MCT India Infotech Pvt.Ltd.

EAM vs ERP: The debate continues

Post By :- admin Date:- July 4, 2017

Capital assets or Physical assets of an enterprise including equipment, buildings, vehicles, and infrastructure need maintenance to sustain their day-to-day operations.

Enterprise Asset management or EAM is increasingly becoming a valuable tool & being accepted as a technology-empowered approach, which can boost an organization’s productivity, reduce costs, cut wastage and inspire the embracing of best business practices. Usually there are two primary routes to take on the challenge of physical asset management: using Enterprise Resource Planning (ERP) software or specialized enterprise asset management (EAM) software.

On the other hand ERP systems offer a large scale consolidated approach to tracking an organization’s asset-related processes, while EAM systems provide in-depth, best of breed functionality to monitor, react, and predict the precise performance of assets over their lifetime. Together, they can help organizations boost performance and deliver on their strategic objectives

EAM and ERP systems

Enterprise Asset Management or EAM, also known as computerized maintenance management systems (CMMS), is a term used to describe software specifically designed to improve asset performance, increase service life, and cut costs across an organization’s physical assets, primarily buildings and equipment.

Enterprise Resource Planning or ERP software allows an organization to use a system of integrated applications or modules to manage its activities. ERP is designed to combine all of a company’s activities into a single database, eliminating incompatible and duplicate technologies.

ERP versus EAM

At first glance, choosing an ERP system to manage physical assets looks pretty enticing. There is only one software system to support, which is attractive from a CIO’s perspective and financials are all in one place.

But while ERP is a great fit for financials, manufacturing, supply chain, and CRM applications, to name but a few, extending these capabilities to areas such as asset management can result in disappointment. In many cases, an ERP system offers less functionality and is harder to use for asset management.

EAM on the other hand is designed specifically to support assets and offers more depth and insight from which to improve operational performance. But historically, the cost and complexity of integrating an EAM system with an ERP system has proved prohibitive.

However, organizations are now beginning to realize that the ERP one-stop shop approach might be short-sighted, and that it is impossible for one software system to optimally serve the needs of the entire organization. It is fundamental that critical functions like asset management get the tools they require, while finance and IT get the consolidation and system simplicity they need.

ERP systems normally manage an organization’s financials, which is complicated to use. By using an EAM system, a portion of those financials—those related to asset management activities (e.g., MRO purchasing)—are initiated and tracked in the EAM system. To ensure costs are correctly allocated across the chart of accounts and vendors are paid, cost information must be passed to the ERP system. The two systems must be integrated.

EAM and ERP system integrations have been historically complex and expensive. Different types of databases, table structures, upgrade issues, and system constraints have added costs and headaches to getting EAM and ERP systems in synch and communicating. The difficulty associated with system integration is the primary reason why some organizations have chosen ERP over EAM when it comes to asset management.

Additionally, many of the past complexities of system integration were not only due to the technologies employed, but also where certain business processes resided. Defining where business process will be executed (i.e., EAM vs. ERP) is a key factor of integration success. If overlooked, it could result in a long, expensive and painful integration experience.

Ultimately, organizations need costs to be at the asset level. Knowing what the organization spends to operate and maintain assets supports informed and educated business decisions. With that said, the most efficient and effective means of capturing asset lifecycle costs is to perform work management (i.e., maintenance and engineering), MRO materials management, and purchasing all in one system. These are integrated functions and ideally should have one system home for their activities, preferably the EAM system. 

The conclusion

“Asset management is a top priority for an organization. Each Organization wantsits assets to be successful. Therefore, it want the best when it comes to technology tools that can help to accomplish their goals. Tools that offer rich functionality are easy to use, easy to integrate and don’t break the Organization’s ongoing processes. So, for organizations that are serious about improving performance through a more focused approach to asset management, it seems that EAM is the clear winner”