EAM versus ERP: A historical perspective

Page 1 of 7

LOGIN | REGISTER

MENU

Art Of Change
EAM versus ERP: A historical perspective
Submitted by daryl.mather on Sun, 02/22/2009 - 14:05
To answer this one properly, it is worthwhile to go back to the mid 1970s when a lot of these
enterprise systems had their beginning.
Doing the work right
The first set of systems to emerge were built to deal with the issues and problems faced by the
production processes of manufacturers. They rightly believed that they could get a lot more
productivity out of their people and processes, and computerized solutions emerged as a solution to
this problem.
The desire to get more productivity and profitability from the production processes, coupled with the
need to get more business streams to be managed electronically, led to the creation of SAP in 1972.
(ICI was their first customer.)
During the 1980s, manufacturing became a lot more intelligent with the creation of the methodology
MRP, (Materials Resource Planning) and then later the evolution into MRP2 (Manufacturing Resource
Planning). Both of these, particularly the latter, tried to use the emerging technological systems as a
medium for executing the underlying methods.
Toward the end of the 1980s, the world also became aware of the successes at Toyota with Just-inTime Inventory Planning. It challenged the MRP2-style thinking and added an additional layer of
complexity to the processes needed to manage production processes.
In 1990, analyst firm Gartner coined the term Enterprise Resource Planning as a means of defining
systems that would tie together the disparate parts needed to manage a production line, as well as
the business surrounding that production line. It is a natural descendant of both the MRP2 processes,
the JIT revolution and the Computer Integrated Management thinking.
Interestingly though ... maintenance was never a part of these methods or approaches. Maintenance,
in these industries and at that time, was not considered strategic enough to warrant the focus that
production management did.

http://www.plantservices.com/blogs/art-of-change/eam-versus-erp-a-historical-perspect... 1/07/2016

EAM versus ERP: A historical perspective

Page 2 of 7

Doing the right work

At about the same time there were other industries, as well as process manufacturing, it must be
said, that were facing a different set of problems. Industries that were seeing a rising cost in physical
asset management, as well as an increasing understanding that the issues related to maintaining
physical assets were a bit more important than a cost center to be managed.
Maximo started out around 1968, I believe, and was soon followed by a string of additional programs
all seeking to address the same problems.
The two system types grew in relative isolation until the mid 1980s to early 1990s. One focused on
integrated business management, with a clear focus on the production processes. The other also
integrated business processes, but with a focus on managing the physical asset base.
The term Enterprise Asset Management (EAM) appeared to emerge around the beginning of the
1990s. I first heard it used by Mincom to define their MIMS application suite, whereas Maximo had
come to define the term MRO. (Maintain Repair and Overhaul/Operate -- depending on who you
spoke to at the time.)
I am pretty sure that the EAM term was initially coined as a marketing strategy to try to explain that
theirs was a different view of enterprise resource planning, depending on the type of enterprise. EAM
systems gained a lot of prominence in electricity industries, mining, oil and gas, defense and masstransit industry sectors.
In each of these the production processes and targets were extremely important, but the key
contributor to their productivity and profitability was the effectiveness of the physical assetmanagement programs.
The core principles were to do the right work, at the right time, with the right resources.
The difference
As late as 2003, Garnter group was still commenting on the fact that SAP did not adequately cover
MRO-style inventory algorithms. This goes to the heart of the differences between these two system
types.
One managed inventory in a definitive fashion. It tied inventory-management principles directly to the
needs of production and ensured that the supply chain that delivers the materials is as efficient as it
could be.
The other, EAM, managed inventory in a probabilistic fashion. Assets don't break down on cue. They
fail early, last longer, have intermittent problems and a range of other issues. In short, ERP systems
needed to include a just-in-time style of thinking - while EAM systems needed to have a just-in-case
approach.
And this meant a fundamental difference in software architecture and resource planning philosophy.
Today the host of systems that were marketing themselves as EAM systems have ceased to exist as
stand-alone companies. Tthe level of convergence is so tight that packages offer themselves as an
EAM or as an ERP depending on the requirements.
The term EAM is used less and less these days as companies look to manage their entire businesses
and not just the maintenance or production aspects of it. ERP has come to represent the definitive
enterprise system - whatever that means at a specific time to a specific client.

http://www.plantservices.com/blogs/art-of-change/eam-versus-erp-a-historical-perspect... 1/07/2016

