August 2015, IDC #257973

WHITE PAPER

Next-Generation Asset Performance Management for Asset Management and Production Operations Optimization

Sponsored by: Meridium

Christine Dover

August 2015

IDC OPINION

With the expansion of intelligent, connected assets for mission-critical operations, we are witnessing

the convergence of information technology (IT) and operational technology (OT). The ability to control

operational devices over the Internet brings with it an imperative to apply the "3rd Platform" capabilities

of Big Data and analytics, cloud, mobile, and social to asset performance management (APM) and

operations optimization systems. IDC research shows that product innovation and asset and

operations optimization are leading the way as drivers for 3rd Platform initiatives. Examples range

from measuring asset performance to analyzing the financial and environmental risk of optimized

maintenance schedules. To take advantage of these opportunities, organizations need a 3rd Platform

software solution for asset performance management. Such a solution must provide:

Asset centricity for connected networks of assets, processes, and people: Asset-centric networks offer the ability to collect network-based information from the viewpoint of any node, application,

or asset on the network that can be used by processes and people to make decisions.

Intelligent asset strategies and benefits: The application must be specialized to enable the building and running of asset performance management applications that analyze data both

vertically and horizontally, including from intelligently controlled networked production assets.

Industry-specific solutions for asset-intensive enterprises: The solution must consider the unique industry requirements for asset-centric companies in oil and gas, chemicals, power and

utilities, metals and mining, and transportation.

Advanced predictive analytics for executives, managers, and practitioners: The system must provide predictive and comparative analytics to support the business decisions of diverse

organizational roles.

Intuitive user experience: Executives, managers, and practitioners need an intuitive, engaging, and mobile-first user experience for near-real-time intelligence on asset risk, strategy, and performance.

Secure deployment on-premises, in the cloud, or hybrid: Asset performance management solutions must be capable of development and configuration in a manner accessible to

developers familiar with standard programming interfaces for deployment in a secure

environment: on-premises, in the cloud, or hybrid.

Meridium's next-generation Enterprise Asset Performance Management (APM) solution is a software

platform for increasing productivity, mitigating risk, and optimizing the cost of managing an asset-

intensive business at the intersection of people, strategic assets, and the 3rd Platform. Meridium

Enterprise APM is designed to optimize asset management and production operations through an

intelligent asset strategy.

2015 IDC #257973 2

IN THIS WHITE PAPER

An asset performance management platform is a specialization of what IDC calls the 3rd Platform built

for the new generation of enterprise and facility IT and OT systems that incorporate Big Data and

analytics, cloud deployment, mobile-centric user interfaces, and social business strategies that

connect assets to processes and people. The focus will be applications for asset performance

management and operations optimization such as addressing regulatory pressures, mitigating risk,

and protecting brand and reputation across the range of asset-intensive industries. Meridium is

delivering the Enterprise APM solution to address these needs.

SITUATION OVERVIEW

Figure 1 illustrates the forces coming together to launch a new generation of innovative, intelligent

applications: leveraging Big Data and analytics, securely deployable, mobile centric, and processing

signals from billions of things (connected over the Internet) to enable high-value decisions.

IDC believes that 7580% of these intelligent industry solutions will be data intensive. Sensor data from

connected assets is enabling real-time monitoring and problem detection for improved operations and

asset performance. This goes beyond what traditional systems such as customer service,

procurement, general ledger, and enterprise asset management (EAM) can deliver. Instead, new

methods of integration and intelligence are required to assess the risk of asset failure, diagnose

underperforming assets, and evaluate the performance of assets to alleviate and mitigate risks with an

intelligent asset strategy to optimize asset availability at the lowest risk and most optimized cost. The

ability to build and deploy these applications requires a specialization of the 3rd Platform for

operational technology built to meet the demanding data, processing, and user interface requirements

in the context of what is being called "asset-centric networks."

2015 IDC #257973 3

FIGURE 1

3rd Platform: Enabling Intelligent Industry Solutions

Source: IDC, 2015

Business Context: Asset-Centric Networks

Asset-centric networks offer the ability to collect network-based information from the viewpoint of any

node, application, or asset on the network that can be used to make decisions. First, senior

management is looking for ways to optimize costs and resources, run "lean," maintain production

output, protect earnings, address regulatory pressures, mitigate and reduce risk, protect the

company's brand and reputation, and manage budgets. A fully integrated enterprise asset

performance management (EAPM) solution can now deliver and provide the structure to consolidate

all asset-related data and to transform data into information that becomes knowledge and wisdom

through an intelligent asset strategy to provide timely and accurate client asset management

decisions. In addition, asset-centric networks provide opportunities to increase process safety and

regulatory compliance, as well as improve environmental risk management, while addressing the

reality of the changing workforce.

For example, in the past few years, many managers in asset-intensive industries have chosen to

spend resources on their supply chain or customer service processes, enabling them to provide faster

customer response times. However, is this the most efficient use of company resources? In interviews

2015 IDC #257973 4

with users in asset-intensive companies, it appears that opportunities for process improvement in

supply chain and customer service may have been exhausted in the past few years and that improving

production, managing risk, and optimizing cost through 3rd Platform asset performance management

applications offer far greater returns to the business.

