Calculating the Savings from

Implementation of CMMS
Author: Daryl Mather, Maintenance Consultant

With the advance in the market place of CMMS systems various questions are arising more and
more frequently. For example:

What is the goal of our CMMS implementation?

How will it assist us?

What are the real expectations of a CMMS implementation?

CMMS systems, as we have come to know them, come basically from two distinct families. These
are ERP systems such as SAP, JDE and the PRONTO system and EAM systems such as Epac,
MIMS and a plethora of other systems. When most maintenance practitioners refer to CMMS
systems they are in reality talking about EAM systems.

ERP Systems
ERP is a methodology of its own. The general methodology of ERP, as a descendent from the
MRPII development done over the past couple of decades, is based on production analysis and
planning. With origins in the industries of discrete manufacturing and service-based industries
these types of systems are still most suited to these industries. The characteristic requirement of
industries such as these is the need for responsive production planning to suit a rapidly changing
sales environment.
Within ERP systems the stores, or purchasing processes are normally driven by the requirement
for raw materials that are required to fabricate the components in accordance with the production
plan.
Maintenance management does not form a general part of the methodology. The process
analyses the raw materials inputs, according to the operations plan, and calculates the machinery
and other resource requirements in order to maintain maximum levels of productivity.
Having said that it is worthwhile mentioning that the range of ERP systems currently on the
market have generally developed very good and competitive maintenance management modules.
The more advanced of these are easily able to assist in the maintenance management process
by tying maintenance requirements to the changing production plan. Thus making the best use of
maintenance resources.

EAM Systems
EAM systems are the family of systems that had their origins in extremely capital-intensive
industries. For example the dominant mining industry of Australia has given rise to the MIMS
system, which is now seen as one of the premier systems of its type in the world. Another system
in this genre is the Maximo system, which also holds a strong position in terms of market share

within the worlds capital-intensive industry. A main requirement of capital intensive industry is that
there machinery requirements is generally fixed.
In a mining environment, for example, the equipment is generally required to be available 100%
of the time based on a pre-determined availability. That is to say that the calculation for the
amount of truck required to complete the forecast or budgeted mining activity is based on the total
available truck hours x their expected availability.
Another example is the utilities industries. With recent episodes such as the California energy
crisis it can be seen that the utilities industries are generally required to operate at 100% capacity.
With that being defined as all of the time that the equipment is not required for scheduled
maintenance to ensure its productivity.
The maintenance and equipment parts requirements of the assets required to do the work
generally dominate the materials requirements, or purchasing processes, of such industries. Thus
requiring a system more focussed on the maintenance aspect of the organisation as dictated by
the forecast usage.
During the latter part of the nineties the similarities and converging functionalities of these two
families of enterprise management systems allowed them to exist in similar industries. However
they still have fundamental differences in their data structures and bottom line deliverables. Some
industries have even gone to the extent of integrating the two systems, although with varied
levels of success.

The Goal
No matter which system that is used the desired effect on maintenance is the following:
To move to a planned environment and allow for further progression along the
maintenance evolutionary path.
As is now widely accepted maintenance is an evolution more than a goal. Despite the advances
in technology there are still a very large number of maintenance management departments that
are extremely reactive in nature. This is identified by the proliferation of non-controlled stores
systems, high level of reactionary or breakdown content and by reading indicators such as MTBF
and MTTR.
(MTBF Mean Time Between Failures)
(MTTR Mean Time To Repair)
A maintenance workforce in a reactive state will have a very low MTBF of equipment and an
equally low MTTR. This may be masked, if not measured and regularly reported, by the fact that
machine availability may still be at a high level.
What the indicator is telling us is that we have a plant or piece of machinery that is unreliable and
breaks down often. Also we have teams of workers that are very good at fixing these
breakdowns. The heroic culture that is fostered in these sorts of situations can be the most
difficult obstacle in the implementation of a CMMS and realising the possible gains of this.
So the bottom line achievement that we want to realise by implementing CMMS is the
advancement of the Maintenance Management workforce to the next level in the maintenance
process or the Planned stage. This is indicated generally by the fact that we have greater control
over our stores systems, we are able to utilise capacity scheduling techniques to better manage

