Industrial assets, from complex manufacturing plants to remote and mobile capital equipment, are subject to an asset availability ceiling. While this ceiling varies by industry, peak system availability is typically 85-95 percent. Unfortunately, the widespread acceptance of these ceilings masks the hidden—and significant—costs associated with unplanned downtime.

For typical heavy process industries, these costs can represent 1-3 percent of revenue and potentially 30-40 percent of profits annually. For large capital equipment, the costs may be 1-3 percent of asset value per year. With millions of dollars in savings at stake, the cost of unplanned downtime warrants further investigation.

Patterns in equipment availability
Industry studies show that large complex assets typically achieve 85-95 percent availability. Of greater interest is that nonavailability is split evenly between planned downtime (scheduled maintenance) and unplanned downtime (breakdowns). Because unplanned downtime is so pervasive and no clear way exists to eliminate the problem, the 2-5 percent of nonavailability is accepted as normal even though it represents a significant cost burden. The cost of downtime can be categorized as follows:

Lost revenue. The greatest impact of unplanned downtime is revenue loss. This is typically the result of demand exceeding supply. The loss of revenue due to downtime is especially egregious, because the cost is not just the loss of the typical 3-10 percent profit margin on the lost revenue. It is actually the value of the total revenue lost, less the direct avoided costs of production (generally materials or energy).

Consider this example: an airline flight is cancelled due to mechanical problems and all passengers fly on competing airlines. The only costs the airline avoids due to the cancelled flight are the fuel burned and possibly crew costs. However, no revenue was collected so this becomes a downtime cost. In this example, fuel and crew costs may be approximately 30 percent of revenue, so the cancellation results in a cost of 70 percent of the potential revenue for the flight—much higher than assuming the cost is the typical 6–7 percent airline net profit times the potential revenue. The same logic also applies to plant downtime.

Carrying excess capacity. A typical strategy to address an asset availability barrier is carrying excess production capacity. This may entail building a plant slightly larger than necessary so product can be inventoried to cover unplanned downtime, or carrying spare units to replace those that fail. Both solutions have costs: capital to purchase that additional capacity and additional maintenance expenses associated with a larger facility.

In this model, it is assumed that excess capacity is equal to the amount of unplanned downtime, with a cost equal to that fraction of asset value. This amount then is annualized based on an expected equipment life and discount rate. To calculate maintenance costs on this excess capacity, a rule of thumb can be used. For most long-lived equipment assets, life-cycle maintenance costs are roughly equal to capital costs. In this model, the maintenance costs of excess capacity are determined by a multiple of capital costs. If maintenance costs are known, the correct multiple can be entered; however, for the following examples, it was assumed capital and maintenance costs were equal.

Disruption and recovery costs. The recovery cost associated with returning to normal business operations also must be considered. This could include overtime for emergency repairs, airfreight for materials or spare parts, loss of product due to off-quality operations, etc. Since these costs are situation-specific, it is difficult to use a rule-of-thumb or balance-sheet-based calculation to develop an estimate.

So, for the purpose of this simple model, recovery costs are included as a fraction of the maintenance costs of the asset (which are estimated as a multiple of capital costs). For the following examples, it is assumed that recovery costs are 3 percent of the total maintenance costs, although the model does allow for any percentage to be specified. It also is assumed that the recovery costs are constant even if excess capacity is available; if unplanned downtime occurs, the costs to recover should be the same if revenue can be recovered or not.

Simple downtime cost model–plant example
With the three major elements of downtime now identified—loss of revenue, excess capacity, and recovery—a simple model can be used to calculate the hidden cost based on the amount of excess capacity available to recover lost revenue. In this approach the worst case is assumed to be 0 percent excess capacity, meaning no revenue can be recovered, resulting in a cost equal to the lost revenue less direct-avoided cost of production plus recovery costs.

One hundred percent excess capacity means enough exists to allow full recovery of revenue lost to downtime, so the cost becomes excess capacity costs plus recovery costs. Ratios of excess capacity between 0 percent and 100 percent indicate partial revenue loss and partial excess capacity cost; therefore, these costs are linearly interpolated for situations of partial excess capacity. As mentioned previously, recovery costs are assumed to be the same regardless of the degree of excess capacity.

To develop the costs required for this model, financial statement ratios are used. This approach allows the hidden cost of downtime to be calculated without needing to delve into excessive detail. Fig. 1 shows an example for a heavy process plant. In this case the needed ratios were taken from the financial statements of a large U.S. petrochemical company, for a hypothetical plant valued at $100 million.