An intelligent asset strategy can identify and quantify unmitigated risk by asset and provide executives,

managers, and practitioners with strategic and tactical alternatives to mitigate risk through asset

management actions and the corresponding costs for company decisions. For example, companies

may choose to perform proactive maintenance or defer maintenance based on quantified probabilities

of in-service failures and the associated outcomes in terms of resulting cost and lost productivity and

income. Consider the following four risk categories:

Safety: Can operations procedures and maintenance processes be optimized to improve worker and facility safety while keeping the facility running?

Environment: What is the environmental and community risk in the case of a system failure or shutdown?

Operations: Will an asset fail? When will it fail? What are the impacts from performing work to proactively or reactively responding? How does asset failure impact client commitments?

Financial: What are the economic impacts of proactive versus deferred maintenance? What are the activities that can be scheduled during off-hours?

The opportunity for increasing return on assets through productivity improvements, risk mitigation, and

optimized cost is considerable as companies that implement asset performance management

solutions frequently report cost savings such as reducing lost production time, mitigating or eliminating

asset failures, and saving on repairs resulting from a single outage versus multiple outages.

Companies are also able to identify assets responsible for problems, determine and implement

corrective actions, and eliminate many future issues. The real potential is for revenue and profit

improvement through increased asset availability and the cost savings associated with coordinated

proactive and planned operations and maintenance tasks.

Example: Enterprise Asset Performance Management Savings

A gas company operates a multibillion-dollar facility that converts coal into natural gas and chemicals.

Like many other organizations, the company needed to consolidate databases, spreadsheets, and

equipment files in order to understand its asset reliability and present actionable information for

management to make decisions. The company also needed to integrate EAM work order history and

track production losses against specific assets. After the company integrated EAM work order history,

it became evident that fixed equipment was where the company needed to concentrate risk-based

inspection efforts. By managing tasks within an APM system, the company was able to keep its EAM

system current and accurate concerning scheduled inspections. Management of change and

production losses tied to specific assets, work history, corrosion analysis, asset criticality, and

equipment saving were tracked in the APM system.

The company compared risk results to ensure that calculations were consistent with expectations.

Data integrity was a key issue as operators are required to identify the method of failure detection, why

the work order was written and its significance, and what caused the failure or its likely causes as well

as provide their recommendations and closing comments. Implementing risk-based inspections

optimized turnaround scope and interval extension and saved personnel-hours in managing and

analyzing large amounts of data regarding inspections, scheduling, and overall planning.

2015 IDC #257973 5

Analytics for Connected Decisions Across Executive, Management, and Practitioner Roles

Enterprise APM systems provide a platform for sharing integrated information across three roles to

maximize return on assets. Senior executives must look broadly at long-term return on investment (ROI),

business sustainability, and intelligent asset strategy, particularly decisions that can impact corporate

and brand reputation and may avert negative publicity. Senior executives also need to consider

operational excellence and continuous improvement across the entire organization. Managers often take

a short- to medium-term approach to optimize the costs of assets and operations across a facility. This

includes asset availability, prioritization of capital-intensive projects and operating budgets, establishment

of risk mitigation policies, and managing regulatory compliance and safety programs. Practitioners on the

frontline are primarily concerned with immediate equipment needs that may result in an unplanned loss

of production. They are concerned with optimizing maintenance costs and the reliability of their assets,

the need to maximize employee and community safety, and the need to elevate employee knowledge.

Let's consider how performance-driven decisions and the people responsible for them play out in a

chemical scenario:

Strategy (senior executives): An incident in a chemical plant located near an urban environment can result in a public relations nightmare for a chemical company. In today's

online society, citizens are quick to make their dissatisfaction known publicly through social

media. Senior executives are responsible for safeguarding the company reputation while also

ensuring accountability and responsibility for people, the environment, and the financial results

that provide for long-term business sustainability.

Performance (facility management): An incident in a chemical plant can impact worker safety, damage equipment, cause environmental hazards, and be expensive to resolve. Taking a plant

out of operation to repair the damage can mean incurring increased customer service costs to

respond to customer and community complaints, lost revenue as production is interrupted, and

out-of-pocket costs to compensate for repair crews' travel and labor. An APM solution improves

planning by balancing plant equipment risk profiles, delivery goals, and resource investments by

focusing capital expenses (CAPEX) and operating expenses (OPEX), along with maintenance

and inventory costs, on the most critical and high-risk assets.

Risk (frontline practitioners): For chemical plants, frontline practitioners are focused on the immediate equipment and avoiding unplanned outages. Reliable performance is a highly

visible metric inside the company, to its competitors, and to the general public who live in the

community. Frontline practitioners need to anticipate, find, and fix problems by providing

operational visibility and analysis that proactively reduce equipment failures, control costs, and

increase availability and reliability. They must also use a comprehensive method to ensure

compliance with government, industry, and company regulations and increase safety by

examining mechanical integrity and eliminating opportunities for failure on aging, sometimes

outdated, assets.

