Maintenance during mergers and acquisitions: The challenges and solutions

Honing in specifically on the maintenance function of the two entities, there are a range of challenges to overcome – from efficiently migrating from one CMMS to another while ensuring the integrity of your data, to managing the culture shift among maintenance teams and their different philosophies.

To help you plan for a seamless integration of your maintenance functions, we have asked our North America Operations Lead, Sam Leach, to share his insights around key challenges faced by maintenance teams during mergers and acquisitions, as well as provide actionable solutions…

Challenge 1: Integrating systems and software

“A common challenge I often see when it comes to mergers and acquisitions is that the two companies have different CMMS software which need to be integrated into one. The most common CMMS software right now would be SAP and Maximo, but the way they’re both structured and how each program identifies their assets are very, very different. As you can imagine, this is a really big undertaking and a significant challenge when companies merge or are acquired. 

“If the acquiring company were using SAP and the acquired company was using Maximo, you may be able to determine how Maximo is structured, how they lay out their function locations, identify their assets or plan their maintenance, but a lot of times what you don’t know is how all assets are actually identified in the CMMS and at what level. Maximo may not identify assets at the very lowest component level, for instance, whereas SAP might get right down into the component level or the construction level of a particular asset.”

Solution:

“What you really need is someone who knows both CMMS programs well so they can decode the data, move all assets over and integrate the two in an organised fashion. At ABL we have several people who can do that very well – we’re one of the best out there in terms of understanding CMMSs and we have experts who have worked a lot in the core programs.

“Depending on how evolved the acquiring company is in terms of their CMMS standards – the codes they use to identify and format assets, equipment types, function location flocks and so on – we would follow that guidance 100%, but we do offer our expertise and suggestions in how we’ve done it before. 

“Having our depth of knowledge and experience means there’s much less time and training involved to integrate the two systems. Our team has a really rich understanding of various CMMSs, as well as what’s important when integrating two systems.”

Challenge 2: Merging of data

“Once you’ve integrated all of the assets over to a single CMMS, you often find that there are unidentified assets. It’s very common for the acquirer to have gone through several acquisitions over the years, resulting in losing track of a number of assets each time due to time and financial constraints. Every time they’re acquired, there’s a potential loss of data which can escalate into a huge challenge if the data isn’t captured properly at a later date.

“So, what do you do about all those assets? How are you going to know that they exist? Unless you have a project team and the budget in which to do it, it’s very hard to do this internally. Everybody has a job right now, and that’s what has to take priority. However, the longer you wait to get this data captured, the worse the issue is going to become – as you’ll have work orders being produced and work being done on equipment that is not properly stored in the CMMS, or potentially no maintenance being done on equipment that is missing altogether from the CMMS.

“This is a process that should happen immediately, but often there’s just not the realisation that this needs to happen until it’s too late, and very few companies want to spend the money or understand the effort it takes to go through and identify all the parts.”

Solution:

“To identify and capture the data of all these missing assets, you can look at their P&IDs as part of a desktop asset verification – which we can do – but these documents are usually old and may not represent what’s actually out in the field.

“What you do then is actually go and carry out the field walk downs, look around the plant or the pipeline and identify these assets in a physical asset verification, which is another service we offer at ABL. We have a software application called ePAV which allows us to capture a whole host of asset information, not just the tag with the equipment tag ID, but also things like the model, manufacturer and serial number.

“One of the biggest things we do is a bill of materials or spare part analysis, where we analyse all of the parts that make up a piece of equipment, as well as spare parts strategies where we help our clients determine what parts to keep on hand. Again, this is crucial for filling in the missing data in the CMMS and ensuring that all the information for each asset is captured so that maintenance can be carried out efficiently.”

Challenge 3: Combining philosophies and strategy 

“When a company is acquired, it’s not only a process of merging of assets, it’s also about understanding how the equipment is being maintained in the acquiree’s plan. Each company will have its own way of carrying out maintenance, so there are a number of questions that need to be addressed:

• How do you identify maintenance?
• How do you carry out maintenance and how often?
• Are you doing it efficiently or are you doing it more reactively? 
• Are you actually addressing all of the potential failures that could potentially happen to that piece of equipment? 
• Have you been keeping up with regulations?
• Have you been inspecting all of the equipment? 

