2017 north american asset performance management solution ... · 2017 north american asset...

2017 North American Asset Performance Management Solution Oil & Gas

Product Leadership Award

NORTH AMERICAN ASSET PERFORMANCE MANAGEMENT SOLUTION OIL & GAS

PRODUCT LEADERSHIP AWARD

2017

BEST PRACTICES RESEARCH

© Frost & Sullivan 2017 2 “We Accelerate Growth”

Contents

Background and Company Performance ........................................................................ 3

Industry Challenges .............................................................................................. 3

Product Family Attributes and Business Impact ........................................................ 3

Conclusion........................................................................................................... 7

Significance of Product Leadership ................................................................................ 8

Understanding Product Leadership ................................................................................ 8

Key Benchmarking Criteria .................................................................................... 9

Best Practices Award Analysis for Oniqua ...................................................................... 9

Decision Support Scorecard ................................................................................... 9

Product Family Attributes .................................................................................... 10

Business Impact ................................................................................................. 10

Decision Support Matrix ...................................................................................... 11

Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices ................................................................................................................. 12

The Intersection between 360-Degree Research and Best Practices Awards ..................... 13

Research Methodology ........................................................................................ 13

About Frost & Sullivan .............................................................................................. 13



Background and Company Performance

Industry Challenges

Oil and gas companies, as well as other companies from asset-intensive industries, tend to

carry hundreds of thousands of maintenance, repair, and operations (MRO) spares but still

up to 50% of unscheduled downtime in these industries can be attributed to a lack of

correct spare parts. This is due to spare parts being unavailable at the right time, the right

cost, or because of stock outs. This highlights the importance of having the right support,

the ability to respond quickly during plant downtime, and the ability to prevent unplanned

downtime. Supply chain, inventory, and materials managers have neither the time nor the

appropriate solutions available to them to effectively manage each necessary spare part.

Typically, managers try to order or reorder parts by setting a reordering level in their

enterprise resource planning (ERP) or enterprise asset management (EAM) systems or in

their homegrown systems. Spare parts are also sometimes managed through

spreadsheets or by the gut feeling of the managers and in some cases, they will order as

many as 10 spare parts for every system to ensure the plant stays up and running.

However, MRO is really about getting the maintenance, inventory, and supply chain

groups to work better together to make sure spare part service levels are maximized while

balancing cost and risk. ERP and EAM systems that are built around material resource

planning or other manufacturing processes are not sufficient to handle these MRO

problems and are only good at performing transactions and reporting. Existing systems

typically do not perform tasks such as prescriptive analytics, inventory forecasting, and

exceptions management.

For such circumstances (the use of ERP and EAM systems), companies that can provide an

asset performance management solution with advanced analytics to optimize MRO spares

and materials are expected to secure a leadership position in the market.

Product Family Attributes and Business Impact

Match to Needs

Oil and gas companies are always looking to cut costs, but they typically spend millions of

dollars on inventory that collects dust. In addition to the price of this inventory, this costs

them physical space to store this inventory in the warehouse. However, cutting these

inventory costs can increase the risks related to performance, downtime, and service

levels.

Ensuring responsiveness regarding the needs and profitability of oil and gas companies

despite their growing maturity and their service and supply chain complexity, Oniqua’s IQ

Optimization Suite is designed to overcome the industry’s prevailing challenges. The IQ

Optimization Suite effectively matches its capabilities to industry needs through a unique

combination of four main modules. These include MRO inventory optimization,

maintenance optimization, procurement optimization, and equipment optimization. The

Suite facilitates collaboration among key stakeholders (maintenance, materials

management, and procurement) and fosters a business environment that boosts overall

asset performance. In addition to having optimization modules for maintenance,



inventory, and procurement, the IQ Optimization Suite has advanced analytics designed

specifically for complex MRO environments.

The IQ Optimization Suite extracts the existing master data and history from a customer's

ERP and EAM systems, then profiles and segments the data based on part usage,

criticality, lead time and other criteria to ensure that all MRO spares are not treated the

same way. Oniqua works closely with its customers, and one of the first things Oniqua

does during the deployment phase is that it figures out what the customer’s business

objectives are and customizes the software accordingly. Based on this, the segmented

data is run through Oniqua's analytics optimization process by applying business rules,

advanced statistical algorithms and economic models in order to produce

recommendations for spare part management decisions, all based on the thresholds set

during software customization.

