Research Publication Date: 2 September 2005 ID Number: G00130205 Enterprise Asset Management Migration Requires Detailed Planning Kristian Steenstrup Neglecting to address key areas when migrating to packaged enterprise asset management applications can result in wasted effort, rework or project failure. Use Gartner's best practices to better plan and manage your migration project. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner's research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.
WHAT YOU NEED TO KNOW Migration costs and complexities can vary greatly, depending on the enterprise's specific needs and strategies, and depending on the packages and environments involved. Many enterprises migrate from legacy systems to packaged enterprise asset management applications by simply mapping field names. They waste money that was spent on the new software by failing to complete the job properly. Gartner has developed guidelines and identified some common pitfalls in migration projects. For best results, focus on the key functional equivalents in the systems, invest in the critical data content for EAM systems, be aware of the operational impact of datamapping decisions and plan interfaces for the business requirements that your users need, instead of what the IT department needs. ANALYSIS If you get the conversion and interfaces right when migrating from a legacy enterprise asset management (EAM) system to a packaged one, the new system will support a continuity of business. The information transition will be transparent, and you can focus on the challenging work of cultural change, retraining and adapting to new processes. The computer system is only one facet of the change involved when replacing an EAM system. If done well, EAM data conversion is ignored and forgotten about because changes to procedures are the focus. If done badly, the company or at least maintenance and repair departments will be hobbled or even paralyzed because they cannot access the converted information. The new EAM system will struggle for acceptance if the conversion leaves out valuable data or corrupts information in the process or if the interfaces are clumsy, are error-prone or create latency. Conversion projects usually allocate resources based on estimates of the number and complexity of tables and interfaces to be changed. But not every table and interface are of equal importance, and greater emphasis should be placed on high-risk or high-impact areas. EAM conversion projects present special challenges because: EAM-centric business data and processes may not be at the center of traditional enterprise resource planning (ERP) applications, and you have to understand the data model so you do not de-emphasize critical data or processes. EAM functionality is specialized and often part of one department. As modern software systems break down the silos of information, the data and processes of EAM must be communicated to the wider business environment. You cannot neglect the cultural change aspects of the job. Each EAM legacy system has its own rules and terms, so do not expect to do the conversion with a simple automated tool. The terminology and processes may be different from company to company and department to department, because there are no enforced or consistent international standards or regulatory practices, unlike in finance or HR. Where the Trouble Lies The following are aspects of an EAM migration that are especially susceptible to cost overruns and often determine whether a project succeeds: Publication Date: 2 September 2005/ID Number: G00130205 Page 2 of 6
Conversions of equipment details, component subassembly mapping, replacement parts lists, inventory, bills of materials, manufacturers' information (including specifications), suppliers' records, standard work orders, labor classifications and safety procedures Data cleansing and reconciliation Interfaces to and from HR for staff availability; staff training and certification records; time and attendance; finance for charts of accounts; budget checking and commitments; and materials inventory, purchasing, receipts and spending We will examine each aspect of these vulnerabilities individually. Conversions The principal overriding factor in most legacy-to-eam conversions is that the EAM system probably has more defined fields and places to put information than the legacy system had. Legacy systems often have free-text fields, in which potentially valuable data has been manually and inconsistently entered. To make matters worse, most EAM systems have to have many specific fields in use to enable the features that they are capable of: Equipment details When building the base system, pay particular attention to the source and validity of equipment lists. Problems will arise, because legacy systems have textual data to indicate equipment types and classes. The data has to be identified and separated so it can be loaded into the EAM system. This step is necessary to ensure that users get maximum value from the system, which has features that depend on differentiating equipment classes and types for the purposes of maintenance and performance planning. You may have to manually re-catalog the equipment if the information is only embedded in free-text fields. Component mapping Create a template of the standard equipment/component configuration, plus any common variations, for each type of equipment. This component map will identify where potential parts are installed. You will need a separate overlay, however, to identify the serial numbers of the actual parts and components installed. Parts lists For each equipment type or class, create a list of parts that may be used in a piece of equipment. This list is similar to an assembly master list (or a manufacturing bill of materials). If you do not create such a list, your searches for where the parts are used will be severely limited, and the assessments of parts impact will be limited. Such lists are useful for determining surplus inventory when retiring a piece of equipment. These parts lists also form the basis of the parts catalog, regardless of whether the parts are stocked in inventory. If your legacy system provides insufficient or inconsistent data, you may have to hire experienced professional contractors to do a full manual recataloging. Inventory Pay careful attention to the mapping of inventory records in a legacy system, including the valuation of inventory. Many problems can result from incorrectly catalogued parts or incorrect inventory counts, locations and values. Pay particular attention to the potential storage locations of parts, including fast-moving or commonly used parts that end up in toolboxes and on workbenches. You will miss substantial volumes of inventory if you do not include these parts. You must develop differentiated condition codes at the time of conversion to determine whether the inventory is used, repaired or new. The valuation of inventory is important. If valuations are done poorly, you can end up with unrealistic financial balance sheets that do not reflect the true "as bought" or current value of inventory. Historic inventory issues and returns should be Publication Date: 2 September 2005/ID Number: G00130205 Page 3 of 6
