Competitive organizations are always searching for the most optimized production processes. Industry 4.0
promises to transform industries worldwide, with digital processes at the forefront of that change.
However, while they will be transformative, digital possibilities don’t have to be complex. And not every
company has to blaze a new and unique trail in order to benefit from digital technology adoption.
The objective of enterprise remains simple throughout even the most complicated digital changes: to
achieve fully optimized and predictable asset performance. This paper outlines a pragmatic, effective
approach to maximizing performance and predictability of assets across industrial operations.
The most reliable way to predict the future is to create it.
The promise of Industry 4.0
By connecting machines, people, and systems, Industry 4.0 promises to create intelligent networks across
the manufacturing value chain that ultimately make operations fully predictable. By monitoring and
measuring the performance of all equipment, future factories will generate the data that Operators need to
iterate and improve processes, maximize production, and further improve efficiency.
Expectations for this transformation are high, and with good reason. The networked factory in the age of
Industry 4.0 primarily runs itself, requiring only a few digitally augmented Engineers to monitor
operations and troubleshoot failures. Moreover, the Industrial Internet of Things (IIoT) dissolves the
boundaries between individual factories, connecting multiple production locations and streamlining
The broadest Industry 4.0 possibilities include self-sufficient machines that heal themselves, and each
other, without human intervention. Peer-to-peer comparisons and systematic data analysis enhance the
accuracy of reports on asset health at the system level and component level. Production assets can
maintain a high degree of self-awareness and predictability in this environment, providing management
teams not just with condition-monitoring or fault diagnosis, but with the actionable insights needed to
improve predictability and sustainability.
Successful digital transformation reaches beyond technology.
What others are saying about Industry 4.0
The improvements in asset maintenance, inventory optimization, interoperability, and worker and health
safety that result from Industry 4.0 are not going unnoticed. McKinsey predicts that Industry 4.0
capabilities such as predictive alerts have the potential to reduce downtime between 30 to 50 percent.
Meanwhile, automation capabilities can boost labor productivity by 40 to 50 percent1.
Nevertheless, while BCG notes that many manufacturers see Industry 4.0 as a priority in order to improve
considerations like equipment maintenance or worker health and safety, few of them consider it an
opportunity to identify new revenue streams. When it comes to digital transformation, the emphasis is
typically on productivity optimization, while a comprehensive business strategy is often absent.
Where should a comprehensive digital transformation strategy start? Watch the video to
Shifting software investment from CAPEX to OPEX
Large capital expenditures like digital transformation efforts create inherent challenges when
implementing new technology, including:
The large amount of cash required to make the investment ties up and delays additional investment
Error-prone guesswork is involved in determining future capacity needs for software.
Lengthy and arduous processes are required to get budget approval.
Purchased technologies often stay with the company — despite technology advancements or changes in
For these reasons, CFOs are shifting away from capital expenditures and instead adopting operational
spending models. This allows companies to:
Pay only for the capacity they need now and scale as requirements change.
Simplify and accelerate the approval process with fewer short-term spending requirements.
Reduce large upfront expenditures, freeing up capital to make multiple investments across the
Decrease the need to borrow or divert financing from other projects to pay for large, upfront
technology costs by increasing funding through operations.
Smooth out cash flows over time instead of requiring lumpy outlays that may impact financial
reporting and market.
Adapt to fast-paced advancements in Industry 4.0 technology.
Overcoming the challenge of achieving digital transformation
A holistic approach to asset performance is paramount for meaningful and impactful digital
transformation. Companies must shift their focus away from specific technologies and instead work on
establishing a high degree of interconnectivity among assets, people, processes, and technology.
The critical first step in laying that interconnected foundation is building the right Asset Performance
Management (APM) strategy — one based on a thorough understanding of an organization’s own level of
maturity in order to best support business objectives and the overall business strategy. Done the right
way, digital transformation acts as a business catalyst.
True digital transformation requires upgrading APM from an asset-oriented approach to a
system that holistically connects Engineering, Operations and Performance. That’s APM 4.0.
APM insight in three dimensions
Effective APM systematically charts a diverse range of processes and demonstrates how well an
organization aligns and adheres to them. It clarifies how reliable and complete operational data is, and
it also considers the work culture and the efficiency of enterprise systems in supporting business
processes and the workforce.