The aforementioned approach makes Oniqua attractive to oil and gas companies because

the solution does not simply save costs by reducing inventory. What largely differentiates

the IQ Optimization Suite is that its advanced MRO-specific algorithms and analytics

capabilities balance both cost and risk. The analytics were built specifically to handle oil

and gas MRO issues such as the slow-moving nature of spares and the non-seasonality

component of spares. This solution accounts for both cost and risk and does not simply

perform a cost saving exercise. It balances the equation between cutting the costs to a

certain level while making sure that the performance, and service levels are not negatively

affected. The IQ Optimization Suite makes sure customers are still able to maintain high

service levels and not increase any unplanned downtime, even when it recommends

cutting the inventory by 20 percent.

As identified earlier, one of challenges of inventory and materials management is the

massive volumes of MRO spares involved in oil and gas companies. When setting a

minimum and maximum spare part level, there are too many variables that need to be

considered if managing a system manually—these include average value, size, lead times,

and how it affects planned and unplanned demand. All this information needs to be

considered for every spare part, and when there are over hundreds of thousands of spare

parts, this number is simply unmanageable.

These variables are not taken into account in competing solutions, such as traditional ERP

or EAM applications, because these lack the appropriate capabilities required to address

specific MRO challenges. The IQ Optimization Suite’s inventory optimization module,

however, takes into account all of these variables in order to determine what the min/max

levels should be. Additionally, the IQ Optimization Suite looks at the whole spectrum of a

customer’s required materials and spare parts that go into supporting the maintenance

and operations side of a business. This includes multi-million dollar spare parts that are

slow moving, might not be used at all, or might be used once every 3 or 4 years, and all

the way down to gloves and lubricants (low value, fast moving spare parts and materials).

Setting the min/max level is only one of the several capabilities of the Oniqua Suite, and

its actual strength lies in filling several gaps left over by competing solutions. These

capabilities include what-if analysis, criticality analysis, prescriptive analytics, multi-



dimensional inventory forecasting algorithms, stock out cost modeling, dynamic inventory

segmentation, investment recovery and surplus management, and risk optimization.

In essence, Oniqua helps oil and gas companies and other asset-intensive companies

optimize MRO spares and materials management, resulting in reduced costs, greater

service levels, and increased efficiency.

Design

Keeping in mind the need to eliminate the difficulty associated with complex data

patterns/analysis, Oniqua has designed its solution with intuitive visualizations, drag and

drop functionality, what-if analysis, and optimization algorithms. These features make it

easier for users to analyze data and to derive actionable insights to identify trends and

growth opportunities. Therefore, its users do not have to be experts or programmers in

order to use the solution. Maintenance managers can now easily and quickly make

decisions and take effective actions to optimize maintenance spares and materials. The

ability to visualize MRO inventory levels, stock outs, and service levels using multiple data

views generates the insight required to reduce unplanned downtime and costly stock outs.

Leading-edge reporting and interactive dashboards are other innovative features and

functions that not only create an enriched user experience, but also provide the visibility

required to effectively manage inventory. The ability to quickly and easily build and

generate reports increases user efficiency and productivity.

Being technology agnostic, the solution is designed to work with all the major ERP

systems, EAM systems (SAP, Oracle, and IBM Maximo), and data warehouses to

synchronize data.

Additionally, the company offers both cloud and on-premise solution deployment. Its

customers can connect to the cloud and start using all of the optimization capabilities and

services quickly and reliably with low risk and a low cost of ownership of managing the

software, infrastructure, and resources. As a result, the majority of its customers currently

use the company’s cloud software as a service (SaaS) subscription model.

Product/Service Value

One of the primary factors that has contributed to the company’s success is that it offers a

comprehensive portfolio of Master Data Services and Opportunity Assessments. Oniqua’s

Professional Services team, with its MRO expertise and understanding of every aspect of

the customer’s business, also offers Rapid Value Services (i.e., one-time project-based

services). Its highly efficient resource pool (the Professional Services team) can identify a

customer’s specific MRO problems and immediately remedy them. When Oniqua performs

a Rapid Value Service or Opportunity Assessment, customers often see immediate savings

across their critical maintenance spares and materials inventories. Having seen value in

these Services and Assessments, customers usually become interested in the software for

an ongoing subscription.

