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"An effective enterprise
asset management solution for monitoring and managing the deployment,
performance, and maintenance of company assets may be the single most important tool for preventing operational
surprises and uncovering hidden profits."
Source : Infor
Greening the Organization Profitably with Asset Management
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Executive Summary
Science, business, and government organizations are starting to support the fact that reducing
greenhouse gas is an inevitable and integral component of doing business. Environmental
awareness, particularly excess greenhouse gases, has seen a surge of visibility from the
international and domestic business communities. Thus, businesses worldwide are turning their
focus to increased environmental awareness through reduction of resource consumption,
particularly of fossil fuels, which is the leading cause of excess greenhouse gases.
AMR Research addresses business' role in contributing to the betterment of the planet with the
term Corporate Social Responsibility (CSR). CSR is not in opposition to good business practices or
improving inancial performance. In fact, resource conservation can and does make good business
sense. CSR is gaining support throughout the broad spectrum of the business world. Firms
engaged in manufacturing, transportation, utilities, government, services, and agriculture are all
adopting CSR-related policies, processes, and procedures - more often ahead of governmental
regulation than because of it. Companies initiating such programs ind that their bottom lines
actually improve through greater eiciencies and increases in productivity and through greater
consumer patronage in recognition of the company's socially responsible position.
In business, one of the keys to successful environmental management is the collection of
pertinent data and the processing of that data to determine program success and the direction of
eforts required to expand success and remedy areas of weakness. One of the critical programs
that can help organizations address this is an asset management application.
Purchasing such an application is not a casual exercise - it represents a commitment of resources,
personnel, and company focus. As the data in this White Paper will demonstrate, many successful
businesses have found that the efort brings substantial rewards. This application can and will be a
valuable tool in your overall business plan for resource conservation and for corporate success.
The History of Green Initiatives
The emergence of green initiatives in recent times is often looked upon as a new revolution freshly
begun with the turn of the 21st century. Nothing could be further from the truth. Environmental
awareness and the accompanying economic impact has in fact, been around for years.
Theodore Roosevelt was a "conservationist." At the turn of the 20th century, he initiated the
National Parks system to preserve pristine areas of natural beauty for future generations. The
1973 oil embargo set forth another kind of conservationism - economic conservation: The sharp
rise in the prices of petroleum products - especially gasoline - forced consumers to conserve
resources because of the cost of such commodities. Resulting governmental mandates dictated
to automobile manufacturers new, increased mileage requirements for their vehicle oferings. And
the desire to get the most out of petroleum purchases led to the rise of automobile companies
such as Toyota, Nissan (then Datsun), and a little-known company more famous for motorcycles
than cars: Honda.
Each of these examples relects conservation initiatives, which at the time, were seen as having
a negative impact on business. Teddy's conservationism withheld large portions of old-growth
forests from harvesting thus increasing the cost of lumber. He met with vocal opposition, yet stuck
to his guns - often alone and unsupported. Historically, eforts to conserve resources and protect
the environment have been viewed as anti-business and anti-consumer. "Tree-hugger" was the
common axiom used for persons thought to be irrationally focused upon their estimation of
"nature" to the detriment of common work-a-day folk. At best, green initiatives were the purview of
well-of liberal-leaning persons that were out of contact with mainstream reality.
Current Initiatives and Commitment to
a Greener Planet
Earth Friendly Direction
Recent times have seen a tremendous shift in thinking when it comes to environmental issues.
The emergence of the economies of China and India has sparked world-wide competition for oil.
Even the American consumer is shifting to an environmentally aware position: dolphin-free tuna,
organically grown produce, a move toward hybrid cars and ethanol-based fuel, luorescent over
incandescent light bulbs, solar panels and wind mills - consumers are "voting with their wallets" in
favor of products and activities that are conservation-oriented and environmentally friendly.
More signiicant than these individual instances of conservation awareness are the actions of
political and economic leaders:
- In December 1997 the Kyoto Protocol to the United Nations Framework Convention on Climate
Change was drafted, representing an efort of the international community to signiicantly
reduce the production of greenhouse gases. As of 2006, 169 nations had signed these accords.
- In his most recent book, Where Have All the Leaders Gone? Lee Iacocca urges US auto
manufacturers to develop vehicles with zero emissions, fueled by non-petroleum-based
resources.
- In June 2007 the Chinese government vowed to reduce its pollution level s it continues its
economic development
- With the Global Warming Solutions Act of September 2006, Governor Arnold Schwarzenegger
and the California State Legislature dictated a 25% cut in the state's greenhouse gas emissions
by 2020 from 2006 levels which when factoring in the current growth in energy consumption
equates to a 46.5% reduction in GHG. The legislation went further by mandating that by the year
2050 that GHG levels would be cust to 80% below 1990 levels.