Essentially, APM organizes transparency across every single component, resource, system, and process in
the organization. To accomplish this without getting overwhelmed by the sheer complexity of so many moving
parts, APM must be viewed in terms of three high-level dimensions.
What targets do you have? Do you have a healthy balance between your financial conditions and
performance parameters? What market challenges will you be facing? What sustainability &
environmental factors should be considered? How are supply chain dynamics influencing your facility?
Visual Asset Condition
What is the physical condition of assets, including their layout, automation architecture, and
workflows within your plant?
Maintenance and Operations
What is the condition of your organization, processes and IT/OT systems? How do they interact? How
are you organized?
Creating transparency in business context
Building proper business context entails utilizing approximately 10 cross-industry benchmarks. For
example, the total maintenance costs/asset replacement value KPI determines the amount of money you need
to keep your asset base in shape. But to determine the costs of maintaining any given asset and the value
of replacing it outright, you need clear insight into multiple facets of that asset and your facility,
such as the impact of the surrounding geography, demographics, and environmental conditions; the size,
complexity, and age of the facility; the asset’s place in the supply chain; and the health of the market
that manufactures and services the asset.
AVEVA’s APM 4.0 framework (connecting Engineering, Operations, and Performance) puts all of these complex
factors into their correct context and considers how each will determine the conditions for a successful
digitalization journey. As a result, it will eventually also provide the ability to predict failures ahead
of time, giving you the option to act in situations when proactive maintenance or repair is more cost
The APM 4.0 framework also balances four key value drivers within the Business Context dimension, helping
you set course for the APM strategy with the best monetary value.
The way a business chooses to balance these four drivers over time will require re-tuning depending on
how the business responds to the operations lifecycle and its effect on the asset lifecycle.
For instance this scenario is represented below:
When market demand increases, the overall APM strategy needs to be focused on asset performance.
When economic conditions enforce operational cost reduction, this focus might need to shift to a more
These four value drivers work as a
business compass and help you keep sight of your true north as they shift in response to the operational
The agility you need to re-tune your APM Strategy is determined by the overall condition and regulatory
compliance of your assets, your asset management organization maturity, and their alignment with APM
systems. In turn, those considerations depend on the lifecycle phase your assets are in.
Aside from helping you achieve the best ROI for improvement, this set of value drivers includes
environmental and sustainability aspects that become key for a healthy business. From tighter
regulations to an increased public outcry for corporate and industrial responsibility, businesses now
have multiple incentives to maintain an accurate and up-to-date view of their assets at the highest
level so that sustainable decisions can be made regarding material selection, dematerialization, energy
consumption, proper end-of-life disposal, and so on. The value drivers defined here help you define,
balance, and prioritize these vital sustainability efforts.
Creating awareness of asset condition
When defining an asset’s condition, it is easy to get lost in equipment details instead of evaluating the
entire performance chain that is defined by the nature and condition of your current assets. Businesses
need to know whether their asset base is in good condition in relation to factors like age, layout,
overall health, and their match with current operating windows. The overall asset condition must also be
considered to determine what is feasible in terms of predictable operations and delivery.
Creating efficiency in operations and performance
After taking the business context and overall asset condition into account, full insight into an
organization’s APM capabilities becomes crucial. These capabilities are the sum of all work processes,
supporting systems, and data quality within a specific work culture. A company’s effectiveness with APM is
strongly related to the correlation of all these elements and the way the organization is shaped around
them. After all, the best laid plans are only as effective as those responsible for putting them into
Shared insights into the current status of the business, organizational maturity, and
asset condition ensure your success.
Industry 4.0 comes with the promise of incredible new efficiencies for production and maintenance. For
many organizations, however, the prospect of falling short in pursuit of those efficiencies may feel
daunting, especially if it means an unsuccessful push to embrace Industry 4.0 could result in wasted
money, time, and resources.
An effective APM 4.0 strategy connects engineering, operations, and performance. It lays the foundation
for successful, streamlined digital transformation by establishing an easy-to-understand framework
including best practices, integrated system solutions, and single truth data models. It provides an
actionable, evidence-based roadmap that prioritizes improvement in tasks and investments while aligning
AVEVA and a strategic APM roadmap
AVEVA helps industrial businesses optimize the engineering, operation, and performance of critical
assets. Our APM Roadmap gives clients the insight and perspective they need to identify top priorities and
optimize operations, often in a matter of weeks.
Discover your current APM maturity with our brief assessment to help benchmark against competitors
and guide your APM strategy development.