Opportunity Assessments are typically done at the front end of the sales cycle, where

customers are interested in what Oniqua does but follow a ‘prove it to me’ approach. In

this case, Oniqua takes a slice of the customer data, runs it through Oniqua’s analytics,



and provides a detailed report on what it is seeing across customer data and where the

greatest areas of opportunity lie. Providing customers with unique value propositions such

as Rapid Value Services and Opportunity Assessments clearly help Oniqua gain customers’

confidence and strengthens Oniqua’s potential to further expand its scope of services in

the coming years.

The company’s Professional Services also include software implementation, deployment,

functional consulting, technical consulting, project management, product training,

customer support, and customer mentoring.

Customer Acquisition

Oniqua acquires Tier I oil and gas companies as clients (usually above $2 billion in

revenues and $100’s of million in inventories) through a direct channel and acquires other

companies ($500 million to $2.0 billion in revenues and at least $10 million in inventory)

through business partners. The company works very closely with each customer’s

operations, inventory, supply chain, maintenance, reliability, and materials managers. The

significant configuration flexibility and scalability of the solution’s architecture has helped

Oniqua secure customers of all sizes, from small single site installations to large multi-site

installations of global enterprise clients.

Some of the leading oil and gas companies that have used Oniqua to reduce production

risks, improve operational and plant efficiencies, improve service levels, and optimize

maintenance and supply chain processes include BP, ExxonMobil, BHP Petroleum,

Occidental Petroleum Corporation, ConocoPhillips, TOTAL, Transocean, Phillips 66 and

ADMA-OPCO. ExxonMobil is currently one of Oniqua’s largest and fastest growing oil and

gas customers, having signed an agreement in December 2015 and is rolling the IQ

Optimization Suite out globally, two to three sites at a time. ConocoPhillips was able to

lower its inventory levels by 10 percent for three years in a row and reduced MRO working

capital by 10 percent at one of its sites in just six months. This resulted in ConocoPhillips

quickly saving $10 million. Due to its 99.0% customer retention rate over a rolling five-

year period and a robust, continuously expanding customer base of hundreds of

customers with thousands of users, Oniqua is expected to even further strengthen its

market position in the coming years.

Growth Potential

The Oniqua IQ Optimization Suite has been installed across more than 30 countries,

supported by offices in North America, South America, South Africa, Europe, and

Australia. Celebrating 26 successful years of MRO optimization, Oniqua manages billions of

dollars worth of inventory (critical spares and materials) and millions of unique stock

items. ASCO, a pioneer in oilfield support services such as oilfield logistics, transportation,

fueling, and maintenance specific to the oil and gas space, acquired Oniqua in 2012.

The Oniqua IQ Optimization Suite has not only been highly successful in promoting

product leadership in oil and gas, but has also drawn the attention of leaders from a range

of other industries, such as mining, petrochemicals, utilities, manufacturing, and

transportation. Oniqua has nine of the top 10 global mining companies as its customers,



including BHP Billiton – one of Oniqua’s biggest and longest standing customers (over 20

years). BHP Billiton has a global license with Oniqua, where the IQ Optimization Suite is in

use in about 130 mining sites across the world. Other Oniqua customers include Newmont

Mining, Rio Tinto, Freeport McMoRan, AEP, Tennessee Valley Authority, Nebraska Public

Power District, Alcoa, ORICA, BlueScope Steel and many other marquee names.

Going forward, Oniqua’s product vision and strategy is strong for the foreseeable future.

In July 2017 Oniqua is going to introduce a major upgrade to its inventory optimization

module. In addition to this module upgrade, the company plans to enhance its other

modules, such as maintenance, equipment, and procurement. In its maintenance module

Oniqua will be adding more predictive capabilities, leveraging the use of Big Data.

Oniqua’s ability to work across a plethora of asset-intensive industries and its strong

product strategy are expected to boost Oniqua’s growth potential in the coming years.