A common issue of not having or following a standard methodology is consistency in rolling out maintenance tasks. An example of this would be a company that maintains based on manufacturer recommendations.  In many cases maintenance recommendations from the manufacturer are either too generic or done without considerations for the process or environment in which the asset is operating.  Having standard methodology in which to identify maintenance based on industry best practices and considerations for the consequences of failures will allow the company to maintain assets more efficiently.

Solution:

“To overcome this challenge, it’s important to get operations and maintenance teams involved from the start. These are the people who are actually doing the work, so their buy-in is what will ensure success when it comes to maintenance.

“This is something we can facilitate through workshops, where we help operations and maintenance teams identify the methodology of the acquiring company, how they classify those assets, identify their risks and set goals.

“We can also develop a strategic asset management plan if our clients want to have a tangible deliverable in addition to facilitating workshops. There are so many documents that go into this type of plan, but overall it’s a holistic approach to how you identify assets, how you maintain them, and spare parts philosophy. Then we consider ‘what is your methodology?’ using the ISO 55000 standard.

“One of the other applications that we have is an online assessment that a client can complete, and get a report to identify the areas they need to focus on when it comes to how they conduct maintenance.”

Challenge 4: Culture and people

“Culture change is probably one of the biggest challenges when it comes to mergers and acquisitions. Often when you’re acquiring a plant, you’re also acquiring the staff as well, but getting people to adapt to the acquiring company’s culture is really tough to manage and a change that happens over time. 

“People are the most important factor of a company. You can put all the effort into the assets, processes and the CMMS, but if you don’t get buy-in from the people, there’s no projection for the success of the maintenance. A lot of facilities are very compartmentalised which makes it very difficult to get everybody unified and on the same page.”

Solution:

“Many companies choose to use a third party like us to come in and provide a consulting or advisory service to help make the process a little bit smoother. We have a lot of experts at ABL who have worked in similar situations, or have experienced different levels of integration in their previous jobs, so we’re well-equipped to identify the areas of focus based on what we’ve seen in the past. There’s a method to make sure culture change and integration is done successfully and unless the acquiring company has done this multiple times, you can’t possibly have a solution for every single situation that may arise. 

“An effective way to help staff adapt to a new working culture is through workshops that are facilitated by industry experts as intermediaries. Training is another important solution to consider when it comes to merging two company cultures – when you get a new group of employees or younger staff, you’ve got to be able to train them and make sure they understand the philosophy that you’re using when it comes to maintenance.

“For the acquiring company, there needs to be a level of acceptance that the workers have been doing things in a certain way for a long, long time. They may not be doing it the way that you would like them to, but if you bring everybody together as a team and identify the common goal that you all want to make sure it’s run efficiently, that’s a good starting point for unifying the team.”

Challenge 5: Document management

“Another issue you find in a merger is that there are so many documents from both parties and they need to be reviewed in regard to what state they are in, where they are stored and how they are organised. It’s a massive process that people don’t really consider because they think it’s just a minor thing.

“One of the implications from a maintenance perspective is that if you have a complex piece of equipment and one of the mechanics gets sick or retires, how are you going to be able to find the documentation to know every component and how to maintain it? Sometimes with older plants, equipment can be so old that the manufacturer doesn’t even have any documentation for it, which leads to so much time wasted.

“More importantly, if that piece of equipment fails, you’re facing huge financial losses as a result of downtime – sometimes in the millions of dollars per day depending on what the output is. All of it comes down to documentation, and it’s a huge undertaking but with massive implications if it isn’t done correctly.”

Solution:

“When it comes to document control, you need somebody who understands ISO, the auditing process, and can help you identify key pieces of information, such as:

• Where’s your repository? 
• Where is your storage? 
• Where are you going to keep your documents or are you going to have an application to do it? 
• Is there some other area where the data is being backed up?
• What is the format that all of these documents need to be in? 
• Does the document contain design information, asset information, or more qualitative information, such as correspondence.

“Assuming that the acquirer doesn’t have any type of document control in place – which is a lot of the cases – it takes a huge effort to go in and look at each and every one of those documents and identify what they’re for. It’s not something that one person can go and do either – you’ve got to get teams involved to identify the different types of documents.

“There needs to be a clear structure in order for this to be done right, which is something we can facilitate for our clients. With industry experience, we understand the implications and can put people behind the process to help organise it and highlight the importance. In the process of identifying assets, we’ve suggested document control tasks that need to be done in order to make it successful.”

Need some advice on how to streamline your maintenance during a merger or acquisition?