IS BASED ASSET MANAGEMENT

An Evaluation

Abrar Haider

School of Computer and Infomatin Science, University of South Australia, Australia

Keywords: Information systems, organisational culture, performance evaluation.

Abstract: Information systems (IS) for engineering asset lifecycle management act as strategy translators as well as

enablers. Therefore, the real value of IS relies upon how effectively these systems are mapped to asset

lifecycle management processes, and how effectively they are synchronised with other IS in the

organisation. On the other hand, engineering asset managing organisations adopt a traditional technology-

centred approach to asset management, where technical system implementation command most resources

and are considered first, whereas skills, process maturity, and other organisational factors are only

considered relatively late and sometimes only after the systems are operational. This paper provides an

evaluation of the IS implemented to support asset lifecycle in an asset managing organisation.

1 INTRODUCTION

Contemporary asset management paradigm demands

an elevated ability and knowledge to continuously

support asset management processes, with support in

terms of quality data acquisition, real-time data

exchange, and computer supported categorization

and analysis of asset operation divergences from

standard procedures. These factors are essential for

effective planning, scheduling, monitoring, quality

assurance, and acquisition of necessary resources

required for supporting asset lifecycle, and

consequently enhancing the competitive profile of

the asset managing organisation. Information

technology (IT) in general and information systems

(IS) investments are no more considered as inwardly

looking systems aimed at operational efficiency

through process automation; in fact, it extends

beyond the organisational boundaries and also

addresses areas such as business relationships with

external stakeholders, to deliver business outcomes.

The term asset in the context of this paper is

defined as the physical component of a

manufacturing, production or service facility, which

has value, enables services to be provided, and has

an economic life greater than twelve months (IIMM

2006), such as manufacturing plants, roads, bridges,

railway carriages, aircrafts, water pumps, and oil and

gas rigs.

IS utilised in asset management have to provide

for the decentralized control of asset management

tasks as well as have to act as instruments for

business intelligence and decision support. IS for

asset management, therefore, are required to provide

for an integrated view of lifecycle information

through integration of information spanning asset

lifecycle stages. An integrated view, however,

requires appropriate hardware and software

applications; quality, standardised, and interoperable

information; appropriate skill set of employees to

process information; strategic fit between asset

management processes and IS; and a conducive

organisational, cultural, and social environment.

This paper presents an evaluation of IS

implementation for asset management at a public

sector Australian utility that manages infrastructure

assets. This paper provides an overview of the water

industry in Australia and an account of the case

organisation and the major IS it employs. This is

followed up by discussion based on the evaluation of

IS employed in various areas of asset lifecycle

management within the case organisation.

2 CASE BACKDROP

Australian water industry is primarily developed

around a linear model of collecting, storing, treating,

distributing, and then discharging the water (Barton

group 2005). However, the players in Australian

water industry represent a mixed picture and consist

of public and private water services providers. The

industry is regulated at both federal and state level to

manage water through a range of initiatives, such as

pricing, service levels, and environment. The

293

Haider A. (2008).

IS BASED ASSET MANAGEMENT - An Evaluation.

In Proceedings of the Tenth International Conference on Enterprise Information Systems - HCI, pages 293-298

DOI: 10.5220/0001718902930298

 SciTePress

scarcity of water resources and the continuing

drought in Australia is placing renewed demands on

water asset management. These demands on one

hand require effective supply and demand

management of water, and on the other hand require

operators to sustain and manage their water

harvesting assets with reduced levels of

performance, due to predicted climate changes. In

order to counter such challenges state governments

as well as the Council of Australian Governments

has engaged in water reforms aimed at better

planning and allocation.

The concept of Asset management in water

industry has been strongly endorsed by the

governments at federal as well as state levels, and

water utilities have actively engaged in developing

asset management regimes since early 1990s.

However, the increased interest in asset management

is largely due to the legislations that have forced

operators in the water industry to improve their

financial management, recover full cost of service,

and use cost benefit analysis on a regular basis to

evaluate the performance of their assets with the

profits that they enable (GAO 2004). However,

water infrastructure assets in Australia are aging fast

and are being exposed to challenges of various

types.