The APM solution needs to support each role (executive, management, and practitioner) by bringing

together data from disparate systems into the APM solution for evaluation and analysis (see Figure 2):

Enterprise resource planning (ERP) systems and manufacturing execution systems (MESs): ERP systems manage the business of the organization, including financials and general ledger, human

resources, and procurement of materials and supplies. MES applications manage resource and

production schedules, track and trace materials, and manage shutdown turnarounds.

2015 IDC #257973 6

Enterprise asset management and computerized maintenance management (CMM) systems: EAM and CMM systems track information about the assets and any work performed on them

(e.g., work orders for inspections and asset repair cost and information; asset data such as

purchase date, warranty information, and expected lifetime; and safety information such as

permits and documentation).

Asset performance management: APM systems work with the ERP, EAM, and CMM systems and above the condition monitoring (CM), control/process historian, and engineering and

design systems. APM systems integrate all superior and subordinate systems to consolidate

all data to create information and turn that information into enterprise knowledge for asset

financial and risk optimization through an intelligent asset strategy (IAS). This functionality is

not provided by the ERP, EAM, and CMM systems.

Condition monitoring: These systems provide asset diagnostics, online monitoring, and anomaly detection.

Control system/process historian: This system, in addition to controlling operations, provides a history of activities, including process control, alarms, and events, as well as operating envelope

definition, and online monitoring.

Engineering and design: These systems provide engineering data, 3D modeling, tag masters, regulatory documents and drawings, and change management history.

In addition, unstructured data may be found in email, social workstreams, and productivity tools such

as presentations, spreadsheets, and reports.

FIGURE 2

APM in the Asset Management Landscape

Source: Meridium, 2015

Enterprise Asset Management (EAM/ERP)

SAP IBM Oracle

Asset Performance Management (APM)

Meridium Point Solutions

Condition Monitoring & Process Historians

SKF Rockwell GE Emerson OSI

Control Systems

Honeywell Emerson Rockwell GE Siemens

Engineering & Design

Intergraph Aveva

Government regulation & Classification Societies

EPA DOT OSHA EU ABS DNV GL BVRegulation View

Strategy View

Picture View

Control View

Transaction View

Trend View

2015 IDC #257973 7

An APM solution must bring together all of these capabilities in support of the executive, manager, and

practitioner roles and connect decisions from risk and strategy to performance. Historically, it has been

a challenge to develop an APM solution that could simply, easily, and quickly access all of these

separate data inputs from disparate systems to provide insight into risk, performance, and strategy.

IDC believes that the future is platform convergence bringing together all of these asset performance

management capabilities into a unified platform. Figure 3 illustrates this anticipated convergence in support

of asset performance management applications (whether about money, processes, people, or things).

FIGURE 3

Intelligent Asset Strategy

Source: Meridium, 2015

Technology Context: 3rd Platform for Asset and Operations Optimization

The 3rd Platform enables new applications for growth and innovation built on the technology pillars of

Big Data and analytics, cloud services, mobile computing, and social networking/connected assets.

Adoption is being driven by business requirements for analytics to anticipate issues and prioritize

decisions for resolution, mobile access by a distributed workforce, and enhanced collaboration for

innovative social business processes made available for cloud-agnostic deployment to mitigate

implementation complexity and risk.

APM solutions require a specialization of the 3rd Platform, taking account of unique asset intelligence,

industry-specific requirements, analytics, user experience, and secure deployment requirements and

real-time (or near-real-time) decision making using deterministic asset-to-asset networking.

{ Intelligent Asset Strategy }

Assets &Sensors

People & Process

Systems

Engineering

HSEQ

ERP

Maintenance

Operations

Unnecessary

RecommendationsDeploy Intelligent

Strategies

Continuous Loop

of Improvement

Define &

Evaluate

Asset Strategy

2015 IDC #257973 8

Asset Intelligence Requirements

The solution must be specialized to enable the building and running of APM applications that analyze

data from intelligently controlled networked production assets. Traditionally, intelligent assets were

implemented via embedded proprietary software requiring specialized developer skills and often

incorporating point solutions that were neither integrated nor comprehensive. Modern APM solutions

should be built using standard application programming interfaces that apply across assets and

applications, masking the unique characteristics of each of the diverse assets or applications that

participate in the execution of the operations process.

Industry-Specific Requirements

Consider the unique industry requirements for asset-centric companies. While there are diverse

requirements specific to each industry, including regulatory and compliance mandates, there is also

much that can be learned from and shared across industries as well as benefit from the 3rd Platform

capabilities of Big Data and analytics, cloud and anywhere access to data, mobile access from any

device, and social connectivity between assets, people, and processes. Specifically:

Oil and gas: Intensified global competition, environmental incidents, geopolitical concerns, and an evolving landscape of demand for fuel combine to make meticulously managing bottom-line

costs critical to business success and/or survival. An aging infrastructure coupled with an

inexperienced/aging workforce adds increased risk to bottom-line performance. Big Data and

analytics can provide intelligence on people, process, and planet safety while managing risk to

production and environment. Workers at remote oil fields, along pipelines, and at refineries

can access asset performance data from their mobile device. Sensors on assets provide data

about operational disruptions and outages.

