Why Failure-Mode Focus Matters in Intelligent Asset Management

[ElmarPaul]

In asset-heavy industries like Oil and Gas, Energy, or Transportation, managing equipment is more than just a cost factor—it's crucial for operations. Delivering gas under high pressure or transporting passengers at high speed requires a strong focus on asset reliability and, especially, asset integrity. This is the "license to operate." If a critical asset fails, it can lead to equipment damage, loss of production and revenue, and even more serious risks, like environmental harm or human injuries.

To avoid such problems, it's important to apply the right maintenance practices to critical assets. This helps manage risk in a complete way, improving the effectivity of measures and ensuring assets work their best.

Why Understanding Asset Failure is Critical

In industries that rely heavily on equipment, understanding how and why assets fail is essential. Maintenance planning and execution often depend on the experience of professionals, such as maintenance planners or technicians, who have been in their roles for many years. Some strategies follow recommendations from Original Equipment Manufacturers (OEMs) or adhere to regulatory guidelines. However, there is often a significant gap between asset reliability engineering and maintenance planning and execution.

The Gap Between Maintenance Strategies and Execution

This gap appears when maintenance strategies—like managing failure data and recommendations—are handled separately by different teams. One group might focus on engineering, while another handle failure reporting and maintenance execution. This disconnection can cause inefficiencies. Similarly, proactive strategies such as classic preventive maintenance or even condition-based, predictive maintenance aren't always based on real evidence or fully integrated across teams.

To gain operational excellence and even enable new capabilities end-to-end, it's time to shift to a failure-mode centric approach in asset management.

How SAP Asset Performance Management Bridges the Gap

SAP Asset Performance Management (APM), integrated with Asset Management in SAP S/4HANA, addresses this opportunity by offering an end-to-end business process. From defining a maintenance strategy to execution, the system includes a feedback loop that enables continuous improvement, ensuring better maintenance over time.

The Failure Mode: A Common Language Between Teams

A key feature of this system is a unified and harmonized failure data model. As the central element, the failure mode acts as the common “language” between asset reliability engineering and maintenance teams. This unified approach prevents issues caused by inconsistent or misaligned data, allowing for better communication and coordination.

According to DIN EN 13306, a failure mode is the “manner in which the inability of an item to perform a required function occurs.” In simpler terms, it describes what goes wrong with an asset when it stops working as expected.

Industry Standards Inform SAP’s Failure Data Model

SAP’s failure data model draws from industry standards, such as FMEA (Failure Modes and Effects Analysis), FMECA (Failure Modes, Effects, and Criticality Analysis), and RCM (Reliability-Centered Maintenance). This model allows teams to define and prioritize maintenance strategies—whether reactive (fixing something after it breaks) or proactive (preventing it from breaking).

The model also considers other crucial details such as the operating environment, the asset’s function, the potential failure effect, the failure mechanism, and others. All these elements together provide a complete picture of possible failures and their consequences.

The Power of Relationships Between Failure Data

One of the most important aspects of this model is the relationships between the different elements. For example, the relationships between a failure mode and its addressed function and functional failure, its relevant failure effects, mechanisms, and potential causes are critical. It makes subsequent failure reporting and recording more efficient and targeted, especially when reacting to an issue.

Equally important is the connection between a failure mode and the recommended proactive measures (like preventive maintenance via maintenance plans). This connection ensures that maintenance strategies and failure reporting are linked, creating a cycle of continuous improvement. The practical lessons learned from maintenance feed back into the re-engineering, making future strategies more effective.

Figure 1 shows the unified failure data model with its entities, their relationships, and the intended usage in SAP Asset Performance Management as well as in Asset Management in SAP S/4HANA.

 

Failure Mode Accounting in Asset Management

Safeguarding the License to Operate

For businesses in asset-intensive industries, preventing catastrophic failures is critical to maintaining their “license to operate”. A major, or even catastrophic asset failure can lead to operational downtime, safety risks, and financial losses, which is why proactive maintenance strategies are essential.

A well understanding on asset criticality and failure consequence easily helps to properly rank the maintenance backlog and set the right focus.

