Archive for September 15, 2009

Study: Integrating Risk Assessment with Strategic Planning Boosts ROI

According to a new report released by The Conference Board, the integration of risk assessment data into performance management adds significantly to strategic and operations planning, but few companies have integrated their Enterprise Risk Management (ERM) and performance management processes.

            “This integration provides decision makers with a dynamic analytical framework for evaluating operational strategies, acquisitions and divestitures, and capital investments across business units, asset types and risk profiles,” said Ellen Hexter, author of the report, along with Daniel Sandy Bayer, president of Bayer Consulting. “The combination of ERM and performance management is very valuable for strategic and operating plans that have long-term business consequences. A risk-adjusted performance framework offers organizations the ability to explicitly link personal and performance objectives.”

            Enterprise risk management and performance management are two complimentary processes essential for the management of an organization. Both disciplines are designed to support organizations’ efforts in making decisions and meeting their goals, ERM through the identification and management of those risks that could affect business objectives, and performance management through the identification and measurement of the drivers needed to achieve results.

            Risk-adjusted performance metrics offer managers tools that strike the appropriate balance between meeting performance goals and achieving appropriate returns for the risks being taken. The application of risk-based performance management may also lead to incentives that are more aligned with an organization’s long-term success.

            Despite all of these benefits, few companies have integrated these processes. In a recent survey by The Conference Board of 97 senior executives, only 57% of the responding organizations had both a formal ERM program and a performance management program. Of this group, only 43% said that integration of the programs would be extremely or very valuable. When asked if their companies would increase their use of risk assessment data in planning during the next 12 months, just slightly more than half of respondents from companies with both programs (53%) said that was extremely or very likely.

            The report concludes that there are three major reasons why organizations are reluctant to include risk assessment data in their planning processes:

  • The ERM program is not considered effective – Only 52% of the executives surveyed with both an ERM and a performance management program considered their ERM programs to be extremely or very effective at the corporate level and just 30% rated their programs that highly at the business unit level.
  • A lack of commitment from the top – Executives cited a lack of management focus as one of the greatest challenges to the integration of ERM and performance management.
  • A need for more sophisticated performance metrics – Only 34% said that their companies use risk-adjusted return on capital at the corporate level, and even fewer (21%) do so at the business unit level. About 73% said that their risk measures were not compatible with their planning metrics.

            “Given the dramatic losses suffered by some major companies in recent years, including during the recent financial crisis, boards of directors and senior management will become increasingly interested in ensuring that planning processes throughout their organizations incorporate an explicit assessment of risk,” concluded Hexter.

September 15, 2009 at 11:26 pm Leave a comment

New Proficy Maintenance Gateway Release Improves Real-Time Operations

GE Fanuc Intelligent Platforms, a unit of GE Enterprise Solutions, announced the availability of Proficy® Maintenance Gateway 2.0 to help customers avoid costly equipment failures and reduce asset maintenance costs. The software enhances the company’s Proficy software suite – a platform for driving reliable, profitable operations in a plant and across the enterprise – by ensuring that maintenance operations are integrated into each company’s journey toward operational excellence. The product can scale up from a simple condition monitoring system to a sophisticated orchestration to help maximize asset utilization and reliability.

            “The timeliness of this product release in light of today’s global economic climate is important,” said Sheila Kester, Business General Manager, GE Fanuc Operations Management Software.  “By keeping the Production and Maintenance departments ‘in synch,’ an organization eliminates the costly delays in responding to the plant’s evolving operational dynamics. Furthermore, the continuity and accuracy in the information flow between production and maintenance teams allows the organization to take proactive steps to eliminate hidden costs before they’re incurred.”

            The new release extends the proven capabilities of Proficy Maintenance Gateway by providing a new automatic measurement point update module, enhanced write-back functions from the enterprise to the plant systems, and new adaptors to Enterprise Asset Maintenance (EAM) applications, such as SAP’s PM module and newer versions of MAXIMO®. The broad range of connectivity options, ease of use by plant personnel, and ability to incrementally scale from small to large installations make the solution desirable to companies in asset-intensive industries.

            “Proficy Maintenance Gateway acts as an integration engine of the Production and Maintenance processes of an enterprise, continuously driving business-critical efficiencies in both departments in real-time,” said Coleman Easterly, Product General Manager, GE Fanuc Operations Management Software. “This is achieved by leveraging and extracting more from the core capabilities of our Proficy Plant Applications family while doing the same with the EAM systems in an organization.”

            Proficy Maintenance Gateway tracks and helps reduce the Mean-Time-To-Repair in “corrective maintenance” cases while working continuously to monitor usage of equipment and automatically ordering “preventive maintenance” orders for improved performance. The product is designed for maintenance and/or production personnel. Out-of-the-box EAM connectors accelerate deployments and reduce installation time to days rather than weeks or months. Also, the enhanced rules engine offers more flexibility for time-based meters and status updates of Work Orders to the control system.

            “Proficy Maintenance Gateway enables an organization’s existing asset management system to drive the right set of maintenance strategies for their equipment in a timely manner,” continued Easterly. “It takes into consideration the current, real-time dynamics of the plant equipment and production, rather than being solely based on a set of pre-planned conditions and assumptions. This real-time synchronization between production and maintenance can dramatically reduce unplanned and hidden costs in the short term, while continuously driving improvement in plant reliability in the long run.”

September 15, 2009 at 11:25 pm Leave a comment

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