3 RESEARCH METHODOLOGY

This research employs an interpretive epistemology

with a qualitative perspective. It is obvious that the

issues relating to evaluation of IT investments in

asset management are complex and multifaceted,

and require a broad and flexible perspective for

comprehensive examination. These include technical

issues as well as an assortment of others issues such

as organisational, social, and cultural issues. IS can

be classified as interpretive if it is assumed that our

knowledge of reality is gained only through social

constructions such as language, consciousness,

shared meanings, documents, tools and other

artefacts. Interpretive research does not predefine

dependent and independent variables, but focuses on

the complexity of human sense making as the

situation emerges (Kaplan and Maxwell 1994). It

attempts to realize the phenomena under

investigation through the meanings that people

attach to them (Deetz 1996). In order to address the

issue at hand an interpretive stance provides a richer

understanding of the contextually oriented IS based

asset management issues, than the more conformist

positivist approaches. In compliance with the

University of South Australia’s ethics regulations,

the case study organisation cannot be identified and

will be referred to as OzDrop. Similarly, the

interviewees are referred to by their job description

rather than their actual designation, for example

design manger, operations manger. The research

methodology comprises of open ended interviews

with 14 middle managers representing various roles

within the organisation.

4 OZDROP BACKGROUND

OzDrop owns and operates bulk water supply and

distribution infrastructure located throughout

regional Queensland that has a replacement value of

$4.6 billion. It supplies about 40% of the water used

commercially in one of the largest states of Australia

via 27 water supply schemes and three subsidiary

companies. Its water supply customers number close

to 6,000 and comprise mining, industrial and

manufacturing companies, local governments, power

stations, irrigators and local water boards. The water

infrastructure on which the business is built

includes, 26 major dams, 85 weirs and barrages, 83

pump stations, 40 balancing storages, 920 km of

industrial water pipelines, 2,000 km of irrigation

pipelines and open channels, 800 km of irrigation

drainage works.

4.1 IS at OzDrop

OzDrop employs various IS to support asset

lifecycle. However, the path to process automation

has been far from being a liner one. In the early part

of the last decade OzDrop took initial steps towards

introducing IS for asset management. This was in

response to increased regulatory reporting pressures

and demands of aging asset infrastructure. As a

result an asset register and management system

(ARMS) system was implanted. However, this

system was nothing more than simple record

keeping of asset inventory. Apart from limited

functionality the system was not integrated with any

other organisational information system, hence there

was no way of finding out costs incurred during

asset lifecycle. In addition, there were issues with

data quality, duplication of data, and the data lacked

standardisation, therefore maintenance history varied

greatly from actual and lacked creditability. In mid

1990s OzDrop expanded ARMS to include extra

functionality such as, accrual accounting, asset

identification, asset valuation, bill of quantities, and

direct and indirect costs. In 2000, OzDrop adopted

SAP R/3 as its core asset management system.

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However, the initial focus was on implementing the

plaint maintenance module to provide improved data

quality, work management and costing, and

management decision support tools. Though, SAP

was implemented due to the regulatory pressures

rather than in response to the process needs of

OzDrop. Consequently, implementation of SAP has

been far from satisfactory. At the same time, ARMS

was not a completely functional system and both

ARMS and SAP conform to different information,

therefore migration of data from ARMS to SAP was

not possible. Since implementation of SAP was

initiated as phased approach, this incomplete

configuration of SAP PM was insufficient to handle

asset management data. Nevertheless, SAP is still

not fully operational and the company is using

specific modules of the system. In another major

technology implementation initiative, in 2002 an

Oracle based information management system was

introduced to incorporate customer relationship

management, and customer and water account

management. The company aspires to integrate these

systems as well as their electronic data management

systems and make it available on the company’s

intranet. At the moment, customer billing system is

available online, however the system and billing has

been sublet to a third party. In addition to these

technologies, the company also utilises a variation of

CMMS (with limited functionality) and SCADA

systems.

