The essence of… Asset Performance Management

The definition of Asset Performance

Asset Performance is a measure of the asset’s capability to perform each required function. In short, it is what the business owner wants the asset to do in a safe and, of course, a reliable way. So, the word “performance” may take different shapes depending on what the particular requirements of the operator or asset owner are. The criteria of success are typically related to the dimensions of risk management and cost optimization, and, of course, to the ability to meet the desired production levels.

The definition of Asset Performance Management

Gartner[1], a technological research and consulting firm, introduced this term some 20 years ago as “the capabilities of data capture, integration, visualization and analytics tied together for the explicit purpose of improving the reliability and availability of physical assets”.

We define Asset Performance Management as the ecosystem of required work processes focused on taking care of our assets. They should be integrated together in order to deliver the relevant requirements for the business in terms of the asset performance.

Asset Performance Management comes from the need to integrate multiple work processes, which have been historically defined based on equipment classes and the different departments which are present in an asset owner/operator organization:

• Integrity and inspection departments managing fixed assets from strategy definition to inspection execution for risk management and compliance with local regulations.
• Reliability departments managing the strategy portion for rotating and electrical equipment, having the maintenance department as its execution arm.
• Instrumentation departments managing strategies and execution along with maintenance for instrument calibration and Safety Instrumented Systems proof-tests.

APM is strategy and asset centric. Maintenance and traditional operations are a way in which you can execute a part of those desired and defined mitigation actions based on the relevant strategy.

For example, a critical compression system contains assets from all classes: static, rotating, electrical, safety. All of them have to eventually become part of one strategy, so that each different team, from their own angle, can take the necessary actions to mitigate risks.

Imagine if it is not just one critical compression system but an installation that has hundreds of different asset types, of different criticality criteria, different functions, and all of them need to align with one reliability and strategy goal for the company. Managing all of this together – from risks over mitigation to selecting the relevant maintenance strategy standpoint – that is asset performance management.

The importance of Asset Performance Management

Managing industrial assets is an important part of strategy and day-to-day operations for corporations as they pursue asset availability in order to increase production throughput and increase revenue, improve reliability to reduce environment and safety risks, and prevent costly failures that drain the maintenance budget.

In a world which is becoming more aware of the effects of global warming and the importance of becoming carbon neutral, running asset intensive operations without experiencing functional failures is key to keeping carbon emissions in check.

The importance of ISO 55000 for asset strategies

ISO 55000 has put together all the relevant recommendations of the past in a structured way. The adoption of the standard enables an organization to achieve its objectives through the effective and efficient management of its assets. The application of an asset management system provides assurance that objectives can be achieved consistently and sustainably over time. However,  it all starts from one point: What is your company strategy? What is it that you want to do as an organization? Once you define that, you can start thinking about your asset strategy, your asset management plan, the execution, the technology, and the tools you need to accomplish your goals.

The building blocks of Asset Performance Management

If we break Asset Performance Management into the following steps, we get:

1. First of all, you need to understand which assets you have in the organization. Which categories, classes, and techniques are currently being engaged to manage them? The common framework to understand which assets you have is to understand how critical they are for a given operation. This means understanding what risks they potentially can possess, ranging from environment, health, and safety to impact operations and budgets.
2. Based on this framework you can identify which assets are highly critical and understand which risks are not tolerated by the organization’s business goals. That is what helps you identify which assets are your bad actors or troublemakers.
3. Then you need to define what the relative risk mitigation strategy should be. To answer this question, you employ different methodologies:
   1. Risk based inspections for static assets
   2. Failure modes and effects  analysis for components
   3. Reliability-centered maintenance for more complex systems

All these methodologies effectively depend on the asset function. You can ask yourself: How can the asset still perform its function? In what way is this going to be important for us? What are the consequences of each functional failure? This will naturally bring you to thinking about the necessary risk mitigation tasks, actions, or recommendations.

There is also a distinctive type of predominantly critical asset that has a safety function. For example, safety-instrumentation systems for instrumentational loops are designed to shut down the operation when things go wrong and guarantee that it can be done in a safe way. That is also a different methodology that looks at a different type of these particular assets.