Chemicals: The chemical industry is continually challenged to improve operational excellence and optimize process safety while ensuring high ROI and compliance with ever-changing

regulations. Big Data and analytics can provide operational visibility and analysis to

proactively reduce asset failures and increase production availability. Workers on the plant

floor need access to real-time asset performance intelligence from their mobile device.

Social business processes can share group knowledge across a workforce with a wide range

of experience.

Power and utilities: Power and utilities companies must continuously provide electricity, natural gas, and water as demanded by their residential, commercial, industrial, and

government customers. Assets that produce, treat, and transmit power must be reliable,

available, and operate safely at the least risk and cost. Big Data and analytics can enable the

reduction of asset malfunction and unplanned downtime with better data on aging

infrastructures and information for capital replacement planning. Field workers need access to

electricity, gas, and water systems availability and asset intelligence from their mobile device.

Metals and mining: Mine management is challenging and often relies heavily on reliability engineers and technicians to communicate the health of assets. Big Data and analytics can

collect massive amounts of data across property assets including the mine, smelter, and

refinery to create real-time dashboards with drill-down capabilities into specific assets and

offer insight for asset investment planning. Executives, managers, and practitioners need

access to this asset intelligence from wherever they are on the mine property from their mobile

device. Sensors on assets provide constant updates on performance and asset health.

2015 IDC #257973 9

Transportation: Fleet organizations must continuously provide reliable and punctual service as demanded by customers. Many of the fleet organization's assets and people are in motion

from one location to the next. Big Data and analytics can be leveraged to avoid incidents and

improve maintenance strategies that would otherwise jeopardize safety and on-time

performance. Mobile workers need access to asset intelligence from anywhere and any

device. Sensors on vehicles can provide constant updates on performance and schedules.

An APM solution must provide an industry-specific approach to optimize assets, ensure compliance,

and integrate with traditional data sources such as enterprise asset management applications and

subordinate control, condition monitoring, and historian systems.

Analytics Requirements

Consider the requirements to support analytics for executive, management, and practitioner roles and

the decisions for which they are responsible. To meet the business requirements of diverse

organizational roles, the application must support a range of analytical techniques (refer back to Figure 3)

from risk and strategy to performance as part of a reliability strategy:

Risk: Executives need information about the potential risk primarily financial and reputational to the organization if the company makes decisions to defer maintenance. Executives need

a multidimensional view of the results to make trade-offs on future investments in assets.

Strategy: Managers look across a group of assets to do predictive forecasting and make recommendations based upon risk-based methodologies such as reliability-centered

maintenance and failure modes and effects.

Performance: Practitioners make decisions based on the condition of assets. They are often looking for signals (e.g., asset failures, missed schedules, sudden spikes in demand) that may

impact an operational or maintenance process or forecast a future change.

An APM solution must provide a range of analytical techniques from reporting what happened to

monitoring what is happening now and anticipating what is likely to happen based on the asset data

collected, as well as comparative analysis across assets, across an enterprise, against industry

averages, across time periods, and more.

User Experience Requirements

Consider initiating a program to transform people within your organization (and external stakeholders)

so that they change from gut-based to fact-based decision making. A key requirement is a human

interface that provides an intuitive user experience that engages people, providing visibility to

operations, management, and executives, and helps focus attention on the most impactful factors:

Any device: Consistent, synchronized information should be available and accessible from any device, including all flavors of mobile and with access to any asset relevant for the operations

process and to all asset data, including drawings, manuals, and history. Wearable computers

using technologies such as smart glasses and watches can help support this goal in the

real-time environment.

Relevant in context: We are in a state of information overload. User interfaces such as health indicators, which are early indicators of asset failure, help users focus on the information that is

most relevant to their role and the decisions they are responsible to make. Executives and

managers need dashboards that enable them to listen effectively to separate the signal from the

noise generated by the overwhelming amount of data being created by the company's assets.

2015 IDC #257973 10

Descriptive or prescriptive: The interface should enable an individual to monitor the performance of an asset (descriptive) and advise on the next best action (prescriptive) to correct or adjust an

asset or asset-intensive process. Executives and managers can navigate from the higher-level

view down to the individual asset/equipment/system that requires their attention.

An APM solution must provide a consistent, intuitive user experience, no matter the operations

process or asset that is being monitored or adjusted.

Secure Deployment Requirements

Asset performance management applications must be developed, deployed, configured, and extended

in a secure environment in the cloud, on-premises, or in a hybrid model for maximum flexibility.

Security at the user access, source, and data levels should be supported.

