In many ways, maintenance is one of the most important functions within an organization. It has the potential to impact everything from production to customer service. Yet many operations managers lack the tools and data that they need to strategically plan and budget for maintenance operations. Creating a data-driven plan from SAP EAM requires countless hours of manipulating volumes of transaction details in spreadsheets. Even then, the data quality can inhibit drawing insights to build a solid plan. Organizations can overcome these limitations and improve their annual maintenance planning and budgeting processes by augmenting SAP with today’s automation capabilities.
In this article, we will explore the budget creation and tracking challenges and then highlight opportunities to improve process efficiency and accuracy for more strategic maintenance management.
Budgeting for Strategic Maintenance Management
Effective maintenance budget management is vital to the success of asset-intensive organizations. Having the resources in people and materials to maintain assets and respond quickly to resolve issues that arise can have a material impact to production. Minimizing unplanned downtime and ensuring that assets are running at peak efficiency results in higher levels of production and better meeting customer needs. According to Forbes, unplanned downtime is “one of the largest causes of lost productivity, causing delays, unhappy customers and lost revenue. In fact, the problem costs industrial manufacturers an estimated $50 billion each year, according to recent studies.”
Not only do you need to plan for the resources, but you need to plan for the right resources and optimize your costs against budget realities. And this is the fundamental task to address.
Challenges of Using SAP EAM Data for Budget Management
Developing an annual maintenance budget and tracking actual expenses throughout the year are core components of effective maintenance budget management. But SAP is well known to be challenging to work with for many processes of maintenance planning and scheduling. Creating and tracking spend to an annual budget plan is certainly one of those processes. Let’s explore these challenges.
Tedious and Inefficient
The process of developing a bottoms-up annual budget starts with extracting maintenance data from SAP. This includes every PM task from the maintenance plan and historical corrective and breakdown work orders. Then working with spreadsheets, arrange the expected planned work over the year, add an estimation of unplanned maintenance based on history, and then add any ad hoc projects expected to occur.
This data manipulation process can take many days or even weeks and takes time away from more strategic maintenance management activities. This may be o.k. for a once-a-year exercise, but the work to view the actual costs to the budget takes almost as much time every month.
Organizing the Data for Finance and Others
As a major cost center, delivering an accurate estimation of spend is important to the whole organization. Different stakeholders will want to understand what’s behind the budget and what are the trade-offs to meet company expense goals.
For Finance, they will want to review the budget by the appropriate general ledger accounts or other corporate cost structures. Breaking down the work orders (for example parts, labor, and contract labor) and organizing the budget views by these categories brings a whole new level of data manipulation that often proves too time-consuming to even attempt to do.
For Plant and Maintenance Managers, they will want to see and manage the budget by their locations, cost centers, or even at the asset level.
Compiling different iterations of the budget to help different decision-makers is important but almost impossible to accomplish for annual planning or ongoing viewing of actuals to the budget. This limits effective maintenance management tasks including:
- Planning future requirements including number of technicians by craft, and parts and materials to source in the next year
- Expected spend as well as tracking actuals to the budget to show where the money is going
- Availability of details to support budget and activity trade-off discussions
SAP PM data needs to be complete and consistent to support analysis by any method – spreadsheets or automation tools. If your SAP PM data is fed by manual data entry of completed paper-based work orders, the data can be incomplete and contain unstructured data entries such as open text reasons for failure. These issues make analysis difficult including organizing and viewing the history data to understand corrective vs. preventive maintenance costs or identify “bad actors” such as assets that are proving costly to maintain.
Overcome Challenges with Automation
To improve the maintenance planning and budgeting processes, organizations need to augment SAP with a tool that automates the extraction and sorting of data. The solution should also enable informed decision-making through data visualization tools as well as streamline communication to different stakeholders.
Automation to Organize SAP Data
A maintenance budgeting solution can take days and weeks out of the planning process by automating the process of extracting SAP PM plans and work order history to create a bottom-up budget. Upload the organization's budget expectations and compare the results. From this starting point, you can work to align the results to the budget by adjusting seasonality, add special projects, and add contingencies or reserves. You can also evaluate the major cost drivers to determine where to cut or make trade-offs.