- Earlier this year, Time Inc. participated in a study by the Heinz Center that looked at the amount
of carbon dioxide emissions produced over the process of publishing Time and In Style. The
company is said to be seeking ways to reduce its efect on the environment.
Earth-friendly activities are no longer on the fringe; they are mainstream and growing rapidly at a
time when the evidence of global warming and climate change is indisputable.
Good Business Sense
BBusinesses are run to make a proit. How does the for-proit origin of business mentality coexist
with the growing wave of environmentally oriented consumer preferences and demands?
Some of the most successful businesses - those with foresight,
imagination, leadership, and policies that are "in-touch" with their
customers - have eagerly adopted earth-friendly practices.
Today's business leaders have made a real and substantial commitment
to those practices (green) initiatives. Such commitment of time and
resources is motivated by several factors, not the least
of which is the enhancement of earning capacity.
The most successful forward-looking businesses are embracing the
economic beneits of environmental responsibility. They are inding that
good stewardship of the planet is not necessarily detrimental to the
bottom line. To the contrary, the best of the best companies have
found substantial proitability in such stewardship. Witness the recent
television spots about the Subaru auto plant in Lafayette, Indiana.
These spots tout the facility as being "zero land-ill" and as operating within
a virtual nature preserve. This plant is one of the most eicient manufacturing enterprises in the
world, ringing up proit margins well in excess of its less eicient, less environmentally friendly
competitors.
The message is clear. Proit awaits the environmentally conscious, publicly responsible business.
Conservation has become big business. Companies throughout the business spectrum are
picking up in environment issues and are responding with initiatives that promote conservation,
reduce greenhouse gas emissions, and foster continuing ecological awareness in their business
practices as well as in their clientele.
"Instead of running away from
the threat of regulatory
sanctions, forward-thinking
plant professionals should be
running toward a strategy for
bottom-line improvement that
rests on three ideas: economic
prosperity, environmental
stewardship and social
responsibility."
Growing Green Plants,
Russ Kratowicz,
PlantServices.com, 2007
The Science behind Greenhouse Gas
As illustrated in previous sections, there is a huge concern over the human production and release
of greenhouse gases.
Greenhouse gases absorb energy from the sun and reradiate that energy in the form of heat into
the atmosphere. This heat, added to the warmth of the sun absorbed by the Earth directly,
determines the general temperature of the planet.
The main sources of carbon emissions are power generation plants fueled by coal, oil, or gas and
from transportation (chiely automobiles). The numbers are staggering. Recall the California
initiative to reduce emissions by 25% by 2020. This goal means reducing California's carbon
emissions by 174 thousand metric tons per year! That's just California - many other states are
following suite.
We have already seen the measures California has implemented. Its carbon emission goals are to
be accomplished through a combination of improving vehicle fuel economy (by 33%), greater
eiciency in energy consumption, "smart growth" such that communities concentrate where
public transportation is readily available, the use of renewable energy sources (hydro, solar, wind),
upgrading existing power plants for greater generation eiciency, and wise management of forests
(trees absorb carbon dioxide in their growth process). Control of energy consumption is key.
The Role of Asset Management in
Curbing Greenhouse Gas Emissions
AMR Research addresses business' role in contributing to the betterment of the planet with
the term Corporate Social Responsibility (CSR). CSR is made up of four factors: Marketplace,
Environment, Community, and Workplace:
Each of these factors exerts pressures on business decisions.
Responsible businesses must balance these factors such that
inancial responsibilities to the marketplace and stakeholders
merge with obligations to promote the welfare of the community,
the environment, and the workplace.
Thus, CSR represents a business contribution to sustainable development
goals. CSR is about how business takes account of its economic, social,
and environmental inluences in the way it operates - maximizing the
beneits and minimizing the downsides. This equates to the voluntary actions that business can
take, over and above compliance with minimum legal requirements, to address both its own
competitive interests and the interests of wider society.
Critical factors that a business can control in an environmentally responsible way include waste
management, infrastructure management (buildings, facilities, and their energy eiciency),
emissions management, and asset management.
Asset management? Unfortunately, asset management is often forgotten as a key contributor to
energy use. Assets are purchased and expected to perform satisfactorily until their estimated
end-of-life. However, assets represent a signiicant portion of a business' operating expense,
impacting environmental as well as inancial performance.