Applying the 3rd Platform for Asset Management and Operations Optimization

Asset management and operational processes vary greatly by vertical. Asset management applies to

maximizing productivity, mitigating risk, and optimizing the cost of managing an asset-intensive

business at the intersection of people, strategic assets, and the 3rd Platform. Financial optimization

ensures that the organization is maximizing return on assets by increasing revenue and profit through

mitigating risk and optimizing cost. Operations optimization ensures process safety and regulatory

compliance and minimizes production downtime.

Example scenarios in several industries oil and gas, chemicals, power and utilities, metals and

mining, and transportation show that asset-intensive industries will benefit most from the application

of a 3rd Platform for asset management and operations optimization. Traditionally underserved by

corporate IT, operational technologists will look to the 3rd Platform to rapidly build and deploy analytic

applications for asset management and operations optimization. The 3rd Platform must link the

business functions responsible for asset maintenance, operations process monitoring, risk and failure

analysis, and optimized asset utilization and planning.

2015 IDC #257973 11

Table 1 shows how several industries are prioritizing asset management and operational optimization

to achieve a high return on asset performance.

TABLE 1

Asset and Operations Optimization by Industry

Industry

Use Case

Description

Real-Time Asset

Management

Real-Time

Operational

Optimization Benefits over Traditional Approach

Oil and gas A common platform

that provides

optimized

maintenance

schedules for global

assets to improve

uptime, ensure

regulatory

compliance, and

help safe

operations

Seamless

integration with

sensors and

devices to

consume and

continuously

monitor asset

performance

data and ensure

the health of

each asset

complies with

the applied

strategy

Surveillance tasks

become input by the

operations team for

operator rounds

development and are

used to create

maintenance plans

and operator rounds

that are optimized and

justified based on risk

mitigation policies and

regulatory

requirements

Facilitates collaboration between

maintenance, engineering, and

operations to develop the optimal

asset strategy for critical assets

Asset strategies are based on

corporate-accepted key

performance indicators (KPIs)

and may be leveraged globally

Continuous optimization of

maintenance plans based on

current asset performance as

well as risk and cost factors

Common performance metrics

may be applied across industries

or globally

Chemicals Treating all fixed

assets equally

can lead to

over-inspecting,

increased

maintenance costs,

and increased risk

levels

Implementing a

risk-based

inspection

program, first

identifying the

highest-risk

assets and key

damage

mechanisms and

setting inspection

frequencies

based on risk

levels

Improving mechanical

integrity because

subject matter experts

are required to

provide a detailed

review of potential

damage mechanisms

for each asset and

establishing integrity

operating windows

and safety integrity

levels

Enables continuous process

improvement and reduced

inspection costs by aligning with risk

level (metrics: risk reduction, costs)

Power and

utilities

7% unavailability due

to unplanned events;

high reactive

maintenance costs;

two times lost

revenue from

outages due to PPA

penalties and spot

market coverage

Implemented

EAPM; analyzed

asset criticality;

performed root

cause analysis

Poorly performing

assets identified;

unavailability reduced

by 2%

Moved to proactive/predictive

maintenance approach; 2%

availability improvement (metrics:

reduction in unavailability; total

availability benefit [$])

2015 IDC #257973 12

TABLE 1

Asset and Operations Optimization by Industry

Industry

Use Case

Description

Real-Time Asset

Management

Real-Time

Operational

Optimization Benefits over Traditional Approach

Metals and

mining

Asset management

and reliability

program priorities

difficult to

communicate to

users in remote

mining locations;

wrong level of data

(too much and too

little) for too many

users; inconsistent

formats

Use EAPM to tie

together

machine health

analysis with the

CMM system to

provide proactive

maintenance

Consistent reports

available to

executives (with ability

to drill into specific

mine locations);

information

associated with

equipment health

available to

practitioners (with

drilldowns into events

and case histories)

Data is available in one location and

is always current; improved

response in changes to asset

health; dashboards with drilldown to

user choice for level of detail

Transportation A reduction in

economic resources

for infrastructure

management

required a national rail

organization to certify

tasks and prioritize

maintenance

Identify which

assets have low-

risk impact and

can be

postponed

during heavy

work periods

Update maintenance

cycle frequency based

on the asset's

reliability; assess the

expected failure rate

based on the real

maintenance

frequency

Reduction of operating costs;

improved process optimization;

reduction of time spent planning

maintenance (metrics: operational

cost savings)

Source: IDC, July 2015

AN ASSET PERFORMANCE MANAGEMENT SOLUTION: MERIDIUM'S ENTERPRISE APM

Meridium's integrated Enterprise APM, shown in Figure 4, aligns with a client's asset strategy to manage

assets and optimize asset financials and operations (refer back to Table 1). Meridium Enterprise APM is

the solution for the 3rd Platform. Deployed on-premises, in the cloud (Meridium APM Now), or in a hybrid

model, Meridium Enterprise APM provides the user experience, mobility, and innovation that clients

demand when looking to maximize the productivity and safety of industrial assets.

