IBM Software

Thought Leadership White Paper

October 2013
Descriptive, predictive, prescriptive:
Transforming asset and facilities
management with analytics
Choose the right data analytics solutions to boost service quality,
reduce operating costs and build ROI
2 Descriptive, predictive, prescriptive: Transforming asset and facilities management with analytics
Contents
2 Introduction
2 Giving data meaningdespite its growing volume,
variety and velocity
3 Understanding the differences between three key
analytics types
5 Deploying the right analytics type for your capabilities
and needs
6 Reaping the business and operational benefits of data
analytics
6 For more information
Introduction
In Melbourne, Australia, public transit operator Yarra Trams
uses analytics on data from 91,000 trams and related pieces of
equipment for insight into disruptions, performance, locations
and passenger use to better maintain its trams and increase
service reliability in excess of 99 percent.
Across North America, clothing retailer Gap Inc. uses analytics
to forecast the financial impact of real estate decisions such as
whether to consolidate existing locations, remodel, renew in
place or open new stores.
As these organizations have learned, data analytics represents an
opportunity for real estate, facilities and asset managers to trans-
form their operations. But many organizations have yet to adopt
the analytics approach. Many, in fact, still rely on manual tools
such as spreadsheets for creating reports on their assetsand on
intuitive management from individuals to draw conclusions from
data and act to improve operations.
For organizations that want greater insight into their real estate,
facilities and enterprise asset performance, along with a better
way to use information for improvement, knowing how to utilize
data more effectively in decision making can present a challenge.
This white paper describes a key first step in adopting an analyt-
ics approach: understanding the different types of analytics
descriptive, predictive and prescriptivethe management role
each can play and the value each can deliver.
Giving data meaningdespite its
growing volume, variety and velocity
As facilities and assets become more IT-likeinstrumented,
intelligent and interconnectedthe convergence of physical
and digital infrastructures makes their management increasingly
complex. And in a physical world outfitted with millions of net-
worked sensors, vast amounts of facilities- and asset-generated
data make extracting meaning increasingly difficult.
Business leaders recognize the potential these changes in tech-
nology hold. In fact, an IBM survey of 1,700 CEOs and public
sector leaders identified technology change as the most critical
external factor impacting organizations.
1
To take advantage of
the opportunity to transform facilities and asset management,
however, organizations need analytics capabilities that can iden-
tify operating anomalies in real time, predict outcomes and
deliver optimization models.
Organizations need analytics solutions that can extract meaning
from huge volumes of data to help improve decision making,
handle wide varieties of data and data sources from within and
outside the enterprise, and keep up with the rapid velocity of
data in motion. They need capabilities for analyzing historical
and real-time data, as well as forecasting the future, to distill
whats valuable, detect patterns and reveal insights they may
not even have thought to ask about. With such solutions,
they can achieve benefits ranging from increased revenue to
lowered operating expenses, enhanced service availability and
reduced risk.
3 IBM Software
Understanding the differences between
three key analytics types
The goal of any analytics solution is to provide the organization
with actionable insights for smarter decisions and better business
outcomes. Different types of analytics, however, provide differ-
ent types of insights. So it is important for managers to under-
stand what each analytics type delivers and to match analytics
functions to the organizations operational capabilities across
its real estate, facilities and asset management functions.
Analytics solutions are of three principal types:

Descriptive, which uses business intelligence and data mining
to ask: What has happened?

Predictive, which uses statistical models and forecasts to ask:
What could happen?