Conclusion

Leveraging its expertise in developing technologically advanced asset performance

management solutions, Oniqua’s IQ Optimization Suite addresses industry complexities by

optimizing the management of critical maintenance spares and materials across the full

asset lifecycle. Oniqua has secured a competitive edge over its peers by providing a

solution with prescriptive analytics, multi-dimensional inventory forecasting algorithms,

and reporting capabilities that fill gaps in leading ERP and EAM systems. The advanced

MRO-specific analytics transforms data into actionable insights and helps asset-intensive

oil and gas companies balance costs and risks. Its customers have successfully reduced

costs, increased service levels, minimized unplanned downtime, and achieved greater

efficiencies across their operations. Designed as a cloud-based solution specifically for

complex, asset-intensive MRO environments, the flexible configuration, interactive

dashboards, advanced reporting, and intuitive visualizations clearly enhance the value

proposition to its customers. With its strong overall performance, Oniqua has earned Frost

& Sullivan’s 2017 Product Leadership Award.



Significance of Product Leadership

Ultimately, growth in any organization depends upon customers purchasing from a

company and then making the decision to return time and again. A comprehensive

product line, filled with high-quality, value-driven options, is the key to building an

engaged customer base. To achieve and maintain product excellence, an organization

must strive to be best-in-class in three key areas: understanding demand, nurturing the

brand, and differentiating from the competition.

Understanding Product Leadership

Demand forecasting, branding, and differentiating all play a critical role in finding growth

opportunities for your product line. This three-fold focus, however, must be complemented

by an equally rigorous focus on pursuing those opportunities to a best-in-class standard.

Customer communications, customer feedback, pricing, and competitor actions must all be

managed and monitored for ongoing success. If an organization can successfully parlay



product excellence into positive business impact, increased market share will inevitably

follow over time.

Key Benchmarking Criteria

For the Product Leadership Award, Frost & Sullivan analysts independently evaluated two

key factors—Product Family Attributes and Business Impact—according to the criteria

identified below.

Product Family Attributes

Criterion 1: Match to Needs

Criterion 2: Reliability and Quality

Criterion 3: Product/Service Value

Criterion 4: Positioning

Criterion 5: Design

Business Impact

Criterion 1: Financial Performance

Criterion 2: Customer Acquisition

Criterion 3: Operational Efficiency

Criterion 4: Growth Potential

Criterion 5: Human Capital

Best Practices Award Analysis for Oniqua

Decision Support Scorecard

To support its evaluation of best practices across multiple business performance

categories, Frost & Sullivan employs a customized Decision Support Scorecard. This tool

allows our research and consulting teams to objectively analyze performance, according to

the key benchmarking criteria listed in the previous section, and to assign ratings on that

basis. The tool follows a 10-point scale that allows for nuances in performance evaluation.

Ratings guidelines are illustrated below.

RATINGS GUIDELINES

The Decision Support Scorecard is organized by Product Family Attributes and Business

Impact (i.e., These are the overarching categories for all 10 benchmarking criteria; the

definitions for each criterion are provided beneath the scorecard.). The research team

confirms the veracity of this weighted scorecard through sensitivity analysis, which



confirms that small changes to the ratings for a specific criterion do not lead to a

significant change in the overall relative rankings of the companies.

The results of this analysis are shown below. To remain unbiased and to protect the

interests of all organizations reviewed, we have chosen to refer to the other key

participants as Competitor 2 and Competitor 3.

Measurement of 1–10 (1 = poor; 10 = excellent)

Product Leadership

Product Family

Attributes

Business

Impact Average Rating

Oniqua 9.5 9.5 9.5

Competitor 2 8.0 8.0 8.0

Competitor 3 7.0 7.0 7.0


Criterion 1: Match to Needs

Requirement: Customer needs directly influence and inspire the design and positioning of

the product family.

Criterion 2: Reliability and Quality

Requirement: Products consistently meet or exceed customer expectations for

performance and length of service.

Criterion 3: Product/Service Value

Requirement: Products or services offer the best value for the price, compared to similar

offerings in the market.

Criterion 4: Positioning

Requirement: Products or services address unique, unmet need that competitors cannot

easily replicate or replace.

Criterion 5: Design

Requirement: The product features an innovative design, enhancing both visual appeal

and ease of use.

Business Impact

Criterion 1: Financial Performance

Requirement: Overall financial performance is strong in terms of revenues, revenue

growth, operating margin, and other key financial metrics.

Criterion 2: Customer Acquisition

Requirement: Product strength enables acquisition of new customers, even as it enhances

retention of current customers.



Criterion 3: Operational Efficiency

Requirement: Staff is able to perform assigned tasks productively, quickly, and to a high

quality standard.