converted, because this information is used to calculate reorder quantities in inventoryreplenishment algorithms. Maintenance bills of materials Some legacy systems do not support maintenance bills of materials, but they are very important for maintenance planning. These bills are lists of parts for specific jobs, not a manufacturing bill of materials for the full assembly. If your legacy system does not have these standard lists, you can make them by going through your material transaction records for previously performed common jobs. This effort will be a big time saver in the new system, because you will be able to support standard parts kits more easily and without extra user effort. Manufacturers' information Convert and associate the manufacturers' codes and technical information associated with parts. This will be valuable when reviewing technical specifications and tendering or seeking alternative suppliers. Suppliers' records Convert and associate supplier records, including the trading terms and conditions, which suppliers are preferred for parts, and which parts may be from more than one manufacturer. Convert supplier performance information and trading terms by location if you can. Standard work orders A new system will save enterprises time and attract more users if you convert, and set up in advance, standard, commonly used work orders. These work orders will be associated with the standard maintenance bills of materials mentioned above. In many legacy systems, these will not be directly coded as part of the EAM software. It is worth the effort to map, or even manually convert, the standard work orders. This way, you will gain a library of standard jobs as soon as you start using the new system, rather than relying on users to build a library as they go. But you must also provide a clear and simple way to create new standard jobs and alter established ones after the system goes live. Data Cleansing Include an explicit assessment of data quality and what investment is needed to overcome problems. Survey users to ascertain the confidence in data. You must assess the structure, terminology, accuracy and consistency of the data for the EAM system's master and transactional tables. You can borrow some supporting technology and practices from other functional areas, but consider a manual recoding effort. For more information, see "MarketScope Update: Data Quality Technology, 2005" and "CRM Demands Data Cleansing." In some conversions, it is worthwhile to manually recode tables of data, especially for equipment and parts catalogs. Service vendors can he hired to assist with this recoding effort. Seek them out based on their specialization and experience in the area of maintenance, repair and operations of parts and equipment categorization. Take into account the extended time and cost of such a project. Interfaces Be careful not to overengineer or underengineer the interface for the expected requirement. Consider how often and at what volume you use the data, how often you update the data, and the complexity (and therefore validation) of data. Although many advanced technological interface techniques are available, such as Web services, enterprise application integration and real-time integration, they are often overkill. An overnight or even weekly batch process will be adequate for data that changes infrequently. The interface can always run on demand if you change the master system. For small-volume interfaces, even consider a manual process. It may not be Publication Date: 2 September 2005/ID Number: G00130205 Page 4 of 6
advanced, but it might save a lot of money if only a few simple records go infrequently from one system to another. In addition, consider the following key interfaces: Staff availability Although the EAM system will include some capability for HR records, including a roster and skill database, it is unlikely to be the master record. Such a master record would normally be held in an HR or ERP system. You will have to build an interface to keep the EAM system up-to-date transparently, preferably in real time. Charts of accounts Although these are usually not volatile records, they often are audited and cannot tolerate error. A low-frequency automated conversion is sufficient. Budget checking and commitments This area has varying requirements, depending on your budget control policies. Some organizations have to check budgets in real time, before work orders and other commitments are approved. This will require a real-time interface, via enterprise application integration tools or Web services, to access the budget system and perform the appropriate check. Other organizations will not have to check available funds, but they will want the value of commitments that are raised by the EAM system to be passed to the financial management system to update outstanding commitments. In this case, a batch interface on a daily basis will probably be adequate. Inventory, purchasing, receipts and expenditures This likely will be the most complex and contentious interface. You should debate your needs in your organization and plan carefully, because your decisions will have wide-ranging ramifications. Often, this interface will influence whether the organization sees the project as a success or failure. The cleanest place to interface the EAM system with the ERP system is after the purchase order has gone out, the materials have been received, and the invoice has been loaded, matched and approved. Then, an approved invoice for payment can be passed to the financial or disbursement system. This keeps the links associated with inventory reorder calculations, purchasing and receipting in one EAM system. If this is not possible because of prior needs to use the ERP system for at least some of the process, you will have to design a more complex interface. This can be done by exporting requisitions to a purchasing system, exporting approved purchase orders to a master ordering system, or exporting receipts and orders to a master ERP system. In each case, you will have to develop a more-complex and potentially more-expensive interface set, with audit trails, checks and balances, and a reconciliation/correction process. Time and attendance The entry of time on jobs is a high-visibility interface, because this is where most employees will touch the system. This function has to be welldesigned so it is easy to use, to the point of being error-proof. You need one point of entry and validation. If not, you can be sure employees will complain about the new system. Because of the potential to validate against work orders, account codes, personal records and job codes, many interfaces may be built around the validation process. Consider normal work practices. Ask whether an employee needs a screen showing multiple jobs that they have undertaken, as opposed to a supervisor or clerk, who may need a screen that shows every employee who worked on a specific job. Key Facts Failure to consider the functional equivalent and usage of data fields and tables in a legacy system (not just the names) will result in a converted system that has incorrect processes and limited user acceptance. Failure to convert the data available and parse it into the new system's fields and tables will render some features of the new system unavailable. Publication Date: 2 September 2005/ID Number: G00130205 Page 5 of 6
Failure to consider the most-appropriate interface technique (Web services, online, real time, offline, batch or even a manual process) will likely result in overengineering and higher costs for some areas, and underperforming bottlenecks in others. Key Issues What business metrics will business intelligence tools help reveal and monitor? REGIONAL HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford, CT 06902-7700 U.S.A. +1 203 964 0096 European Headquarters Tamesis The Glanty Egham Surrey, TW20 9AW UNITED KINGDOM +44 1784 431611 Asia/Pacific Headquarters Gartner Australasia Pty. Ltd. Level 9, 141 Walker Street North Sydney New South Wales 2060 AUSTRALIA +61 2 9459 4600 Japan Headquarters Gartner Japan Ltd. Aobadai Hills, 6F 7-7, Aobadai, 4-chome Meguro-ku, Tokyo 153-0042 JAPAN +81 3 3481 3670 Latin America Headquarters Gartner do Brazil Av. das Nações Unidas, 12551 9 andar World Trade Center 04578-903 São Paulo SP BRAZIL +55 11 3443 1509 Publication Date: 2 September 2005/ID Number: G00130205 Page 6 of 6