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Optimizer of Budget Allocation towards Asset Development and Maintenance

Tangible and intangible business assets (buildings, equipment, vehicles, facilities, furniture, software, databases) – are one of the main (and often – the most important) company’s capital that must be properly managed in order to achieve the best results. Direct optimization of KPI (key performance indicator) on the basis of the most efficient assets management is not offered in any of the available products. The outcome of such optimization is significant in a long run, since strategic business indicator chosen as the target is optimized with adherence to specified restrictions.

Our product solves the following problems:

  • Defining the most optimal budget for construction, acquisition, reconstruction, and maintenance of assets;
  • Allocating the budget in the most efficient manner on maintenance and support, acquisition, and construction of assets.

The product makes it possible to define the optimal size of total budget for investments into new assets, reconstruction and support of the existing assets as well as to allocate the budget in most efficient way. Mathematical task of optimal control could be defined in such a manner that any indicator declared in the Enterprise strategy (profit, capitalization and so forth) can be optimized in accordance with specified restrictions (financial, ecological, reliability, customer’s satisfaction, etc.).

Existing enterprise assets management systems (EAM) are designed for optimization of expenditures on maintenance of the existing assets. Even the most advanced EAM systems and comparable ERP components do not currently provide the tools for optimization of the resource allocation, which allow achieving the best value of enterprise performance indicators specified in the strategy.

Since the process of executing projects and the economic environment as a whole are characterized by the presence of random factors that affect project’s outcome and general enterprise performance indicators, we are considering a problem of resources allocation as a problem of robust control of nonlinear stochastic systems with various types of constraints. Such mathematical model allows allocating resources optimally under conditions of changing or incomplete information and take into account unexpected factors that are relevant to project activity and to economic environment as a whole.

Since development of new assets and their maintenance can be full projects of their own, it is logical to consider the entire project of Resource Allocation as managing a portfolio of projects. Concept of project portfolios for representation of the entire set of assets in the vertically integrated oil company for creating new and supporting existing assets is shown in picture below.

Our product is designed as an add-on to a standard Project Portfolio Management within SAP platform – SAP PPM and will use standard tools when working with project portfolios, offered by SAP PPM.

SAP PPM has no standard tools for optimal resource allocation between project portfolios. Optimal management is going to be handled by the product that is to be developed. In this product, at every step of resource allocation between portfolios, the best average value of goal KPI is calculated that is in compliance with limitations set within company’s strategy.

To find optimal solution to this problem requires analyzing a vast number of possible allocation options. Analysis of a single option launches an imitational model that forecasts how assets are going to change under chosen conditions. Such thorough analysis of every single option requires very large computing resources. In order to get practical solution in manageable time we propose to utilize high performance in-memory platform SAP HANA integrated with highly parallel Hadoop cluster.

The advantage of a product is that it can provide a new level of optimization for large companies. Direct optimization of key performance indicators on the basis of efficient assets management isn't offered in any of the available products. The results of such optimization in a long term are significant, since optimization is performed with adherence to all specified constraints AND on a targeted indicator - selected strategic business variable of an organization. Optimized KPI can increase by 5% and more.