The Unified Failure Data Model

With the unified failure data model, a “lingua franca”, or shared “language” is established between reliability engineers and maintenance planners or technicians. This model ensures efficient and consistent communication across different teams, helping improve both asset reliability and integrity. By defining critical failures and their consequences ahead of time, proactive measures—such as preventive or condition-based maintenance—can be implemented to prevent failures.

Closing the Loop: Failure Reporting and Feedback

When a failure does occur, the unified model supports a closed-loop reporting system. This failure-mode-centric approach in asset management can be compared to principles of financial accounting, where data allows for trend analysis across assets, helping teams identify areas for improvement and implement countermeasures as needed. The ongoing monitoring of the maintenance strategy ensures consistency, higher asset reliability and integrity.

A Comparison to Financial Accounting Principles

“The ultimate goal of any set of accounting principles is to ensure that a company’s financial statements are complete, consistent, and comparable.

This makes it easier for investors to analyze and extract useful information from the company’s financial statements, including trend data over a period of time. It also facilitates the comparison of financial information across different companies. Accounting principles also help mitigate accounting fraud by increasing transparency and allowing red flags to be identified.

Comparability is the ability for financial statement users to review multiple companies’ financials side by side with the guarantee that accounting principles have been followed to the same set of standards.

Accounting information is not absolute or concrete, and standards are developed to minimize the negative effects of inconsistent data. Without these rules, comparing financial statements among companies would be extremely difficult, even within the same industry. Inconsistencies and errors also would be harder to spot.”

 Source: Investopedia

Failure Mode Accounting: A Company Wide Strategy

This failure mode-centric approach forms the foundation for failure mode accounting throughout the entire company and beyond. By extending Enterprise Asset Management (EAM) capabilities provided by SAP S/4HANA with SAP Asset Performance Management (APM), businesses can seamlessly move to a more sophisticated level of asset management that integrates with supply chain, resource management, and finance.

Moving Towards Condition-Based Maintenance - Maintenance at the Right Time with the Right Scope

Challenges of Traditional Preventive Maintenance

Preventive maintenance, whether based on time or performance, is widely used to mitigate critical failures. However, this “one-size-fits-all” approach often falls short, leading to unexpected asset failures and breakdowns.

Adopting Condition-Based and Predictive Maintenance

The need for more advanced approaches like condition-based maintenance (CBM) or predictive maintenance is growing. SAP’s Asset Performance Management provides a holistic approach by combining real-time monitoring with historical failure data from SAP S/4HANA, enabling better asset health tracking and maintenance planning. If CBM is chosen as the maintenance strategy, the system integrates time-series data and interprets the asset’s remaining useful life. This, paired with failure modes and task recommendations, unlocks the full potential of CBM.

The Benefits of Integrated Asset Management

By fully integrating CBM into existing asset management processes, businesses can transition to a new era of asset management that targets optimal maintenance for maximum asset availability.

It’s the combination of all maintenance strategies – corrective, preventive, condition-based, predictive, prescriptive – in one unified system with a consistent and coherent management of failures and related data that allows a higher sophisticated maintenance program for a better business outcome.

SAP’s Intelligent Asset Management: 6+1 Key Steps - From Maintenance Strategy Definition to Execution, and Back

SAP supports six key business process steps to integrate Asset Performance Management and Enterprise Asset Management effectively. The foundational piece is the harmonized and aligned asset master data definition, which supports a closed-loop approach based on the Plan, Do, Check, Act (PDCA) principle:

0 - Manage Asset Master Data

Manage aligned and harmonized asset master data centrally for end-to-end processes in asset management spanning from reliability engineering to maintenance and inspection execution. E.g. manage:

• core asset master data like equipment and technical objects
• maintenance plans, task list and inspection plans, or maintenance rules and planning objects
• measuring points and indicators to cover usage and condition

The inbuilt synchronization for the relevant asset master data between SAP Asset Performance Management and SAP S/4HANA keps both sides always on the latest. 