Prescriptive, which uses optimization and simulation to ask:
What should we do?
The three types build on one another, with descriptive analytics
being the most common and prescriptive analytics the most
advanced. Yet they share goals for improving real estate, facilities
and asset operations with capabilities that help provide an under-
standing for an event or action, uncover relationships in data,
develop what-if scenarios and simplify business decisions.
Descriptive analytics
Asking What has happened?, descriptive analytics mines data
to provide trending information on past or current events that
can give real estate, facilities and asset managers the context they
need for future actions.
Characterized by the use of key performance indicators, descrip-
tive analytics drills down into data to uncover details such as
the frequency of events, the cost of operations and the root
cause of failures. The most common type of analytics used by
organizations, it typically displays information within a report
or dashboard view. Solutions can be automated to issue alerts
when potential problems arise that fit data patterns the solution
has discovered.
Benefitting from analytics: Increased asset utilization
The Dow Chemical Company sought to increase facility
utilization across its office and lab space while improving
capital planning, real estate lease management, operations,
facility maintenance and energy consumption on a global
basis. Using descriptive analytics, Dow was able to produce
reliable data for decisions that helped the company identify
under-utilized space, achieve a 20 percent increase in facility
use and generate a savings of approximately USD4 million
annually via space consolidation.
By examining key metrics and key performance indicators
of energy use or vehicle maintenance, for example, descriptive
analytics can produce indicators such as cost per square foot,
kilowatt hours per person or mean time between failures for
specific asset issues. By combining information from different,
often disconnected sources and then comparing and contrasting
data, descriptive analytics can provide a comprehensive view and
context for what has happened, as well as current asset status.
Predictive analytics
Asking What could happen?, predictive analytics provides
answers that move beyond using historical data as the principal
basis for decisions. Instead, it helps managers anticipate likely
scenariosso they can plan ahead, rather than reacting to what
has already happened.
Benefitting from analytics: Improved insight into hazards
Nippon Kaji Kyokai, a Japanese organization that inspects
and recycles ships, implemented a new ship recycling
management system to help monitor hazardous materials
and chemicals so they could be properly recycled and/or
disposed of. Using predictive analytics, it was better able
to gain precise information about where and when ships
containing which materials are built and dismantled.
4 Descriptive, predictive, prescriptive: Transforming asset and facilities management with analytics
Using descriptive data accumulated over time, predictive analyt-
ics utilizes models for predicting events. It does not, however,
recommend actions. Predictive capabilities such as forecasting
and simulation provide enhanced insight that managers can use
to make more informed decisions.
Understanding analytics
Denitions, sample applications and opportunities, and underlying technologies
What HAS happened? What COULD happen? What SHOULD happen?
What the
user needs
to DO
What the
user needs
to KNOW
How
analytics
gets
ANSWERS
What
makes this
analysis
POSSIBLE
Increase asset reliability
Reduce labor and inventory costs
The number and types of asset
failures
Why maintenance costs are high
The value of the materials inventory
Query/drill down - Where exactly is
the problem?
Ad hoc reporting - How many, how
often, where?
Standard reporting - What
happened?
Alerts, reports, dashboards,
business intelligence
Predict infrastructure failures
Forecast facilities space demands
How to anticipate failures for
specic asset types
When to consolidate underutilized
facilities
How to determine costs to improve
service levels
Predictive modeling - What will
happen next?
Forecasting - What if these trends
continue?
Simulation - What could happen?
Alerts - What actions are needed?
Predictive models, forecasts,
statistical analysis, scoring
Business value
Increase asset utilization
Optimize resource schedules
Optimization - What is the best
possible outcome?
Random variable optimization -
What is the best outcome given the
variability in specied areas?
Business rules, organization
models, comparisons, optimization
How to increase asset production
Where to optimally route service
technicians
Which strategic facilities plan provides
the highest long-term utilization
Descriptive Predictive Prescriptive
Characterized by the use of trends of time-series data and corre-
lations to identify patterns, predictive analytics applies advanced
statistical analysis and data miningas well as sophisticated
mathematics to validate assumptions and test hypothesesto
provide a solid, data-based foundation that can raise managers
confidence in conclusions. Organizations might use these results
5 IBM Software
to identify conditions for potential out-of-stock or over-stock in
parts inventory. They might also use them to evaluate asset fail-
ure and productivity history to anticipate the likelihood of failure
in a particular timeframe.
An IBM study shows, in fact, that organizations using analytics
to determine why and what they need to be doing are twice as
likely to outperform their industry peers.
2
These organizations
apply predictive analytics for all types of decisions, from daily
operations to major business actions.