OzDrop lacks a centralised technology adoption

policy and does not conform to a common

information model. As a result, different

departments have implemented their own

customised spreadsheets and databases to aid their

day to day operations. Although these applications

aid in the execution of work within the department,

however they are not integrated with other

information systems and are of little value to other

departments who could use this information for

better asset lifecycle management. OzDrop has a

strong cost focus and little commitment from senior

management in terms of adoption of new

technology, which is reflected by OzDrop’s

Manager Business IT systems Last year (while the

company was considering implementation business

intelligence infrastructure) vendor walked into the

door and asked what you want. Management did not

know what are business intelligence systems, what

are their capabilities, and what kind of reports can

they generate……… I am not a qualified engineer so

I can not quality assure if the system is capable of

providing what the engineers want ………(for

implementation of technology) we consider the total

cost of ownership. The actual implementation may

be cheaper but when we consider costs incurred on

learning new technology, and costs relating to

adoption of technology you have to make a decision

on the total cost of ownership and not just the initial

implementation cost.

4.2 Sustainability and Design

Asset demand management at OzDrop is governed

by the system of prioritising customers as well as

water. However, due to drought condition in

Australia, OzDrop’s assets have been underutilised

in the last decade. Nevertheless, most of the assets

owned by the OzDrop were designed and developed

before 1950. Therefore almost all information

regarding their design, except for some relating to

their refurbishment, is in a hard copy format. There

is no exchange of design information with other

asset lifecycle management functions. The lack of

digital information poses a number of issues; the

foremost among them is the inability to develop an

information culture. For example, the design manger

noted, we have particular needs in design and most

of our information is driven from top down. To be

honest with you our experience with technology has

not been that good. Software implementation is

usually very difficult to achieve and infect we’ve

seen quite a few of them come and go without

providing benefit to us. The intricacies of integration

with other applications just ended up proving to be

too difficult. SAP has been with us for a long time,

but we are not seeing the benefits though I am sure

what SAP is capable of providing us - Chief

Engineer.

In the formal process of asset design/redesign

chief engineers visit different regions and talk to

designers and operations to discuss the design and

operational requirements. Deign/redesign process of

an upgrade or refurbishment is carried out through

consultation with designers and is fully reviewed by

the technical service engineers in that region. The

company thus ensures that they have consensus from

all the parties involved. In so doing, there is heavy

reliance on the tacit knowledge held by staff,

whereas there is no system for preserving the same

or making it available to other functions within the

organisation. In the words of the design manger, ‘we

use AutoCAD but that just gives us an electronic

version of a drawing. Ideally we would like to have

access to information to analyse how good our

design is. The information available to us has been

input by the people who really don’t have sufficient

technical background to understand the key things

that need to be there. We’ve got long way to go I

think before our systems are going to be sufficiently

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up to date and have sufficient useful information that

our guys could pretty quickly get a hand on. Once

we cannot get our hands on this information we have

no choice but to rely on the knowledge held with our

field staff’ - Design Engineer.

The design exercise has a strict focus on the

design of the asset and there is not enough

consideration given to the supportability analyses of

asset lifecycle design. Although it can be attributed

to the fairly stable nature of water infrastructure

assets, however the major cause for inability to

carryout a comprehensive set of supportability

analyses is the non availability and lack of access to

requisite information. Apart from this, OzDrop,

being semi government, retains the hierarchical silo

approach that resists information exchange and

collaboration, which is evident from the following

response of a design engineer, ‘getting the historical

information in order to get the design right at the

first place is very difficult. In order to get this

information costly onsite information extraction is

required, that is by talking to the local people. We

would like to see accurate maintenance information

in the field, like what is happening, why it happened,

what are the failures etc. On top of this, there is no

interaction between electrical and mechanical

engineers. They just log information in their own

systems for someone else to look at and make

decisions. If you want to know performance of a

particular system, your best bet is to go and speak to

a field engineer’ - Design Engineer.

This argument is further supplemented by

another design engineer, which illustrates another

manifestation of a silo approach to asset lifecycle

management.

‘we are not into risk assessments in a big

way. Obviously all of systems are subject to corporate risk

assessment. From design point of view we look at what

condition we need to implement to manage risks posed to

an asset, and that’s where all the issues are that we want

to monitor. For example, what space do we need to back

the system up, what redundancies do we need to guarantee

etc. So all those sort of things we do as a matter of course

in the design exercise. Once the asset is in operation its

for the operations and maintenance people to do risk

assessments. They never ask us for information on any

previous assessments and even if they do we cannot

provide it to them easily since we perform our assessments

manually’ - Design Engineer.