The key ratios required to calculate the hidden cost of downtime are return on productive assets, return on sales, and tax rate. The return on productive assets is net profit divided by book value of net physical plant and equipment. Return on sales is net profit divided by total sales. For a given asset, in this example the $100 million plant, the profitability of the plant is calculated by multiplying the return on productive assets by the asset value, and total revenue is calculated by dividing the profit by the return on sales. With total revenue estimates, the asset value, and assumptions on avoided costs of production, recovery costs, maintenance cost multiplier, etc., it is possible to plot the hidden cost of downtime based on a percentage of unplanned downtime vs. excess capacity required to cover that unplanned downtime. (Exact formulas and an interpolation table used for the calculations in this article can be found at www.smartsignal.com/hidden_cost_asp.html.)

As shown in Fig. 2, cost is plotted against total profit from this particular facility, demonstrating that the hidden cost is a large portion of total profit. The percentage of total profit is very high in this case because the business is both low margin and capital intensive. If capacity constrained, cost of lost revenue is high—due to low margins—and if the business is capital intensive, the cost of excess capacity is also very high. Therefore, for this kind of business, the hidden cost of downtime represents a substantial drag on profitability and elimination of downtime can deliver significant cost savings.

Simple downtime cost model–equipment example

This same approach can be applied to individual pieces of capital equipment. If the asset value is known, balance sheet ratios for return on productive assets and return on sales can be used to determine the hidden cost of downtime for an individual piece of equipment. Fig. 3 shows a similar example for an expensive productive asset, such as a locomotive. The ratios used are typical of U.S. freight railroads.

For the case of equipment assets, it is interesting to look at the hidden cost of downtime as a percentage of asset value. In Fig. 4, the cost of downtime is plotted as a function of asset value, showing for this kind of asset in this business that the hidden cost of downtime runs 2-3 percent of asset value per year.

As these examples illustrate, the cost of unplanned downtown can be significant. However, if the availability ceiling can be broken, organizations can achieve significant returns. One solution is to use predictive maintenance software, which can identify emerging problems before they lead to unplanned downtime. Part II of this article, to be published next month, will review a predictive condition maintenance solution and show how it is being used to break the availability ceiling and reduce the hidden cost of unplanned downtime. MT

David R. Bell is vice president of business development for SmartSignal, Inc., 4200 Commerce Court, Suite 102, Lisle, IL 60532; (630) 245-9000.

It is a typical day at Acme Manufacturing Corp. as a 200 hp compressor is becoming unreliable and is unable to meet production demands for air.

In previous years, Acme would have decided to purchase a new compressor, a larger 250 hp model, at the lowest cost possible to meet its horsepower needs. This approach is typically known as the "first cost" driven approach. Life cycle costs or actual process requirements are not evaluated with this type of approach. Typically, no energy savings are achieved.

This time, Acme has done something different. Acme started an active Motor Systems Management (MSM) program, and it now looks at optimizing the entire motor system when replacing a component of that system. Before deciding how to meet the demand for air, Acme performs an audit of the entire system.

The audit results in the purchase of two 75 hp high efficiency compressors with automatic sequencing controls, the reduction of plant air pressure by 10 psi, the identification and repair of air system leaks, and the installation of a new efficient air dryer as well as a larger receiver tank. A 40 percent energy savings is generated, and the process has as much compressed air as it requires. This system approach is the key to an effective MSM program.

Why manage your motor systems?
According to the U.S. Department of Energy, motor-driven systems account for almost 70 percent of industrial electricity use with over $30 billion per year spent by U.S. industries. For some process-intensive industries such as pulp and paper and refining, up to 90 percent of the electricity used is to power motor-driven systems.

In today's climate of rising energy costs and uncertain energy supplies, managing such a large percentage of electrical usage makes sense.

What is MSM?
MSM is a plan used to maintain electric motor systems at optimal performance. By following an MSM program, a company ensures that its motor systems are optimized, which will increase reliability and reduce energy consumption thus conserving electricity.

MSM programs can vary from simple and inexpensive to extensive and more costly. Each program is tailored to the specific needs of a company, taking into account that some of the elements of an MSM program may already be in place at a company. Regardless of the approach taken, the main goal of the program is to achieve payback on investment as soon as possible. Once this goal is realized, all future savings go right to a company's bottom line.