• The next phase is the execution. Here, you might want to consider strategies and actions that will mitigate the risks, including routine preventive maintenance. Examples are: Visual inspections, which are operation driven, non-destructive testing of static assets, proof testing for safety systems, calibrating your sensors, monitoring your assets condition with the help of Predictive Analytics, or Health Management, or by field data collection by operators.
• Then you need to identify which corrective actions you need to take. Or maybe you want to deploy more enhanced tools like predictive diagnostics that reassess the assets behavioral patterns, raise the alerts based on those particular deviations, and create recommendations. Maybe you even make the decision to do no scheduled maintenance at all for the assets that are low risk and do not have high-cost failures. Maybe the strategy would be to do no investment of any maintenance in those assets. All that is in your execution plan.
• Once you execute this strategy based on all different methodologies that you have utilized and put together, you will have valuable insights to see how you have done so far and what else needs to be improved. You will get answers to: Did I mitigate the risks that I thought of before? Did I really address my “bad actors”? If I did, let us repeat and reuse this success for other assets. If I did not, what did I miss? Elements like Root Cause Analysis, statistical analysis, and reliability distributions can help you answer the question: What else did we miss?

Defining a strategy should be an evergreen process as part of the continuous improvement cycle. In short, the workflow can be divided into several pillars. At GE Digital, these APM solutions are called: Health, Strategy, Integrity, Reliability and Safety.

Why are companies starting their journeys just now?

In reliability and asset performance management, there are a lot of different methodologies and tools to use: condition monitoring, condition-based approaches, failure modes analysis, reliability-centered maintenance, or safety instrumented systems, and risk-based inspections.

All of these methodologies and tools have existed for decades. In the last few years, they have become more and more available and affordable, so now companies are starting to deploy them.

But what is even more important is that companies are starting to look at the bigger picture, and not only at the technical execution where they install a sensor, and react to what the sensor says. Companies are starting to ask the real questions: “Where do I want my organization to be in the coming years, mid-term, and long term.  What do I need to change in the way I look at my assets in order to meet my strategic goals in a sustainable way?” This kind of thinking and mentality is what drives effective organizations to embark on the asset performance journey.

Who would be the main driver for starting this journey? What kind of people do you need there?

Reliability is everyone’s job. It is everyone’s responsibility and it all starts from top management. The owners, vice presidents, and senior leaders of the organization should be responsible for setting the goals. They determine what the organization wants to achieve and define the risk criteria. How do you know if an asset that shuts down for two hours is very bad or if it can be ignored? That depends on the impact and whether the company is ready to accept that loss. And that is what the top management defines. They also determine what investments you really need to make and how you assess the return on investment for these journeys and projects.

Next in line are the reliability management teams. They are the ones who do the analysis, follow up on the recommendations, and then design the relevant risk mitigation strategies. Then we have the maintenance team who executes the job, the inspection team, and the procurement team who procures and stores the components. This is not based on whatever is cheaper, but rather on the reliability track record of a given component type and support the non-interrupted process of the operation.

In conclusion, you really need everyone. Be careful not to select just one team or one department that is guiding the asset performance management, because if that happens, everyone is just going to sit back and wait for someone else to show results. It is a common responsibility and goal that needs to be supported by the CEO and management. Reliability is a process, not a department!

What are the different levels of maturity in APM?

In GE Digital’s experience in designing APM solutions and developing APM roadmaps, we have been using the following four categories of maturity as a starting point for their APM journey:

• Reactive Inefficiency is typically when a company is responding to immediate conditions and does not really have a vision so they are not measuring their results in a consistent manner.
• Managed Control is when the vision exists and is communicated, performance measures are established, and consistent and process KPIs drive decisions.
• Strategic Improvement describes an organization whose performance measures are regularly reviewed and improved, the vision is compelling and drives people to action, and decisions are strongly influenced by business objectives.
• Reliability Driven is simply put, world class. This is where performance results are world class benchmarks, vision is copied by competitors, and APM decisions are driven by Value Gain and maximum sustainable Return on Assets.

Think about your cost and expenditure in the long term, which will be associated with the strategy and then of course, once you identify the relevant way, your tool should be able to implement the recommended risk mitigation strategies directly to all the relevant parties for that execution.

