementation of this tool. It includes purchase costs, services necessary for its installation, costs of possible hardware to be acquired for its operation, support value, monthly fees, among others.

- CMMS Value: It is the amount expected to be saved in asset management processes when acquiring the tool. First, a survey of all maintenance costs is carried out. Then, a forecast of the savings to be generated with it, considering points such as: extending the useful life of the asset, reducing downtime, saving inventory costs, increasing productivity, besides all others. benefits we have presented above.

Having estimated the value of the CMMS, simply apply it to the formula to get the return that an investment in asset management software can deliver. Companies with newly deployed or upgraded CMMSs can experience a return on investment - ROI of 25% to 400% in the first year.

Next week, we will talk about who the CMMS is for: whether or not your company applies. And you still don't know, check it out next Wednesday. Have a nice weekend.?

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