What follows are the key elements of a typical MSM program prioritized to reflect the goal of quickest investment payback.

1. Review of existing motor systems

An assessment of any current MSM practices is taken. The assessment includes a review of written policies, procedures, specifications, and motor inventories, and also interviews with key staff.

A walk-through motor system assessment is done to identify all essential and critical motor systems and to observe their condition. An essential motor system is defined as one that, should it fail, shuts down an entire production operation until that system is repaired and back on-line. A critical motor system is defined as one which, should it fail, significantly cripples a production operation until that system is repaired and back on-line.

2. Personnel training

To be effective, an MSM program will require personnel who are trained in various aspects of motor systems including installation, maintenance, and repair. It is important to assess what training will be required near the beginning of the program in order to plan the training resources that will be needed.

3. Motor inventory database

In order to manage motor systems effectively, a database is required to identify and inventory all essential and critical motors, their locations, nameplate data, repair history, and general operating profiles. There are a number of commercially available computer programs designed specifically for motor inventorying.

Many computerized maintenance management systems (CMMS) have adequate capabilities to process the required data. A low-cost alternative is to use a spreadsheet type of computer program.

4. Pending failures and urgent system problems

The focus here is on diagnosing and solving immediate urgent problems that may be resulting in regular and premature failure, unplanned downtime, and excessive wastes of energy and materials. This is an excellent time to employ root cause failure analysis (RCFA) that determines the root or underlying cause of repetitive failures. RCFA should be used on all failing components of a motor system from the power source to the process. RCFA is most effective when applied to systems or components which are experiencing repetitive failures after short life cycles.

An effective way to get management's attention is to set up an MSM pilot program in an area that is experiencing a high number of motor system or component failures. Such an area will already be a thorn in the side of management. Success of MSM in reducing or eliminating failures with related cost avoidance and energy savings will almost certainly get management's attention. Full management support for MSM in other areas will automatically follow.

5. Preventive maintenance

Preventive maintenance tasks involve making periodic scheduled inspections of motor systems and components to determine their condition as well as to perform required maintenance. Any observed developing problems should be corrected immediately.

Some examples of these tasks are lubricating bearings, aligning components, making visual and audio observations, and cleaning components of contaminants, dirt, moisture, etc. An added benefit of preventive maintenance measures is that most of them result in very short or immediate payback times with little required investment.

6. Predictive maintenance

A majority of the failures associated with rotating equipment are mechanical in nature with bearing failures leading the list. Failures of mechanical components including bearings are rarely inherent to the components themselves but mostly come from outside sources. Vibration analysis can identify pending failures on rotating equipment which are caused by factors such as misalignment, imbalance, under or over lubrication, or contamination. Infrared thermography and oil analysis (tribology) follow close on the heels of vibration analysis as the best tools to identify impending mechanical failures. These three disciplines also complement each other well so that often a problem uncovered by one can be verified by using one or both of the others.

Motor circuit evaluation provides a detailed analysis of motor circuit condition. These portable units feature diagnostic tools that evaluate all five of the motor's fault zones: power circuit, insulation, stator, rotor, and air gap.

It cannot be over emphasized that proper training of personnel in any predictive maintenance technology is imperative to a successful MSM program.

7. The MSM plan

Develop a dynamic motor systems management plan. Implementation of the plan will help you reduce motor system failures, but when they do occur, you will be prepared to quickly and effectively manage those situations.

Prepare an MSM document to provide guidance through the entire life cycle of the motor systems including:

• Motor purchase policy and specifications
• Preparation and use of a motor inventory
• Evaluation of staff training needs
• Motor repair/replace decision making
• Motor repair policy and specifications
• Preventive and predictive maintenance programs
• Root cause failure analysis
• Inspection methods and frequency

Finally, remember to track, record, and report to upper management the cost savings, cost avoidance, and energy savings resulting from MSM operational improvements. By getting the right amount of attention and speaking in terms of real dollars saved, your new Motor Systems Management program should have a long and prosperous future. MT

John Machelor is a consultant in motor systems management, P.O. Box 2954, Radford, VA 24143; (540) 639-4271. He has held senior engineering and engineering management positions with Westinghouse Electric, Kollmorgen, Lincoln Electric, and General Electric. A free online presentation by Machelor titled "Effective Motor System Management" is available at www.rcm-1.com/

Robert C. Baldwin, CMRP, Editor

Users of successfully and almost successfully installed systems tend to forget their pain in light of whatever increases in productivity or newfound work management capabilities they have been able to achieve.