Meridium Enterprise APM includes the following software solutions, with benefits, capabilities, and

navigation within the software:

Asset Answers is a comparative analytics and benchmarking software solution that allows users to compare asset performance by manufacturer and model for assets owned by the

company and across the asset's entire operating fleet. Utilizing Asset Answers helps users

identify assets with lagging performance relative to their peers that impact a company's

competitive position and will support new and replacement asset selection.

APM Health provides visibility and awareness of asset conditions and event information through performance indicators and enables strategic decision making in the field.

2015 IDC #257973 13

APM Strategy enables intelligent strategies that proactively optimize asset management plans to balance spend and mitigate the risk of asset failure through reliability-centered maintenance,

failure modes and effects analysis, and risk modeling.

APM Failure Elimination increases asset availability and return on assets and helps recover the "hidden plant" by identifying poorly performing assets and systemic reliability issues

through scorecards, root cause analysis, reliability analytics, and production loss analysis.

APM Mechanical Integrity provides safety and environmental compliance by managing loss-of-containment risk and process safety management through risk-based inspection,

inspection management, and thickness monitoring.

APM Safety provides safety risk assessment and compliance through hazards analysis, SIS management, and calibration management.

Meridium supports its Enterprise APM software solutions through:

APM Foundation. This is the infrastructure that provides the administration and tool capabilities necessary for dashboards and reporting to address the users

using Meridium's Enterprise APM solution for different work requirements at different levels

within an organization.

APM Connect. This is an optional APM enterprise service bus (ESB) to enable connections and deep two-way integration to critical systems (there are currently over 700 Web services available to

connect to many types of industrial systems) and is facilitated through Meridium's Integration Center

of Excellence (ICE), the company's professional integration services organization. IDC believes that

no other vendor offers this capability. Integration through APM Connect is facilitated into EAM

systems such as SAP, IBM Maximo, and Oracle; analytical interfaces such as Emerson AMS Suite

and GE System 1 using APM data adapters; and custom integrations.

This infrastructure provides a unified data model and connectivity for assets, risk, health, events, and

recommendations. In addition, Meridium provides product and solution training, industry education,

and certification programs through the Meridium Institute. Its professional services organization offers

assessment and deployment methodology to assist clients in reaching their project objectives

efficiently. Meridium also works with a world-class partner ecosystem that includes companies such as

GE, IBM, SAP, and Accenture.

2015 IDC #257973 14

FIGURE 4

Meridium Enterprise APM

Source: Meridium, 2015

Meridium Enterprise APM: Asset Intelligence

Many companies implement an enterprise asset management solution to support maintenance

activities and act as the system of record. While these are critical business processes, EAM solutions

often don't have the tools needed to develop, manage, and evaluate the effectiveness of asset

strategies. They generally fail to answer the following questions Will this asset fail? When will it fail?

How do we prevent it from failing? What are the risks? How critical are the risks? How do we mitigate

the risks?

Meridium Enterprise APM leverages Intelligent Asset Strategies (IAS), which are the actualization of

design, experience, knowledge, judgment, actions, parameters, analytics, and connectivity with other

systems and assets to continuously improve safety, availability, and expense optimization while

mitigating operational risk. As the cornerstone of an enterprise APM system, intelligent asset

strategies become an automated loop of learning and continuous improvement that bridges the gap

between information technology and operational technology. Furthermore, intelligent asset strategies

drive a holistic view of asset performance by using global benchmarking and analytics.

Intelligent asset strategies use analytics to provide a platform to integrate asset data from existing and

new sources, convert that data into actionable information in a graphical format to predict how and

when an asset will fail, and recommend actions to prevent asset failure. Intelligent asset strategies

applied through Meridium Enterprise APM identify exceptions and trends in the data (1) to provide

system reliability and regulatory compliance; (2) to benchmark assets internally, across an enterprise,

and against industry averages; and (3) to adjust asset strategy dynamically to continually maximize

performance, increase asset reliability and availability, mitigate risk, and optimize operational cost.

Intelligent asset strategies also consolidate operational knowledge in a single location, making it

available across all levels of an organization and in the form needed, on mobile devices, in the cloud,

at the desk, or in the conference room as needed.

Optimize your asset performance while managing risk

ASSET

ANSWERS

APM FOUNDATION APM CONNECT

FAILURE

ELIMINATION

MECHANICAL

INTEGRITY

ASSET

SAFETY

ASSET

STRATEGY

ASSET

HEALTH

2015 IDC #257973 15

Meridium Enterprise APM: Industry Specificity

Meridium Enterprise APM is designed to meet the specialized industry requirements of companies in

the oil and gas, chemicals, power and utilities, metals and mining, and transportation industries.

Table 2 provides some sample key performance indicators included in Meridium Enterprise APM.

