Plant Services - October 2007 - (Page 9)

FROM THE EDITOR Monetize it We’re figuring out exactly how to calculate and express the value of maintenance I t’s been said that money is the universal language. It Martin’s presentation at the recent Avantis user group meetcertainly speaks more clearly to accountants and execuing, is, “You’re driving value, but it’s not visible.” Instead of tives than long discussions of backlogs, OEE, PM vershowing up as an oversimplified expense, you can get uppersus PdM or any number of other measures you might use to level attention and support by proving that maintenance has try to convey your effectiveness and progress. Quicker, too, a high, positive return on investment (ROI). and that’s why management is so eager to boil the mainte“If you’re in maintenance, engineering or operations, first, nance function down to single expense on the balance sheet. you must realize your worth. Without you and your work, And cut it. there is no revenue. There is no company,” Martin says. Nobody wants to buy maintenance (or any other product, “Second, you have to demonstrate your worth, because no for that matter, according to a presentation by Jim Panzl, one else will.” General Electric sales performance trainer, at a recent GE Everybody estimates ROI before investing, “but rarely press event). People want the benefits that come from incalculates it afterward,” Martin says. “When measured, the vesting in the product, and if, like all accounaverage payback on a maintenance or engitants and executives in manufacturing, they’re neering activity is six weeks, and it’s sustainYou have to in the business of making money, the benefits able.” But to reflect that value accurately, you demonstrate are best expressed in dollars and cents. have to move from estimating ROI to meaFor example, GE has figured out that suring cash flows at the points where they your worth, few prospective homeowners are willing to because no one occur. This concept, also known as activitypay extra for energy efficiency. If they have based accounting, has been the holy grail of else will. money to spend, they’d rather buy something controllers for decades. But they think it’s too they can see, like a third garage or a built-in complex and can’t be done. wide-screen TV, instead of GE’s high-efficiency lighting However, you are technologists. You can use the same and appliances. knowledge of technology to measure business value as you But if a new house meets GE’s “ecomagination” standards use to measure everything else about the plant. You can for energy efficiency (which, along with tight construction, determine the cash flows of production, quality and equiprequires GE high-efficiency lighting and appliances), GE ment uptime, and measure the effects of investments in Finance will qualify buyers for a larger mortgage with bigmaintenance and engineering activities. (If you run into any ger payments because the company knows the savings on problems, Martin and Invensys will be glad to help). the monthly utility bill will more than offset the extra cost. “Use technology to measure business value, and use it When buyers understand that means they can get a house to drive business value – beyond maintenance to real busithat’s worth more with lower monthly expenditures, a posiness problems,” Martin says. “You’ll know you’ve succeeded tive effect on their cash flow, they see the light. when executives cite your work in presentations, or in the Monetization is the art of expressing benefits that might annual report. Once they see what they’re getting for their otherwise be boring, complex and incomprehensible in investment in maintenance and engineering, there will be terms of something everybody understands: money. no stopping it.” GE is designing its value propositions for industrial facilities around monetization, and training its representatives to use it as a sales tool. If you talk with one of their folks about lighting, drives or other energy-saving technologies, don’t PAUL STUDEBAKER, CMRP be surprised if you’re made an offer that’s hard to refuse. EDITOR IN CHIEF Industrial maintenance and engineering departments can pstudebaker@putman.net learn something from GE. The problem, according to Peter (630) 467-1300 ext. 433 October 2007 www.PLANTSERVICES.com http://www.plantservices.com/voices/from_the_editor.html http://www.PLANTSERVICES.com

Table of Contents Feed for the Digital Edition of Plant Services - October 2007

Plant Services - October 2007 Contents Monetize It Letters Step into the Blogosphere What it Takes to be a Leader Up and Running Crisis Corner What Works From the Summit Treat Them Right Access Control Out of the Woods Show Me, Don't Guess Condition Assessment Made Easy The Air Above the Floor Power to the Prime Movers In the Trenches Illuminating Maintenance

Plant Services - October 2007

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