Software vendors almost never admit that there is significant effort required during the installation and start up of such a system, especially theirs.

Consultants and information technology department personnel are ready to reassure you everything will be okay, if you will just leave it to them.

I hear plenty of stories of how EAM/CMMS projects have fallen short, typically because users went into the project too quickly without fully determining their own needs, checking software functionality, and investigating the track record of those supporting the implementation. You can hear the same stories if you keep your ears open at conferences and seminars.

Surveys continue to tally the unused capacity of so-called successful installations. And reliability and maintenance organizations continue to install new maintenance information systems and upgrade existing systems to get what they are looking for. Unfortunately, many organizations haven't figured out what that is. That is why MAINTENANCE TECHNOLOGY continues to devote a significant portion of its editorial pages to selecting, installing, and using EAM/CMMS. This issue contains three major articles on the subject.

"Avoiding Pitfalls in CMMS Implementation" by Derold Davis and Joe Mikes, Westin Engineering, discusses the root cause of many of the problems with maintenance information systems.

Our annual directory of "Maintenance Information Systems For Midsize and Larger Organizations" by Managing Editor Susan Dahlberg provides some basic information on systems and suppliers.

"Creating EAM Payback" by Eric Linxwiler, Cayenta EAM Solutions Group, presents an implementation approach based on payback milestones.

These articles, and others like them that we have published over the past 13 1/2 yr, can provide only the starting point for a due diligence effort that must be as thorough as that conducted by lawyers in a corporate merger. Anything less and you will likely find yourself making a career of trying to meet the return on investment figures you promised the executive suite. MT

Robert M. Williamson, Strategic Work Systems, Inc.

Plant No. 2 started using TPM last fall to address a production bottleneck. They purposely stayed away from implementing TPM on a broad scale. Their results were impressive and sustained.

Plant No. 1's TPM efforts were led from the maintenance and reliability department as a way to reduce the need for equipment maintenance by expanding operator involvement. The reliability mana- ger fashioned a training program for operators and developed a training center staffed with instructors.

Plant No. 2's TPM efforts were led by the plant general manager, who recognized the importance of proper maintenance, as a way to improve production throughput and reduce operating costs. He was an active leader—he walked the talk. He explained how TPM activities were to be used to achieve production goals to make the plant more competitive and responsive to customers' needs. He actively participated in all TPM activities from the leadership committee to hands-on training.

Plant No. 1 focused on eliminating well-documented equipment problems, but not necessarily on the production bottleneck.

Plant No. 1 saw virtually no results from its efforts. Because the starting point was too large, the operators had little or no discretionary time to do any of the equipment maintenance procedures they learned. Production supervisors also kept them focused on making product to meet production quotas. Equipment continued to be unreliable which caused more downtime and demanded more production overtime just to meet quotas.

Plant No. 2 focused on improving competitiveness, and ensuring the future by targeting the production bottleneck.

Plant No. 2 saw fast and sustainable results from the TPM efforts. Last fall they were making weekly production quotas using five machining cells running three shifts with 14 percent overtime. After their first applied TPM training event and the completed action items, they were achieving the same weekly production quotas using four machining cells running two shifts with 3 percent overtime, and the cost to produce a product was significantly lower. They are now focusing TPM on the next machining cell that is a known bottleneck. Their goal is to make weekly production quotas using three machining cells on two shifts with 3 percent overtime, achieving still lower production costs and improved throughput.

Plant No. 2 focused on a problem area first and created a "pocket of excellence" in the plant. With that, they defined what they wanted for the future of the plant, and for the people who work there. They provided examples of their workplace and work culture of the future that they could see, touch, measure, and discuss with very little abstract speculative examples.

What are the differences between the two plants? One is obvious—the purposes of their TPM initiatives: focusing on maintenance problems vs. business goals. The other difference goes back to the difference between practitioners and leaders. While a practitioner may be practicing a profession, the leader is leading change. The practitioner focused on maintenance and reliability improvement while the leader focused on improving throughput and reducing production cost, not to be confused with cutting costs. The leader created an overall work environment conducive to engaging people on the plant floor in making improvements in their machines and work areas.

Consider this scenario: Three computerized maintenance management system (CMMS) vendors have been invited into your organization to demonstrate their products. During the presentations they learn that other companies also have been asked to show their software. The vendors now know they must come in with the most competitive bids possible.