4.3 Operations Management

The nature of water infrastructure asset operation is

quite different from other assets. Water is sourced

from specific supply points and thus cannot be

pumped from anywhere, which means that the

infrastructure is static and the environmental and

operational constraints on the asset are relatively

easily predictable. This also means that the water

asset infrastructure has to operate at a certain level

and the usual principles of load apportionment don’t

work in this situation.

OzDrop’s assets base consists of a variety of

asset types and are spread anywhere between 30 km

to 100 km or even longer. Asset monitoring

therefore is not only costly but is also time

consuming. Although, OzDrop makes use of GIS

(geographical information system) and SCADA

system to monitor asset operation, yet asset

operation and condition assessment is largely

manual. The information captured through SCADA

systems is only used for alarms generation and

failure reporting, it is not used or aggregated with

other information for analysis such as failure root

cause. The operations manager of OzDrop suggests

that, ‘condition assessment is manual exercise at the

moment, since we are struggling to integrate

different systems with our major asset management

system (SAP). When we are required to do condition

assessment, our guys will go and do that and in the

process if they identify something that in their

opinion presents an undesirable outcome they will

flag that’ - Operations Manager.

Although, asset operation is the least automated

area in OzDrop, however the company is making

progress towards establishing an operations specific

module within its asset management base system,

i.e. SAP. According to operations manager, ‘we are

developing a fairly significant module within SAP,

which will allow us to capture risk and condition

information on each of our assets. And also to

identify refurbishment and maintenance work that

needs to be carried out on each of those asset. So we

can actually develop a 30 - 35 year schedule to rank

and prioritize vulnerabilities or risks posed to

assets’ - Operations Manager.

4.4 Disturbance Management

OzDrop generally carries out a periodic preventive

maintenance on its asset base, which ranges from the

ones built in 1920s up till now. Therefore, the

maintenance demands of these assets are quite

divergent, with some of the older assets are

operating well in excess of their design capacity.

Nevertheless, maintenance information is generally

processed either manually, or through an array of

custom made spreadsheets developed by regional

offices. Maintenance scheduling, however, is done

centrally at the company offices by using SAP PM

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(plant management) module. Maintenance plans are

developed with a 12 months time horizon and

include a list of tasks for the same period. At the

start of each month, monthly work requests are

released. There is a budget allocated for carrying out

these maintenance activities. However, there is little

provision of emergency repairs, for example if the

failure at the station requires replacement of small

component or a minor treatment; it is attended to by

the maintenance crew at the station. However, in

case of major failure, maintenance requires approval

from various levels as well as needs commissioning

of expertise and resources and therefore takes time.

OzDrop differentiates between maintenance and

asset ownership, i.e. work is executed by

maintenance crew, whereas asset ownership is the

mandate of another function. Consequently, there

are multiple versions of the same information within

the organization. Furthermore, these versions have

their own bias and standard of quality. Although the

organisation is aware of the potential of quality

information, yet there is little emphasis made on

recording and capturing correct and complete

information. For example, a maintenance engineer

summarised the situation as under, ‘maintenance

crew is not technically qualified or capable to

operate an IT system. They consider it as an add-on

to maintenance work, something that just has to be

recorded. At the end of the day they will not be

judged on what information they entered. Their

performance is evaluated on the quality of their

maintenance work’ - Maintenance Engineer.

Maintenance information, however, is crucial for

asset lifecycle management, as it provides the basis

for lifecycle cost benefit analysis, remnant lifecycle

calculations, as well as for asset refurbishment,

upgrade, and overhauls. However, like other

functions, maintenance information is not exchanged

with other lifecycle functions. In addition, the main

focus is on capturing maintenance execution

information with little provision for integrating this

information with financial information.

Consequently, there is no way of calculating the cost

of failure as well as real costs incurred on

maintaining the asset. OzDrop’s finance manager

noted that, ‘There is fixed maintenance cost which is

the routine day to day maintenance, and then there

is what we call renewals program or refurbishment

program. This is what you would call the irregular

lumpy parts of your maintenance over the life cycle

of the asset. We have always separated out

refurbishment or renewals program from

maintenance program. Most organizations will

clump it together because you have to clump it

together to get any kind of resource planning, but

yes, we are not using the financial indicators as

input into reinvestment or investment in assets’ -

Finance Manager.