Criterion 4: Growth Potential

Requirements: Product quality strengthens brand, reinforces customer loyalty, and

enhances growth potential.

Criterion 5: Human Capital

Requirement: Company culture is characterized by a strong commitment to product

quality and customer impact, which in turn enhances employee morale and retention.

Decision Support Matrix

Once all companies have been evaluated according to the Decision Support Scorecard,

analysts then position the candidates on the matrix shown below, enabling them to

visualize which companies are truly breakthrough and which ones are not yet operating at

best-in-class levels.

High

Low

Low High

Bu

sin

ess I

mp

act


Oniqua

Competitor 2

Competitor 3



Best Practices Recognition: 10 Steps to Researching,

Identifying, and Recognizing Best Practices

Frost & Sullivan analysts follow a 10-step process to evaluate Award candidates and

assess their fit with select best practice criteria. The reputation and integrity of the

Awards are based on close adherence to this process.

STEP OBJECTIVE KEY ACTIVITIES OUTPUT

1 Monitor, target, and screen

Identify Award recipient candidates from around the globe

Conduct in-depth industry research

Identify emerging sectors

Scan multiple geographies

Pipeline of candidates who potentially meet all best-practice criteria

2 Perform 360-degree research

Perform comprehensive, 360-degree research on all candidates in the pipeline

Interview thought leaders and industry practitioners

Assess candidates’ fit with best-practice criteria

Rank all candidates

Matrix positioning of all candidates’ performance relative to one another

3

Invite thought leadership in best practices

Perform in-depth examination of all candidates

Confirm best-practice criteria Examine eligibility of all

candidates Identify any information gaps

Detailed profiles of all ranked candidates

4

Initiate research director review

Conduct an unbiased evaluation of all candidate profiles

Brainstorm ranking options Invite multiple perspectives

on candidates’ performance Update candidate profiles

Final prioritization of all eligible candidates and companion best-practice positioning paper

5

Assemble panel of industry experts

Present findings to an expert panel of industry thought leaders

Share findings Strengthen cases for

candidate eligibility Prioritize candidates

Refined list of prioritized Award candidates

6

Conduct global industry review

Build consensus on Award candidates’ eligibility

Hold global team meeting to review all candidates

Pressure-test fit with criteria Confirm inclusion of all

eligible candidates

Final list of eligible Award candidates, representing success stories worldwide

7 Perform quality check

Develop official Award consideration materials

Perform final performance benchmarking activities

Write nominations Perform quality review

High-quality, accurate, and creative presentation of nominees’ successes

8

Reconnect with panel of industry experts

Finalize the selection of the best-practice Award recipient

Review analysis with panel Build consensus Select recipient

Decision on which company performs best against all best-practice criteria

9 Communicate recognition

Inform Award recipient of Award recognition

Present Award to the CEO Inspire the organization for

continued success Celebrate the recipient’s

performance

Announcement of Award and plan for how recipient can use the Award to enhance the brand

10 Take strategic action

Upon licensing, company is able to share Award news with stakeholders and customers

Coordinate media outreach Design a marketing plan Assess Award’s role in future

strategic planning

Widespread awareness of recipient’s Award status among investors, media personnel, and employees



The Intersection between 360-Degree Research and Best

Practices Awards

Research Methodology

Frost & Sullivan’s 360-degree research

methodology represents the analytical

rigor of our research process. It offers a

360-degree-view of industry challenges,

trends, and issues by integrating all 7 of

Frost & Sullivan's research methodologies.

Too often companies make important

growth decisions based on a narrow

understanding of their environment,

leading to errors of both omission and

commission. Successful growth strategies

are founded on a thorough understanding

of market, technical, economic, financial,

customer, best practices, and

demographic analyses. The integration of

these research disciplines into the 360-

degree research methodology provides an

evaluation platform for benchmarking

industry participants and for identifying

those performing at best-in-class levels.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth

and achieve best-in-class positions in growth, innovation and leadership. The company's

Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined

research and best practice models to drive the generation, evaluation, and implementation

of powerful growth strategies. Frost & Sullivan leverages more than 50 years of

experience in partnering with Global 1000 companies, emerging businesses, and the

investment community from 45 offices on six continents. To join our Growth Partnership,

please visit http://www.frost.com.

360-DEGREE RESEARCH: SEEING ORDER IN

THE CHAOS

http://www.frost.com/

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