The heat is on for them to drop their prices and give you the best deal ever, right? The truth is they have just confirmed in their minds that, using the traditional CMMS purchasing process, there is no way they can reveal the true cost for a full implementation. All three vendors realize you need further assistance, but they also realize that if they show all these costs up front, they will not be chosen for the sale. The end result is that the buyer of the software will either miss out on its full functionality, or eventually spend a considerably larger amount for implementation.

This practice of hiding the full cost to win the bid is a big issue facing organizations as they select CMMS packages. Most first-time buyers never suspect that complete implementation is not fully covered. Most software vendors during the heat of the sale have little interest in being totally up-front about an organization's shortcomings. Despite what vendors say about installation and implementation services, most of them want to sell software rather than fix a company's organizational problems. This does not imply that vendors are dishonest; they are in the business of selling software, not organizational improvement.

Even knowing the fact that most vendors don't want to get involved isn't enough to solve the problem. What questions should be asked of vendors? What is really meant when a vendor says, "We have complete implementation services," "we guarantee our product capabilities," or even "we fully train your staff?" None of these statements suggests the often-painful process of changing the way an organization does business. The cost of aligning processes and software can range from half the software cost to six times the software cost if done poorly.

Meeting the implementation challenge
There are several ways to meet the implementation challenge. It takes a skilled implementation group, which may be provided as a side package consultant by the vendor to close the gap between today's processes and the processes really needed to work with the software. Other options include a separate consultant or a trained internal team (if available).

Software projects, in general, have a history of cost overruns, misalignment, and outright failed implementations. There are many pitfalls that can be avoided if the project is planned well.

Maintenance work forces need to have quality data to perform effectively. In fact, today's work forces are often crippled without this data. These massive requirements for information lead organizations to search out a computer system that will help them analyze and manage their business. The difficulty is choosing the best CMMS for the type of organization.

Because there are so many software choices and styles, it is hard to decide which will do the best job. There are proven methods for selecting the system, organizing the department, implementing the software, and finally reaping the benefits that so many organizations miss out on. By learning some of these proven methods, you can avoid the pitfalls of others' mistakes.

Success rate of current efforts
Even though there is a lot of focus on selecting software, many purchased systems remain on the shelf or are grossly underutilized. Many implementation efforts still result in simply documenting work after the fact. Organizations often think that selecting and implementing a CMMS will be as easy as software is to use. This is true if a maintenance organization is fairly small and/or its needs are fairly minimal. However, the larger an organization and the more complex its needs become, the more difficult it is to find the right system to match those needs.

A full functioning CMMS is one of the most complex systems available. Couple that with the fact that there are scores of systems to choose from, and system selection alone can be a daunting task. There are a number of common approaches to system selection; some focus on:

• Choosing a system by matching capabilities to an existing system based on old technology
• Choosing a system that is glitzy and seems to provide some perceived functionality (Wow, isn't this neat?)
• Choosing a system that meets reporting needs
• Choosing a system based on computing environment
• Choosing a system based on cost (i.e., cheapest system available or low bid)

How do you find the right system when there are several that will do a good job? They all seem to do the same things. Why not just shortcut a lengthy selection process, select one of the top systems, and move directly into implementation?

Selection pitfalls
The most common reason system selection and implementation efforts fail stems from the selection process. There is a belief that all major brands of CMMS are basically the same and that an organization should be able to just buy one and start implementing. But the real differences between systems lie deeply under the hood. The only way to find those differences is to look.

A CMMS, like any other software system, is really nothing more than a tool to help collect, categorize, organize, analyze, and manage information. You buy a tool because it provides the best functionality for the price. Shortcutting the functional details that you expect the system to provide eliminates your ability to see the differences between what seem to be very similar systems. Right from the beginning, your selection and implementation project is subject to potential failure.

The next most common pitfall is the acceptance of customization or a high level of tailoring to achieve the functionality needed or desired. There are three methods for altering the way a system functions: customization, tailoring, and configuration (See accompanying section "The Risks of Modification"). Before you commit your organization to these risks, ask vendors for their definition of these terms, to make sure everyone is speaking the same language.

In addition to the normal causes one would expect for selection failures, there are others to consider:

• Not identifying those requirements that are critical or unique to the organization and evaluating software against them
• Major selection focus not on required functionality
• High level of customization or tailoring necessary to get a system to meet needs
• Focus on software rather than business needs
• Selection grouup not listening to the end user to determine true functional requirements

Not using a proven selection process may result in selecting the wrong system.