In another example, for Mechanical Integrity, advanced APM tools are capable of utilizing CMMS data in conjunction with a Risk Matrix to support API-compliant Risk Based Inspection (RBI) studies and prioritize the inspections, followed by full inspection management, scheduling, mobile execution, and reporting capabilities in order to conduct thickness calculations, remaining useful life calculations, and managing Integrity Operating Windows. These activities are typically deployed in seamless integration with CMMS.

The most important requirement for an effective APM tool is to make sure that the tool is an ecosystem that can scale to the size of the organization and seamlessly integrate with third party solutions.

Does digital transformation drive asset performance? Or is it the other way around?

There are organizations who want to use a particular piece of technology just to comply with the digital transformation drive. That is not a sign of high maturity, because these initiatives do not contribute to the company’s goal. They are just aiming to check boxes on their checklist.

Effective organizations do it the other way around. They recognize the value of managing your assets and following the asset performance journey. And they initiate the necessary processes with technology. Initiating digital transformation may result in several suggestions towards more software scalability, capability to integrate into an ecosystem environment, move to SaaS model of licensing etc. This rather triggers the industry to consider whether they have chosen the right vendor or should then consider a vendor that supports digital transformation and IR4.0 initiatives.

The Internet of Things makes data more available: sensor data, composed data, machine learning, artificial intelligence… How does data change the process and the APM cycle?

Our assets are talking, and we need to listen to them. The amount of sensor data, industrial benchmarks, and other content that you have available give you a rich world of data. Sensors on the assets are capable of giving you a signal every split second.

But the real question is: what do you want to do with all that data? In order to answer this question, we need a view of how the data can be valuable for us. We need to see the methodology, levels, and tools of how we can actually process this data with the relevant decision making, mathematical algorithms, and policies that can make sense out of all the data. If humans would study this data full-time for a year, we would not be able to process even a quarter of it. So having a solution that is able to plug into these data sources, centralize the data, and then make sense out of it, that is how the digital transformation angles to asset performance management.

Making sense out of data is in fact visualizing the risks, the business impact of these risks, and then allowing you to mitigate these risks and take necessary actions. Visualizing the risks and the current asset condition is the first goal. But the industry needs to think a few steps further: not only to see what risks the assets are currently exposed to but also to have that in conjunction with the historical data to understand if the behavior of the asset is normal. Has something changed? And what do we need to change in the future? Not only to react to the deviation right now but to prevent the deviation from coming up again in one or more years from now. Data can give you that strategic edge. The tools that can process this data, is the output we would expect from these solutions.

What kind of resources are necessary in order to have a good functioning asset performance management in your organization?

Asset Performance is a journey. And a journey does not depend on technology alone. It also depends on people and the available processes.

From a process standpoint, APM provides a way to understand if your organization, and the way you work, is designed for long term reliability and asset management. If it is not, you may want to make some changes, come up with the relevant departments, build the relevant teams, and empower them in their decision making.

Then come the people. The investment might include a level of required training, empowering employees with the right skills and relevant methodology knowledge, and of course software training. If they need to use the tools, they need to know what they are. 

Lastly, you need to determine the investment and the actual tools, whatever they might be. An APM software solution, investment in an online system, whether this will be a cloud tool, a software service or your own architecture, the hardware you need to replace, and the servers and other hardware from the clusters down to the actual sensors that you want to install in the assets — everything that needs to be considered as part of the journey for asset management performance.

Today we are living in challenging times. There are disruptions in supply chains, a shortage of technical talent, the pressure of climate change and sustainability goals… How can asset performance management help in order to cope with these challenges?

Asset performance management can help to minimize the impact of a skills gap and all the relevant shortage of expertise. Technology can capture all the decisions that were made over the years, and is able to make templates, replicate them, benchmark, and compare.

Logistical challenges need to be considered as part of the risk factors that will influence the risk. For example, when you are doing the RCM study, one of the angles you would always consider is that not having the relevant spare parts in place is a risk on its own.

For critical parts the answer is yes, based on being able to calculate not just supply and demand but also the probability of this part being needed in one or multiple applications. Or during a shutdown, you question the impact on cost and safety to have a bigger quantity available of one or two currently unavailable assets. Both examples are subject to calculations based on the historical data, goals, tolerable and intolerable risks. This way, you effectively understand and decide what you need to do. That is also part of the asset performance management cycle.