TABLE 2

Sample Meridium Enterprise APM Key Performance Indicators by Industry

Industry KPIs

Oil and gas Cost avoidance (e.g., lost production and repairs) from outage saves

Bad actor identification

Unplanned maintenance costs and downtime

Improved financial performance (reduction in inspection and maintenance costs, increased

availability and utilization, improved capacity, reduced planned shutdowns and unplanned

failures, and reduced incident costs)

Improved personal and process safety performance (reduction in incidents, assured

conformance to state and federal inspection and environmental regulations)

Chemicals Risk reduction costs

Inspection frequencies for low-risk assets

Reduced risk of equipment failures

Improved financial performance (reduction in inspections and maintenance cost

Increased availability and utilization, improved capacity

Reduced planned shutdowns and unplanned failures

Reduced incident costs

Improved personal and process safety performance (reduction in incidents, assured

conformance to state and federal inspection and environmental regulations)

Power and utilities Generation: Reliability, availability, capacity factor, equivalent availability factor (EAF),

equivalent forced outage rate (EFOR), equivalent planned outage factor (EPOF)

Transmission and distribution: System Average Interruption Frequency Index (SAIFI), System

Average Interruption Duration Index (SAIDI), Customer Average Interruption Duration Index

(CAIDI), Average Interruption Time (AIT), Overhead Lines Maintenance Cost Index (OHLMCI),

Substation Maintenance Cost Index (SSMCI)

Gas: Accuracy of scheduled gas volumes (%), number of process leaks identified during

operation or downtime, reliability of gas transportation (%), overdue inspections

Water and wastewater: Water quality, unit operational cost, meter reading accuracy, number of

pipe breaks per year

Metals and mining Assets by health

Active alerts by severity and by duration

Assets by criticality

Mean time between repair (MTBR)

Mean time to repair (MTTR)

Transportation Residual risk (%) (remaining risk after mitigation)

Production loss (economic impact on production caused by train delays)

MTTR

Cost of maintenance

Maintenance planning time

Source: IDC, July 2015

2015 IDC #257973 16

Meridium Enterprise APM: Analytics for Executives, Managers, and Practitioners

Meridium Enterprise APM provides role-specific dashboards, as shown in Figure 5. In customer

interviews, we learned how important dashboards are, as companies look to provide robust tools for

executives to manage valuable strategic assets similar to those tools the CFO uses to manage cash

and financial assets.

These dashboards provide the ability for executives, managers, and practitioners to see just the data

they need and, according to their authority, the ability to navigate down to the discrete asset level as

needed:

Executive dashboards are the most comprehensive, providing the entire corporate portfolio of assets and focusing on the long-term viability of the organization.

Manager dashboards provide short-term access to information about groups of assets and include the ability to look at trends, mitigate impact, and take proactive action before

something breaks.

Practitioner dashboards are the most immediate, providing frontline data on what's happening with specific assets in the plant and in the field.

FIGURE 5

Meridium Enterprise APM Executive Dashboard

Source: Meridium, 2015

2015 IDC #257973 17

Meridium Enterprise APM: User Experience

As shown in Figure 6, Meridium Enterprise APM provides a modern user experience that is intuitive

and appeals to the workforce of today and of the future, enabling executives, managers, and

practitioners to focus on the information related to their responsibilities. Meridium Enterprise APM

provides a consistent user experience across all devices, and access to asset performance is available

wherever the user happens to be working. The graphical user interface and advanced diagnostics

actively alert asset managers and automatically create action recommendations. Early customer

reviews of Meridium Enterprise APM expressed delight in the clean look and feel; as one customer

indicated, "It wasn't overcomplicated. Engineers have a tendency to overcomplicate things, and

Meridium did a good job of managing the design, providing a more logical arrangement of data, and

making it easier for users to do their job."

FIGURE 6

Meridium Enterprise APM User Experience

Source: Meridium, 2015

Meridium Enterprise APM: Secure Deployment

Meridium Enterprise APM has been designed to provide secure deployment according to the client's

choice on-premises, in the cloud, or hybrid. We believe these options will, over time, be demanded

by the global asset performance management market. While many clients currently prefer an

on-premises or hybrid deployment, cloud adoption in the overall EAM market is growing rapidly (at a

CAGR of 16.0% through 2019). According to Worldwide Enterprise Asset Management Forecast,

20152019 (IDC #257931, forthcoming), in 2014, 67.9% of EAM solutions were used on-premises and

32.1% were in the cloud. By 2019, only 51.9% of EAM solutions will be on-premises, while the cloud

2015 IDC #257973 18

will account for 48.1%. The rate of cloud adoption varies from industry to industry, with oil and gas

moving to the cloud faster than other asset-centric industries.

FUTURE OUTLOOK

Billions of assets are connecting to the Internet, whether in the home, in the plant, or in the office. These

devices are then controllable so that applications on mobile devices enable users to view settings in the

assets and revise those settings. Think of a thermostat that can be controlled from an iPhone or Android

app. That's convenient, but let's consider an intelligent industrial asset, which is a portfolio or fleet of

industrial facilities, a single industrial facility, a system, or an individual piece of equipment. That requires

the ability to analyze the sensor data of the asset in order to understand its actual operation and

propensity to fail. The provisioning of the data for analysis enables the building of a predictive analytical

application that recommends the next best action to avoid failure or achieve an optimum result. At that

point, the asset becomes intelligent, and it becomes a building block of an intelligent process that can be

optimized and be part of a connected business network that includes people. This can apply to an oil rig,

a refinery, a power plant, and a railcar, as well as the processes in which these assets are deployed.