Common implementation methods
After the selection process is complete, an organization focuses on implementing the purchased software. Successfully navigating the selection process does not guarantee that the system will be fully implemented, used, and provide the expected benefits.

There are a number of methods used for implementation. Some of the more common are:

• Going it alone, other than some vendor training
• Co-managing implementation with the vendor
• Enlisting outside implementation guidance and support
• Managing implementation internally with installation, set up, and training provided by the vendor

Implementation pitfalls

Most system failures reveal themselves during the implementation process. The major cause for implementation failures can generally be traced to not utilizing a formal selection process. Unfortunately, the results of an ineffective selection process are not manifested until well into implementation. Some do not even show up until after the system has been implemented and a situation occurs that proves to be disastrous.

Some of the most common implementation problems that individually or jointly cause major difficulties or delays, or completely stop the effort, include the following:

• Discovering the system does not provide required features or functions
• Encountering major surprises when a critical capability does not operate in the manner required
• Attempting to use the new system in the same manner as the old, i.e., automating obsolete work processes (especially true when replacing an older system)
• Misunderstanding or grossly underestimating the level of effort required. Users become disenchanted when a realization of the true effort required becomes apparent.
• Lacking a thorough plan, schedule, and objectives
• Having less than adequate staffing support
• Overloading users up front with excessive training and subsequently having problems using the system because it seems so massive and complicated.

Ensuring return on investment
Selecting and implementing a CMMS is not a simple or easy process. There are many pitfalls and problems that very easily result in a failed attempt. Early problems stemming from an ineffective selection process do not become visible until well into implementation.

Couple those with a myriad of common problems that occur during implementation and failure becomes very common. Maintenance and reliability professionals must have long-term goals in mind, focus on results, and avoid shortcuts if they are to realize an appropriate return on their software investment.

Future articles will cover the importance of a formal selection process, achieving alignment between an organization's maintenance practices and needs and the CMMS selected, the requirements for a successful implementation and how to accomplish that in the shortest amount of time, and the "Do's" and "Don'ts" of ensuring that the system is used effectively as an analytical and planning tool to obtain the desired return on investment.

Derold Davis and Joe Mikes are senior consultants at Westin Engineering, 11150 International Dr., Ste. 200, Rancho Cordova, CA 95670; (916) 852-2111. They both have more than 15 years of experience in providing system selection and implementation methodologies, proven maintenance practices, productivity improvement practices, and methods and strategies for increasing operational reliability and reducing maintenance overhead.

The Risks of Modification (back to article text)
One of the more common pitfalls in the installation of a computerized maintenance management system is the acceptance of customization or a high level of tailoring to achieve the needed or desired functionality. There are three methods to alter the way a system functions: customization, tailoring, and configuration.

Customization is the process of changing a system's software coding and affecting the way it functions. It generally will invalidate the vendor's software support agreement, pose major rework before new software releases can be installed and used, or both. The user must be prepared to take full responsibility for ongoing software support and enhancements. It is highly recommended that this approach be avoided. If you are tempted, you are probably working with the wrong system.

Tailoring generally consists of an advanced tool-set that allows changes to screen layouts, cosmetics (colors and fonts), and contents; usage of user-defined fields; and even modification of system functionality. The tool-set is provided by the vendor and can take many different forms. This is an intermediate step between configuration and customization. Knowledgeable users can affect some of the more simple changes; others require detailed knowledge of the vendor's tool-set. You can get into some trouble with this approach because you modify the way the system works and manages data. Changes made to the way a system functions must somehow be incorporated into new software releases.

Configuration is using vendor-provided option and feature selections to affect the way the software functions to more closely match your desired business environment. This generally consists of making choices from a list provided by the vendor or by specific data in a vendor-formatted file. For example, if you wish to use ABC classification capabilities for inventory management, you may be able to activate that feature by selecting "yes" from an options menu. Then you would provide the A/B and B/C breakpoints that the system will use to recalculate or initially establish ABC classes. Or, you could leave that feature inactive. You cannot get into too much trouble with this approach, other than making a wrong selection and having to backtrack and correct data.

All customization and certain levels of tailoring will result in a system that either the vendor will not support or is extremely difficult to incorporate into new releases. If knowing these technical terms is not challenging enough, software vendors often use the terms interchangeably. Before you commit your organization to tailoring or configuring a system, ask vendors to define these terms so you are speaking the same language. MT