In terms of the environment and decarbonization journeys, we see a very direct relationship between asset failure and carbon footprints. There is a bigger carbon footprint when the asset is down and inoperable, while it is still consuming energy, and then it has to be started up again and brought back into the operation. Take an oil refinery for example. Here, it is even a little worse, because the flow of hydrocarbons would need to be vented or flared while the installation is down.

There is a simple lesson to be learned: the less down time and interruptions we have, the smaller the carbon footprint will be. If organizations really want to follow the decarbonization journey they need to consider how to manage down time and production interruptions.

What would you recommend to organizations that want to start with asset performance?

Every organization should start by knowing what they need to do and why they want to do it. Then you need to know the steps you need to take. Many organizations that are starting on the APM journey, start because “everyone else is doing it.” This attitude does not lead to the right results.

For example, you set the goal that you want to improve your availability by two percent by the end of 2023. That will translate into five to seven million dollars of additional revenue for the company. That is a target that you can benchmark, you can track your progress and constantly reflect on it even after 2023. Do you still want to maintain that? Is the change sustainable? Whatever change you make, you want to make sure it is a sustainable one.

Once the target is set, you need to determine the steps you need to take. Know that there are many different ways to achieve that target: training, methodology, sensors, RCM. But how do you decide? Assess the areas requiring improvement by doing a gap analysis, followed by a change readiness assessment. This way, you determine the maturity in each process, function by function. You understand what the gap and deviation is, what potentially could be improved, and how ready the team is to actually make a change. That will result in prioritizing and sequencing the activities in a multiple months/years journey. You are essentially building the asset performance management role model.

The key role of Asset Performance Management in sustainability

By making assets more reliable, you minimize and optimize the carbon output. We know we cannot go straight to wind, solar, and other renewable energy sources immediately. That is where APM will play a key role: helping industrial companies get to a lower carbon emission, especially during this hybrid time where we continue to use a lot of the expensive assets that have already been put in place. We are not going to strand all these very expensive assets, we are going to continue to use them for a period of time.

There are many known use cases about optimizing operational emissions, monetizing carbon reduction, and optimizing inventory effort. All of these require data collection, auditing of that data and operationalizing that data in individual plants, across plants and ultimately in enterprises.

It is not just about the adaptation of new, lower emitting equipment. It is a much larger information and optimization game. So APM, at its core really, is an expert industrial management system. It encapsulates many years of subject matter expertise in power generation, oil and gas, mining, aviation, and other asset-intensive industries.

For example, templates and blueprints are especially important in a world where we see a lot of subject matter experts exit companies and take that experience with them. At GE, there are millions of people-years in experience. They have taken that experience and put it in digital twin systems. There are also algorithms, visualizations, and optimization for reliability. That has a very positive effect on decarbonization based upon these million person hours of experience.

When you make industrial assets more reliable, you optimize them. For example, the air fuel mixture of an engine. By measuring exactly and precisely the amount that is needed at a point in time relative to conditions, you are able to extract not just more energy out of them but also optimize and minimize carbon emissions. We already do that in cars today. And it is not just a metering of the prime mover, the engine itself, but it is also the balance of plant, all the other assets that are really contributing to that prime mover putting out electricity, extracting energy.

From a mining perspective: extracting resources out of the ground or somewhere else. It is in that way that APM has the foundational information in computational elements that can be leveraged to optimize emissions and lower the overall carbon footprint today. Not tomorrow, but today, during this hybrid time.

It is not just technology, it is also people and processes. By bringing together these three elements, you can not only achieve a very good APM system, but you can also reduce carbon emissions. Ultimately, an APM and decarbonization expert system leads to an implementation of an autonomous plant which will be able to sense conditions and change to optimize energy resource needs while absolutely minimizing, if not eliminating carbon emissions.

By optimizing a plant, you can optimize not just reliability but also your carbon footprint and emissions today. It is all about hitting this golden badge again and again.

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With thanks to

Yerem Davtyan, Senior Manager Digital Solution Architecture EMEA/APAC, GE Digital
Warren Ross, Senior Director Product Management, APM Product Center, GE Digital

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[1] https://www.gartner.com/en/information-technology/glossary/asset-performance-management-apm