Prescriptive analytics
Asking What should we do?, prescriptive analytics explores a
set of possible actions and suggests actions based on descriptive
and predictive analyses of complex data. Though the final deci-
sion is up to the facilities and asset manager, prescriptive analyt-
ics solutions can provide a reliable path to an optimal solution
for business needs or resolution of operational problems.
Benefitting from analytics: Reduced energy costs
With thousands of facilities in support of its global operations,
IBM Real Estate Site Operations sought ways to manage
energy use, lower costs and decrease greenhouse gas
emissions; maintain equipment proactively; and lower
maintenance and building costs. Implementing prescriptive
analytics for its Rochester, Minnesota campus, IBM was able
to achieve a five percent year-over-year incremental energy
savings, eight percent annual savings in equipment operating
costs, improved asset reliability, and streamlined problem
diagnosis and resolution.
Characterized by rules, constraints and thresholds, prescriptive
analytics makes use of advanced capabilities such as optimization
and mathematical models to reveal not only recommended
actions but also why they are recommended, along with any
implications the actions might have. Organizations might use
these results to identify inventory that should be re-ordered now,
that should be moved to a different distribution center or that
should be disposed of.
Prescriptive analytics takes uncertainty into account and recom-
mends ways to mitigate the risks that can result from it. Its
ability to not only examine potential outcomes but also make
recommendations helps managers make decisions when the data
environment is too large or complex to be understood without
the help of technology.
Deploying the right analytics type for your
capabilities and needs
From basic to advanced capabilities, analytics can yield dramatic
results. One study found that an organization that uses basic
automation to expand its reporting capabilities can improve its
return on investment (ROI) by 188 percent. But adding addi-
tional capabilities such as data management, metadata to ensure
uniform data interpretation, and the ability to gather and analyze
data from outside the organization, can boost ROI to as high
as 1,209 percent.
3
In many cases, the processes and data needed to support these
advanced levels of analytics may not be in place. But that does
not mean the organization should wait. An effective strategy is
to select a meaningful problemone that will have impactand
attack it on a scale small enough to deliver rapid results. The
organization can then begin expanding its capabilities. Whats
important at this stage is not a perfect outcome but a path to
iterative results.
It is important, therefore, for the organization to match its infra-
structure, technologies and processesits level of analytics
maturityto the stage of analytics it is able to perform and the
goals it wishes to accomplish. The organization should begin
with solutions that work with existing data to gain immediate
insights while it puts into place the technologies and processes
to support more complex analytics.
Please Recycle
Reaping the business and operational
benefits of data analytics
Using analytics, organizations can increase service quality, reduce
operating costs and increase return on assets.
Effective facilities and asset management uses data analytics to
proactively manage facilities and maintain equipment, optimize
utilization, prevent breakdowns, lower occupancy and opera-
tional costs, and extend asset life.
Utilizing analytics to monitor energy-intensive equipment across
the facilities portfolio, identify operating anomalies in real time,
and generate corrective work orders can dramatically reduce
energy consumption.
To help mitigate risks of failure in facilities and assets, analytics
can detect even minor anomalies and failure patterns. Identifying
issues early helps organizations deploy limited maintenance
resources more cost-effectively, maximize equipment uptime and
improve customer service levels.
For more information
To learn more about IBM analytics solutions for facilities and
asset management, please contact your IBM representative
or IBM Business Partner, or visit the following websites:
IBM facilities management capabilities:
ibm.com/software/products/us/en/category/SW22A
IBM enterprise asset management capabilities:
ibm.com/software/products/us/en/subcategory/SWK11
IBM business analytics capabilities:
ibm.com/software/products/us/en/category/SWQ00
Additionally, IBM Global Financing can help you acquire the
software capabilities that your business needs in the most
cost-effective and strategic way possible. Well partner with
credit-qualified clients to customize a financing solution to suit
your business and development goals, enable effective cash
management, and improve your total cost of ownership. Fund
your critical IT investment and propel your business forward
with IBM Global Financing. For more information, visit:
ibm.com/financing
Copyright IBM Corporation 2013
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Produced in the United States of America
October 2013
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1
IBM Institute for Business Value, Leading Through Connections: Insights
from the Global Chief Executive Officer Study, IBM Corp., 2012.
2
Steve LaValle, Michael Hopkins, Eric Lesser, Rebecca Shockley and Nina
Kruschwitz, Analytics: The new path to value, IBM Institute of Business
Value and MIT Sloan Management Review, IBM Corp., October 2010.
3
Nucleus Research Inc., Research Note: The Stages of an Analytic
Enterprise, March 2012.
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