With a clear benefit of building intelligence into assets and optimizing the processes in which connected

assets are deployed, what is holding back deployment? IDC surveys, as previously noted, point to asset

and operations optimization as one of the leading 3rd Platform initiatives. So the demand is there. What

is missing is the industry-specific solutions that can make assets and the processes in which they are

deployed intelligent. And what is holding back the availability of such solutions? There are multiple

factors. Consider the complexity of harvesting the asset data, the skill needed to build the analytical

models and applications, and the capability to securely deploy the solutions. Platforms such as Meridium

Enterprise APM specialized for asset intelligence will help accelerate the process of getting more

solutions deployed in the market. Security and data integration are traditionally IT skills. But an asset

intelligence solution built with IT rigor helps bridge the traditional divide between IT and OT.

Once solutions become more readily available, a familiar pattern should emerge. Successful

implementations will provide references to the next set of customers, and the market will expand. Who

will provide these asset intelligence solutions? Companies like Meridium already do. They have the

data, the existing relationships with customers in asset-intensive industries, and a vibrant partner

ecosystem that is expanding to meet demand.

CHALLENGES/OPPORTUNITIES

The opportunities are huge for asset-centric companies (oil and gas, chemicals, power and utilities,

metals and mining, transportation, and manufacturing) to reduce the risk of asset failure, evolve with

the needs of a changing and inexperienced workforce, and improve the operational performance of

assets. The friction is the complexity of building these solutions given the lack of standards, the

custom/unique interfaces in communicating with the assets, the unique formats of the data coming in

from the assets, and so on. But the economics and the high incremental value of such services will

push the industry to overcome these barriers.

Today, asset-intensive companies that typically already have an ERP, EAM, or CMM solution in place

can potentially improve the performance of operational assets by adding EAPM. It is unlikely that the

existing ERP, EAM, or CMM system needs to be displaced or upgraded. Rather, the enterprise APM

solution can be integrated into existing solutions. Companies that already leverage an APM solution

2015 IDC #257973 19

may want to upgrade to a more modern solution to take advantage of the 3rd Platform capabilities of

Big Data and analytics, cloud, mobile, and social. Often, the cost of the APM investment is rapidly

returned through the improved performance of operational assets and avoided shutdowns.

However, the cost and length of an APM implementation can be challenging for some organizations to

approve. Asset-intensive organizations should determine which assets or processes will provide the

biggest impact or the fastest time to value and should choose the most appropriate method of

deployment (on-premises, hosted, cloud, or hybrid). It is also important to consider using resources

such as Meridium's APM Connect and Integration Center of Excellence to leverage prebuilt interfaces

and asset connectors as well as implementation methodologies and best practices. Meridium can also,

through its professional and training services, support clients with turnkey APM solutions to facilitate

solution designs, software implementation projects, and client organization change management.

Meridium will need to work with its existing customers and early adopters to help them take advantage

of the 3rd Platform capabilities of Meridium Enterprise APM. A group of successful customers across

each of the industries on which Meridium focuses will provide the groundswell of references needed to

move the market forward and provide benchmarks for customer success.

CONCLUSION

Does the 3rd Platform from the industrial Internet lead to added business value? To answer this

question, we must add a "V" for value to the definition of Big Data, one of the pillars of the 3rd

Platform. The only reason to monitor and analyze Big Data is when the initiative yields value to the

business over and above the increased effort and cost to manage and analyze these more complex

data sets that make up asset performance management.

For example, the setting of maintenance priorities for production assets is a high-value decision given

the level of expense to the enterprise for spare parts and maintenance operations and the cost to the

enterprise when asset failure causes service disruptions. But is the mining of the sensor data relevant?

If taking account of the asset data can improve the accuracy of predictive models for asset reliability,

then such data is relevant and the initiative can deliver value. Organizations are finding that predictive

maintenance analytical models can guide managers to better decisions on how to deploy assets and

when to maintain them to ensure safe, efficient, and optimized operations.

To capture value on asset performance management:

Focus on the highest-value asset financial and risk optimization decisions.

Ensure new applications meet 3rd Platform requirements Big Data and analytics, cloud deployable, mobile, and social.

Look to a new generation of applications that leverage data from connected assets in order to optimize high-value asset and operations decisions.

To accelerate deployment of intelligent applications for the Industrial Internet, consider and deploy

solutions such as Meridium's Enterprise APM that are focused on asset intelligence and specialized for

asset-intensive industries.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory

services, and events for the information technology, telecommunications and consumer technology

markets. IDC helps IT professionals, business executives, and the investment community make fact-

based decisions on technology purchases and business strategy. More than 1,100 IDC analysts

provide global, regional, and local expertise on technology and industry opportunities and trends in

over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients

achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology

media, research, and events company.

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