our human resources and we have a planned backlog of at least two weeks out. Giving us much
improved maintenance preparedness. Reliability and maintainability indicators should look better
also with MTBF rising and the MTTR measure, if we manage it correctly, staying at the preimplementation low level.
This also gives us the strong base for our move onwards through the predictive stage of
maintenance management through to the World Class/continuous improvement stage. Although
worthy of additional comment these wont be addressed within this article.
So what is the pay back that we should expect? This is very difficult to calculate and requires the
company undertaking the exercise to be able to take a very objective look at itself and evaluate
the data collected in its current working state. This stage of any evaluation is critical to the
accurate calculation of savings and therefore ROI.

Maintenance Human Resources and Material Requirements

So one of the base expectations, now openly stated, is the move from reactive to planned
workflow status. A measure that can be applied easily is that a Planned / Scheduled task will be
50% more efficient, in terms of duration and costs, than an Unplanned / Unscheduled task.
Although this appears to be a large number it is quite conservative and in some cases the
efficiency savings can be many times this.
As such the following calculation can be applied with confidence:
(Past years Unplanned/Unscheduled work (in Dollar terms) Unplannable tasks) x 50%
(An Unplannable task can be defined as a task that will not benefit from the efforts of planning.
These are usually short duration tasks)
Divided, pro rata, into the labour and materials categories this calculation will give you a very
powerful and achievable savings indicator from a thorough implementation of a good quality
CMMS system.
However the amount of savings actually realised will of course depend on the ability of the
organisation to truly embrace the changes that can be achieved and to drive them through all
levels of the company. It is not uncommon to see the full possible gains not realised in the first
years of the implementation as the maintenance resources may, wisely, be deployed on reliability
projects in order to usher in the next phase of maintenance development in a more controlled and
permanent manner.
An overall reduction in maintenance expenditure of 5% is an easily achievable result that I have
witnessed several times.

Machine Availability
A thorough CMMS system implementation will also take into account the KPI structure of the
organisation. With the amount of day-to-day data that will now be available pinpointing problem
areas and modifying processes, routines and / or other factors will be more easily achievable
also. As such a reduction in the amount of Breakdown work, or increase in overall availability of
plant and equipment of 5% is also a very realistic and achievable goal.
As such a calculation such as:

Past years breakdown downtime (In dollar terms) x 5%

Can be used as a realistic measure to calculate the savings from this area of maintenance
improvement.

Stores Holdings
As the work content becomes more and more planned in nature the work of the, generally long
suffering, stores department will become more and more predictive in nature. Requiring fewer
requirements to keep large volumes of parts and materials on a we might need it basis.
If the stores holdings can be reduced the logistical requirements to manage the stores function
also decreases dramatically. Particularly that of the purchasing department and actual stores
management personnel.
A percentage of approximately 8% reduction in stores holdings can be seen as both realistic and
achievable. Following up on implementations with full stores reviews is recommended as this will
bring the focus more and more onto the analysis of what are critical items and at what level do we
really need to hold them given our new operating environment.

Other Areas
As well as stores criticality reviews it is suggested that there are a range of follow up exercises to
a CMMS implementation. These include maintenance strategy analysis and reviews and root
cause analysis reviews using our new reserves of accurate data. The focus created by the
implementation will raise the awareness within the organisation of the strategic importance of
maintenance improvement, and if managed correctly will lead to great initiatives that were
previously obscured by the needs of the company to just keep it going
The possible flow on cost savings of these advancements, once the planned state is achieved is
measurable only against the organisations desire to continuously improve itself.
In concluding there are many financial gains that can be realised and should be expected from a
CMMS system implementation. However they are all integrated, and will only be realised if there
is a very genuine effort to adopt the concepts of maintenance improvement that are so very well
supported by these modern systems. The figures and expectations quoted here are average
values; much will depend on where the organisation is truly at now. Some organisations may well
be able to realise many, many times that which has been mentioned.
ROI is another story entirely, as part of the selection process the possible savings should be used
as a guide to how much the organisation is willing to spend on a system. As such the ROI, over
years, can then be accurately predicted and often surpassed if calculated conservatively
No consideration has been given in the scope of this article to the overall benefits, in productivity
terms, of an ERP implementation.