4.5 Operational Responsiveness

IS in OzDrop are primarily being used for recording

information or what could be best described as

recording what the organisation has done. This

information is seldom used for more high profile

purposes, such as organisational integration,

planning, and executive decision support. The

prevailing silo approach has affected departmental

efficiency as well as functional integration.

Management at OzDrop takes a deterministic view

of technology and aims more at the perceived

benefits from technology than the cause and effect

relationships that enable these benefits. User

training has traditionally been a weak area at

OzDrop. Little training is provided and even that is

aimed at training managers and supervisors rather

than the staff who use the system on daily basis. The

idea is that the supervisory staff (with the help of IT

department) train functional staff. In these

circumstances it is obvious that staff do not feel

comfortable with using major platforms such as

SAP, and business units in OzDrop are more

inclined towards using internally developed

spreadsheets and databases. Due to little information

exchange the company faces substantial knowledge

drain.

Senior management is not technology savvy and

therefore does not rely on IT for asset lifecycle

decision support. Even otherwise information lacks

quality and there is no way of managing the

important asset lifecycle learning. OzDrop depends

a lot on the tacit knowledge (particularly for

maintenance) and at present more than 65% of the

staff at OzDrop are within 10 years of retirement

age, which means substantial amount of intellectual

capital loss. A senior manager from OzDrop

attributes this to the culture of the company and

summarises that, ‘it has a lot to do with culture. Our

culture is wrestling with fundamental issues. Some

would argue that we are in an asset based industry

and not an intellectual property based industry or

anything like that. Certainly true to say that there is

a difference of opinion in the organisation as to how

asset portfolio should be managed through IS.

Perhaps people are not trained or skilled for the

organisation to change. IS implementation needs to

be addressed a little more strategically. We have to

try to convert people from break down heroes into

more strategic thinkers’ - Group General Manager.

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4.6 Performance Evaluation

OzDrop’s IT plan is reviewed every 18-24 months.

However this is an informal review and is done by

managers and is more of a qualitative observation

exercise rather than a detailed efficiency assessment

of IS. It must be pointed out that this review is

enterprise wide and not solely aimed at IS for asset

management. Nevertheless, a review of asset

management was carried out in the year 2004 by an

external consultant. This review included assessment

of asset management processes as well as IS utilized

in enabling these processes. The rationale for this

review was to reorganise the company in terms of

resources, accountabilities, and responsibilities. An

important driver within that reorganisation was

about skills development, knowledge retention, and

ensuring the availability of right environment for

information exchange and knowledge sharing. The

net result was a gap analysis against industry best

practice. IS evaluation, therefore, was a part of the

review and not the major focus of the review. This

qualitative review was carried out through a steering

committee of OzDrop, which ranked and prioritized

the recommendation or the follow ups of that

review. However, it took OzDrop more than a year

to actually agree on the prioritization of the work to

be done. The issues encountered in this regard are

amply reflected by OzDrop’s project manger, when

he notes that, ‘we have taken a step towards taking

stock of our asset management related IS resources;

however there are there issues that we must

overcome. Firstly, the lack of ownership of data that

does not provide any motivation for staff to capture

and process right and complete information;

secondly, investment in mobile data acquisition

solutions such that data is entered as close to its

origin as possible; and thirdly, effective change

management with emphasis on creating a learning

environment and proper training’ - Project Manger.

5 CONCLUSIONS

IS implementation has a number of technical,

organisational, cultural, and social dimensions. It is

therefore essential to ascertain cause and effect of

technology implementation, such that effective

change management strategies could be out in place

to facilitate institutionalisation of technology within

its implementation context. Management at OzDrop

conforms to technological determinism and sees

technology implementation alone as the prime

enabler of achieving its strategic objectives. In so

doing, it disregards the organisational, cultural, and

social dimensions that help shape technology within

the organisation. IS are social systems and their

implementation has strong contextual and social

underpinnings. OzDrop needs to engage in ex ante

evaluation that must take stock of the socio -

technical environment of the organisation and align

the capabilities of technology with the needs and

demands of asset management processes.

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