EAM versus ERP: A historical perspective

Page 3 of 7

The future
EAM systems and terms are still thrown about at times. And to certain people in the game, they still
have a lot of relevance. But the number of people who truly understand the history and historical
differences are few and far between. So, in essence, the "two systems" story that has run through
enterprise systems up until now is effectively dead.
The time for all the really big Enterprise programs is well and truly over. By around 2004, most
companies had their enterprise systems in place. ERP systems also were able to move out of the
production planning and supply-chain space and into areas such as banking, government and other
huge markets.
Today there are minor changes, upgrades and at times system re-implementations. But I don't see
anywhere near the number of implementations that used to be in place during the 1990s. But I do see
an explosion of vendors trying to cram into a shrinking space.
Disappointing results, failed projects, disastrous budget explosions and a trail of other dead bodies
have left many companies and professionals wary of large-scale implementations.
You have to wonder what the effect of SaaS is going to be in the future. I am going to post on this
topic again very shortly. I am an unashamed fan of SaaS technology, and I think it is woefully
underexposed in the maintenance and reliability markets.
16377 reads
Permalink

Show Comments

http://www.plantservices.com/blogs/art-of-change/eam-versus-erp-a-historical-perspect... 1/07/2016

EAM versus ERP: A historical perspective

Page 4 of 7

Free Subscriptions
E-Newsletters

Digital Editions

plantservices.com E-Newsletters
Get Plant Services delivered to your inbox Monday through Friday! Sign up for Plant Services'
complimentary Smart Minute e-newsletter to get maintenance and reliability know-how you can put to
use today, plus the latest manufacturing news from around the Web, special reports, and more. Learn
more and subscribe for free today.

Most Popular
Past 7 Days

Past 30 Days

Past 6 Months

All Time

01
02

DIY: How to make a compound crossbow using materials in your garage

Are you bored with the same old DIY projects? Why not put your DIY skills

03
04

Plan your next family road trip around these 21 American factory tours
How will you be spending your summer vacation? Consider introducing your

05

The U.K. votes for Brexit, and it will impact automakers

The United Kingdom votes to leave the EU, and the fallout won't be limited

Turkish chemical engineering students win 2016 Honeywell UniSim design

challenge
Students' project addresses environmental, economic concerns for oil/gas

More than 15,000 attend National Maker Faire, and other highlights from National
Week of Making 2016
Obama: "No country has done more to build a culture of making and

http://www.plantservices.com/blogs/art-of-change/eam-versus-erp-a-historical-perspect... 1/07/2016

EAM versus ERP: A historical perspective

Page 5 of 7

Meet Smart Industry

We don't have to tell you the maintenance/reliability industry is getting increasingly smart. Our sister
site, Smart Industry, focuses on the digital transformation of industry. Learn more below.
Columbia pipeline pushes throughput, boost availability
Changes to the oil and gas industry in the United States have put pressure on transmission
companies to optimize their systems, add flexibility and respond more quickly to a fluctuating industry
landscape.
Cisco solutions support three major IoT use cases
"This is the next evolution of the IoT portfolio, says Cisco's John Reno. "Were enabling digital
transformation."
Working with the IoT...from cocktails to tears
Its exciting when that thing youre connecting to the Internet sends its first Hello world! message,
isnt it?

http://www.plantservices.com/blogs/art-of-change/eam-versus-erp-a-historical-perspect... 1/07/2016

EAM versus ERP: A historical perspective

Page 6 of 7

About

Contact Us
Advertise
Media Kit
Privacy Policy
Legal / T&C
Content

Blogs
White Papers
Webinars
Special Reports
Events
Products
Magazine

Subscribe
Digital Edition
Issues Archive
Articles

http://www.plantservices.com/blogs/art-of-change/eam-versus-erp-a-historical-perspect... 1/07/2016

EAM versus ERP: A historical perspective

Page 7 of 7

Reprints
Site Tools

Site Map
Knowledge Center
Training / Career Center
CMMS Review
Stay Connected

My Account
Newsletters
Social Media
RSS

Contact Us | Advertise | Privacy Policy | Legal Disclaimers, Terms & Conditions

Copyright 2004 - 2016 Plant Services. All rights reserved.
P: 630-467-1300

| 1501 E. Woodfield Road, Suite 400N, Schaumburg, IL 60173

Chemical Processing | Control | Control Design | Food Processing | Pharmaceutical Manufacturing | Plant Services
| Smart Industry

http://www.plantservices.com/blogs/art-of-change/eam-versus-erp-a-historical-perspect... 1/07/2016