Arranging Budget Views by Audience
Automation can also create views by different audiences from Finance to Plant Managers. Import organizational cost structure lists such as cost centers, general ledger accounts, cost elements, plant locations, and assets to sort the budgeting details. You can evaluate and adjust the budget based on your views, then rearrange and upload the budget to SAP or another financial accounting system based on their views.
Manage Spend Throughout the Year
Once you have aligned on an annual maintenance budget, you can track actual spend to the budget using the same solution. On a regular basis, a budgeting solution can pull the latest SAP data to evaluate actual spending and forecast changes based on the latest SAP PM plans.
Improve Data Quality for Budgeting
To ensure that your budget plans are based on good data, improve the capture and structure of work order results details. Replacing paper-based work orders with a Mobile EAM solution will quickly improve the quality and completeness of the data captured. This will enable an analysis of work order history for budgeting and fact-based budget-cutting and trade-off discussions.
The Benefits of a Maintenance Planning and Budgeting Solution
In summary, a maintenance planning and budgeting solution that is designed to work with SAP offers many benefits that make it worth the investment.
Time Savings for Managers
The time savings can be significant in the annual budgeting process down to many day-to-day activities of your valuable senior maintenance managers. Consider the time savings from replacing tedious data extraction and spreadsheet work to create budgets and track spending. Then look at the work behind organizing the plans and status updates to each stakeholder for their needs and processes. In addition, consider how much time it takes today to get at the data to understand and explain where the money is going and why you are under or over-budget.
These time-savings can free up your leadership team for driving strategic insights from the data to better manage the organization for more cost effective maintenance management.
Improve Control on Maintenance Spend
You can control maintenance spending through advanced planning. With full visibility of your resource needs, you can proactively address those needs. For example, your annual maintenance and budget plan will show the people resources you need by craft to fulfill the plan. With this insight, you can determine if you need to hire employees, contractors, or make sure you have the funds to support the costs of overtime.
You can also reduce inventory carrying costs by advanced planning of the parts and materials you will need for the plan. Avoid carrying too much inventory or under-ordering which can result in costly rush shipping of repair parts.
From an on-going perspective, you have the visibility to spending through the year to adjust as needed to stay on budget or acquire the funding needed. With no surprises, you are in control.
Improve Visibility to Maintenance Costs
Also, with these decision tools, you can have a fact-based conversation about the trade-offs to manage the budget. For example, you can simulate the impact of covering the headcount needs with contractors instead of overtime, or the cost of risking repairs from reducing PM tasks.
Adding it Up
Annual maintenance planning and budgeting play an incredibly important role for asset-intensive organizations. But today’s manual processes and inefficiencies with SAP lead to many challenges to create and manage budgets.
Augmenting SAP’s capabilities with a maintenance planning and budgeting solution can help overcome these challenges. Gain the benefit of a bottoms-up budget that supports insights and decision-making. Track and report budget status to key stakeholders, like Plant Management and Finance in views that meet their needs. Plan requirements and control spending through the year with full awareness of the status and implications.
Reap these benefits of more strategic maintenance management and more with today’s solutions to optimize working with SAP.
How Sigga Can Help
Sigga has been helping companies with SAP to improve maintenance management for two decades. We offer an industry-leading Planning and Scheduling solution that integrates seamlessly with SAP. The solution gives planners and schedulers access to accurate and complete data in real-time. Moreover, they have access to powerful features such as the ability to automatically check capacities, assign resources, and prioritize work orders that saves time and boost efficiency.
And now, we offer a maintenance budget module to address the annual maintenance planning and budgeting process. This module includes features to:
- Create an annual budget plan and identify resource requirements from SAP PM plans, work order history, and custom inputs
- Identify resource gaps, the biggest budget offenders, and distortions between capital and expected spend
- Provides views by cost centers, cost elements, and plants
- Keep everything integrated with SAP and with other financial systems
- Track actual versus planned spending
In addition, we offer two integrated mobile solutions to replace paper and keep data digital and visible across the enterprise. Sigga Mobile EAM supports the day-to-day tasks of maintenance technicians while Sigga Mobile Warehouse and Inventory addresses the day-to-day work within warehouse operations. Both solutions are high-performance, native mobile apps that support both online and offline use, plus complete access to phone functions such as barcodes and camera.
Read how we can help you improve your maintenance planning and budgeting processes.