SAP Solution(s) in Focus: SAP Asset Performance Management, SAP S/4HANA (Asset Management)

1 - Define Asset Maintenance Strategy

Use standardized methods like Risk and Criticality Analysis (RCA), Failure Mode and Effect Analysis (FMEA), or Reliability Centered Maintenance (RCM) to define your maintenance strategy, resulting in:

• Well-classified and segmented assets according to their criticality
• A well-defined failure data model including failure modes for assets—either on an individual or asset class level, with the failure mode as the leading entity
• Well-defined recommendations for reactive or proactive measures

SAP Solution in Focus: SAP Asset Performance Management

 2 - Define Maintenance Plans, Rules and Activities

Implement maintenance strategies via elements like

• Task Lists / Inspection Plans for detail job or inspection characteristic specification; including linkage to addressed failure mode
• Maintenance Plans for time- or performance-based schedule, and/or
• Maintenance Rules for condition-based or predictive/prescriptive maintenance

With the connectivity between maintenance strategy (recommendation) and the implemented elements the traceability is made easy.

SAP Solution(s) in Focus: SAP Asset Performance Management, SAP S/4HANA (Asset Management)

 3 - Monitor Asset Health and Maintenance Demand

• Report failures manually or automatically from sensor data to a fully prequalified maintenance request (notification) with reliable data
• Use the prescribed failure data mode to classify the report appropriately and derive task list proposals from the system
• Focus on critical work, build a consistent asset maintenance history for documentation, trending, and continuous improvement identification.

SAP Solutions in Focus: SAP Asset Performance Management, SAP S/4HANA (Asset Management)

4 - Plan Asset Maintenance Task and Resources

Plan maintenance or inspection jobs in detail with all needed resources in an efficient and effective way. Optimize the schedule for highest workforce utilization and distribute jobs to the rightly qualified technicians.

SAP Solution(s) in Focus: SAP S/4HANA (Asset Management), SAP S/4HHANA Asset Management for resource scheduling, SAP Field Service Management

5 - Perform Asset Maintenance

Execute maintenance or inspection jobs with all information at hand – either on the laptop or mobile device.

• Document performed jobs with qualitative and quantitative information for proper financial settlement, material bookings and maintenance history building.
• Loop back failure/malfunction or breakdown information based on the failure data model in a complete, consistent, and comparable manner.

SAP Solution(s) in Focus: SAP S/4HANA (Asset Management), SAP Service and Asset Manager, SAP Business Network for Asset Collaboration

6 - Analyze Asset and Maintenance Performance

Evaluate the efficiency and effectiveness of the defined, implemented, and executed maintenance and inspection program based on the unified and aligned failure data model.

• Compare the initial “theoretical” definition of the maintenance program and failure data setup with the proven, evidence-based “practical” reality from the maintenance history
• Take action—if needed and appropriate—to adjust the maintenance strategy for better business outcomes while mitigating risk

 SAP Solution(s) in Focus: SAP Asset Performance Management, SAP Analytics Cloud

Figure 2 illustrates the 6+1 key business process steps with listed business capabilities based on harmonized and aligned master data in the center for a closed-loop, intelligent asset management approach.

Conclusion: Revolutionizing Asset Management with SAP

 Seamless Integration of Asset Performance Management and Enterprise Asset Management

Seamlessly connecting Asset Performance Management (APM) and Enterprise Asset Management (EAM) revolutionizes asset management practices. This integration is crucial for asset-intensive industries but also benefits other sectors. The end-to-end (e2e) process—from defining asset maintenance strategies to performing maintenance and back—is essential for solving the complex equation of asset reliability, asset integrity, and maintenance cost.

Evidence-Based Maintenance for Operational Excellence

Ongoing, evidence-based monitoring of the optimal maintenance strategy for assets—whether critical with high consequences or not—enables asset managers to effectively mitigate risks and make informed decisions. This leads to enhanced operational excellence and better management of assets.

With SAP Asset Performance Management and Asset Management in SAP S/4HANA as the two light-house solutions in the overall SAP Intelligent Asset Management suite complemented by

• SAP Service and Asset Manager
• SAP S/4HANA Asset Management for resource scheduling
• SAP Field Service Management
• SAP Business Network for Asset Collaboration
• SAP Integrated Business Planning for MRO

we believe in our strong contribution to unlock the full potential of complex assets and strive for higher business outcome.  We are dedicated to helping make the world’s assets operate effectively.

Elmar Paul

Chief Process Owner, Cloud ERP DSC Operate