Since careful management of assets will efect a company's overall environmental eiciency, it is
important to integrate energy management into a company's Enterprise Asset Management (EAM)
program - both to support CSR goals and to continue improvements in the company's overall
inancial performance. The best and most well-rounded EAM programs include:
- Maintenance Program Management: factoring asset operating
performance (energy consumption) into maintenance strategy
and activities
- Event Management: alerting of existing asset condition or trend
outside of optimum operating parameters for evaluation or remediation
- Planning: assessing existing asset coniguration (design basis) and performance (energy
consumption) for optimization
This means carefully monitoring assets' energy usage, implementing a comprehensive preventive
maintenance program that takes into consideration energy usage, and factoring energy
consumption into any plans that include asset acquisition, allocation or replacement.
Note the emphasis on monitoring and preventive maintenance. Energy eiciency cannot
be estimated without having accurate data as a basis for that estimation. And preventive
maintenance, as has been proven over decades of operation, is the single greatest contributor
to asset useful life and optimum equipment productivity.
Eicient assets, then, minimize energy use and improve productivity. A business can be both
environmentally responsible and economically competitive.
A business can be both
environmentally responsible
and economically competitive.
Recommendations for a Green-centric
Asset Management Application
Implementing and sustaining a quality CSR-oriented asset management program requires
the ability to gather, store, and process large quantities of information related to energy
consumption, asset condition, asset productivity, and the like. Executing such a program manually
would be an impossible task - because of the volume of data to be gathered and processed.
Green Investment Projections
Forward-looking companies are investing in software applications that greatly simplify and
streamline the information aspects of environmentally responsible asset management. This chart
from AMR Research (2007) illustrates the relative portion of a company's IT budget will shift more
and more toward CSR operations:
With so much of a business' precious IT budget oriented toward CSR goals, and with so much riding
on the success of environmentally responsible operations, a business must be very careful in
selecting software applications. There are many excellent applications on the market. Very few of
them ofer features that are genuinely oriented toward CSR opportunities.
Features that Promote Green
The following features are recommended to support green CSR goals with respect to environmental
sustainability and optimum energy conservation. Many of the following features also improve
a business' position with respect to overall asset management. The two goals are mutually
supportive.
Additional features may be added, but at minimum, the following are essential:
- Provide the ability to track commodity (electric, water, gas) consumption and rate details
associated at the meter level with value roll-up within the organizational asset hierarchy.
- Provide the ability to track electric sub-meter interval data, via integration with an Enterprise
Energy management (EEM) application, at the operational asset or system level.
- Provide existing and pre-existing asset performance monitoring and measurement via Key
Performance Indicators (KPIs) that can be displayed on a dashboard coniguration page.
- Provide asset condition monitoring through alert set-ups. Unacceptable asset condition should
be easily observable.
- Provide a comprehensive Preventive Maintenance (PM) program that can be triggered by set
dates, by metered usage, or by selected time intervals.
- Provide a thorough inspection capability that allows users to enter inspection results as
subjective values (good, poor, fail) or as quantitative values.
- Provide comprehensive data gathering capability for asset performance and maintenance
history.
- Provide library of preformatted reports covering best-practices business processes - including
reporting on energy usage and comparison.
- Support WAGES (water, air, gas, electricity, steam) usage logging and reporting.
End Game
Is the urgency to curb greenhouse gas emissions a fad or at a critical turning point in our history?
As businesses and governments begin taking action to reduce greenhouse gases, what type of
approach makes the best inancial sense for your business?
Only your company can decide. As your business continues to respond to consumers and
regulatory agencies who demand a more environmentally conscious approach, it makes good
business sense to include Asset Management as part of your CSR and green strategy.
Any green strategy must rely on the wise collection of pertinent data and the processing of that
data to determine program success and the direction of eforts required to expand success and
remedy areas of weakness. A comprehensive, green-oriented asset performance management
solution will enable you to achieve compliance, eiciency, and consumer appeal.
Disclaimer
This document relects the direction Infor may take with regard to the speciic product(s) described in
this document, all of which is subject to change by Infor in its sole discretion, with or without notice to
you. This document is not a commitment to you in any way and you should not rely on this document
or any of its content in making any decision. Infor is not committing to develop or deliver any speciied
enhancement, upgrade, product or functionality, even if such is described in this document.
Infor Corporate Headquarters
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Alpharetta, Georgia 30004
USA
Phone: +1(800) 260 2640
Table of Contents
- The History of Green Initiatives
- Current Initiatives and Commitment to a Greener Planet
- Earth Friendly Direction
- Good Business Sense
- The Science behind Greenhouse Gas
- The Role of Asset Management in Curbing Greenhouse Gas Emissions
- Recommendations for a Green-centric Asset Management Application
- Green Investment Projections
- Features that Promote Green
- End Game