On this week's Industrial Talk Podcast we're talking to Paul Casto, APM Industry Principal with GE Digital  about "Managing Business Case ROI Risk".  Get the answers to your "ROI Risk Management" questions along with Paul's unique insight on the “How” on this Industrial Talk interview! Finally, get your exclusive free access to the Industrial Academy and a series on “Why You Need To Podcast” for Greater Success in 2021. All links designed for keeping you current in this rapidly changing Industrial Market. Learn! Grow! Enjoy!

PAUL CASTO'S CONTACT INFORMATION:

Personal LinkedIn: https://www.linkedin.com/in/paul-casto-2b8bb218/ Company LinkedIn: https://www.linkedin.com/company/ge-digital/ Company Website: https://www.ge.com/digital/

PODCAST VIDEO:

https://youtu.be/QZ70DFVq-bk

THE STRATEGIC REASON "WHY YOU NEED TO PODCAST":

OTHER GREAT INDUSTRIAL RESOURCES:

NEOM:  https://www.neom.com/en-us Hitachi Vantara: https://www.hitachivantara.com/en-us/home.html Industrial Marketing Solutions:  https://industrialtalk.com/industrial-marketing/ Industrial Academy: https://industrialtalk.com/industrial-academy/ Industrial Dojo: https://industrialtalk.com/industrial_dojo/ We the 15: https://www.wethe15.org/

YOUR INDUSTRIAL DIGITAL TOOLBOX:

LifterLMS: Get One Month Free for $1 – https://lifterlms.com/ Active Campaign: Active Campaign Link Social Jukebox: https://www.socialjukebox.com/

Industrial Academy (One Month Free Access And One Free License For Future Industrial Leader):

Business Beatitude the Book

Do you desire a more joy-filled, deeply-enduring sense of accomplishment and success? Live your business the way you want to live with the BUSINESS BEATITUDES...The Bridge connecting sacrifice to success. YOU NEED THE BUSINESS BEATITUDES!

TAP INTO YOUR INDUSTRIAL SOUL, RESERVE YOUR COPY NOW! BE BOLD. BE BRAVE. DARE GREATLY AND CHANGE THE WORLD. GET THE BUSINESS BEATITUDES!

Reserve My Copy and My 25% Discount

PODCAST TRANSCRIPT:

SUMMARY KEYWORDS projects, roi, organizations, business, companies, paul, industrial, maintenance, reliability, asset management, people, risk, create, deliver, plan, focused, area, professionals, technology, asset 00:04 Welcome to the industrial talk podcast with Scott Mackenzie. Scott is a passionate industry professional dedicated to transferring cutting edge industry focused innovations and trends while highlighting the men and women who keep the world moving. So put on your hard hat, grab your work boots, and let's go 00:21 again, thank you very much for joining industrial talk the number one industrial related podcast in the universe. And it celebrates you industrial heroes, you are bold, you're brave, you're daring greatly. You're solving problems. You're innovating, and you're changing lives. You're changing the community, you're changing the world each and every day. If you're passionate about industry, yeah, this is where you need to be. Because we love to educate. We love to collaborate, and definitely love to innovate. Alright, in the hot seat, podcast, GE Digital is the company. And what's great about this particular conversation, we're going to talk a little bit about risk management and ROI on your asset management projects. Yeah, you need to deliver. So let's get cracking. 01:14 We're also sponsored by occurrent. And Fluke reliability, go out to their websites, both companies passionate about into your asset management, your your maintenance, and making it easy for you to achieve that uptime that is necessary for your for your, your project for your, your business, it's important, that's accurate, and Fluke reliability. Alright. I've been gone for a couple of weeks. And the reason I've been gone for a couple of weeks, I've been very fortunate to be able to attend broadcast from smrp, which is the Society of maintenance and reliability professionals. That was in St. Louis. And then I just zipped on up to Cleveland for the manufacturing and technology show. And both events were just absolutely spectacular. But here is what I learned. Write this down. I know you know it, but I'm gonna have to just say it anyway. Everyone, and I mean, everyone was talking about upskilling reskilling, how do I? How do I deal with my resources that are necessary to keep my doors open? And my business moving forward? Now there's a couple of conversations that are associated with that. That's one, we need people always, always always you need people? And what are the strategies around getting that done? And then to what innovation? What technology can we deploy to help create that business of resilience? So when we're at smrp, they're talking about keeping that asset up and running, managed properly, and and delivering results? And then at the manufacturing and technology show? What do we do? How do we keep people coming in? What do we how do we inspire, inspire our youth to be in into or get into manufacturing? Get into the profession of, of just, you have no idea what was just out there. If you are considering I just ask that you look at this stop. Because if you're young, and if you're considering a profession, I'm telling you, it's ripe, it is spectacular, it is innovative, you're you're going to be at the cutting edge of technology cutting edge of strategic directions for these particular companies. They need you. And that's why this particular podcast is here. Because we want to make sure that you get everything you can go out to industrial talk.com. And we have an education platform. We have all these great articles representing all these wonderful, skilled industrial professionals. You got to read them or listen to them. We got the videos out there. It is truly a great place to be able to begin your journey in the world of industry in the world of manufacturing in the world of industrial for Dotto. It is all out on industrial talk.com We try to have fun, because it is fun. We try to make it entertaining, because it is because it deserves that type of attention. So anyway, let's get on with this interview with Paul. So my a bit very fortunate. He was very busy at smrp. And I believe he is chair of smrp this time around. And boy does he has stuff to say and it's stuff that is very important, especially in today's world. You know, we talk about some of the challenges that have taken place within the COVID COVID pandemic, whatever you want to call it. And yeah, they're real. Don't get me wrong. It's challenging. But one of the great Things that I get out of it. And it was great to see people at these events, getting back to normal, collaborating, and really from the heart, and a desire to truly collaborate and solve problems. Paul is leading that effort at smrp, we're going to have a number of other great conversations. But if you go out to his stack card, yeah, he likes education. He, his, his business card is just way too small for how many things that he does is just as so it's not worth even trying to get all his education. God he is so committed to 05:38 asset management, reliability, maintenance, everything, he is a leader. So anyway, with that said, enjoy the conversation. Paul, welcome to industrial talk, thank you very much for finding time in your busy schedule to share and impart your wisdom and knowledge into the world of asset management, maintenance, and reliability, big time, I'm sure the listeners will grow to appreciate. I mean, you got some mad street cred out there, you do. And I was looking at you, and I'm not going down your bio, but reality is, if you go out to his LinkedIn profile, it's not as impressive as the bio that I received, because it just has you like education. And you're constantly educating, which 06:24 is that it's a fast changing world. And if we're gonna, you know, remain relevant, we have to keep our skill sets up. 06:32 You know, that's that's a whole nother conversation to have. That's a whole nother topic. Because I, I don't know how anyone, especially today, in this particular world, is not committed to some form of disciplined education, whatever it might be read a book, I don't care, whatever it might be. Daily, because you're absolutely right. It's, it's blistering fast even I can't keep up with it. Well, that's not saying much. Yeah, don't don't lose. Don't think about that listeners, I can. So for the listeners out there, Paul, give us a little background, little 411 on who you are. And then we're going to venture into managing business case, ROI risk, which is an important topic. 07:17 What's your so I'm Paul caspo, I've worked in this maintenance reliability asset management space for a number of years, I had a great opportunity several years ago to lead the reliability team for Eastman Chemical, they were really an industry leader Well, before I got there, and that's where I started my foray into really asset management, asset performance management, that that whole space, they were a user. I left Eastman with some other plans, but ended up with Meridian doing asset performance management, or I just call it APM. Globally, for a lot of customers and a lot of different industries. And then, as time went on, we had a buyout from GE. And so we're now at GE entity and my current work is a lot around, I would call it maybe front end engineering, helping customers identify what their business outcomes really are figuring out what kind of value they need to create, to achieve those business outcomes. And, and then after we do all that, we can worry about potential solutions to create the ROI, those three things that really need to be linked together. So I'm doing quite a lot of work in that area, as well as risk management, I'm doing some, some more of all things graduate work around risk management, and how do we manage the risk of ROI. Many times people build business cases and the business cases say I'm going to deliver such and such ROI, but, but deliver less. 08:53 It's interesting, especially the topic of risk management ROI, the financial component around the maintenance, reliability and asset management profession. Not to not to say that there's been snake oil salesmen out there, there have been and they, they they sort of diminish, unfortunately, the realities of an asset management reliability program within an organization and you're going to have to try to sort of distill that and get rid of the negative stuff because the the value is there. Is that not right, Paul? 09:29 Yeah, that that is correct. A few years ago, I actually did a study around this area, we went into our CMMS system pulled out all of our labor hours, all of our, our material hours, everything that we could put together in terms of, of the cost of these projects and looked at the returns and, you know, a good self respecting reliability project, in actuality should deliver over 100% return. Now, it goes up and it goes down. Some of them aren't nearly as successful as others, but it, it is a really high value area to be working in, if you can figure out how to properly execute it. 10:12 So that just brings us to the point of let's, let's talk a little bit about that from a. How do you develop now? I'm not going down the road of the CMMS. And, and bad data and pencil Web? That's a whole other conversation. I got it. But how do we build a the elements of a business case so that we can begin to truly and discipline a insights into the financial benefits associated with this particular case? 10:40 Well, the first thing we have to do is we really need to understand the business outcomes, what what are the drivers that the businesses are looking for? You know, as engineers, many times I say, we get caught up in the elegance of the technical solution. And, and we decide we need to implement this new technology, without really considering what we're there to do. And what we're really there to do is to create value for our companies, and to put together projects that give our companies the best opportunity for success. That's possible, you know, we live, we live in a probabilistic world not a deterministic world, and nothing is for sure out there. But when we start looking at projects, and return on investment, the place to start really is what are we trying to accomplish from a business perspective? The second part of that is what value do we need to create? And then and then we'll put together the project? 11:39 Just for clarification, what are some drivers what sort of give us an example of what outcome of a business give us just sort of a basic ones like, I'm a business, I'm looking at this? 11:51 Sure. This great example, a few years ago, I had Vice President calling me up, and they were very professional and nice. And he says, You know, I could deliver another million dollars to the bottom line, if I could just get over some reliability issues with my equipment? Well, I came out of the construction industry. And what that meant to me was, oh, boy, I really better get cracking here. So that's a great example, he could deliver another million dollars worth of profit to the bottom line of the company if he could get the equipment to run. So that's a great, great business proper. 12:26 See, and I can see that because you're you're talking with that particular example, an asset, the uptime production. And so that that's real time. And And typically, something like that just requires a little analysis on those assets that they've targeted, does that correct? Well, sometimes it's, 12:45 it's a little harder than that. But we do need to go in and do an analysis of why are they losing this? You know, what, what are the problems? And and, you know, what we'll find is, we'll find that some of the problems are definitely equipment related. There have been unexpected breakdowns, other other issues. But I typically also find that there's opportunity on the operation side, they're not running their equipment up to standard, they're not following good processes. And I have to say, to this vice president's credit, we actually contributed more than a million dollars, you know, we did an analysis went back and talked to him, and he focused quite a bit of energy around running a better operation, we focused on getting the equipment to run better, and together, we actually contributed more than then our target. 13:32 Wow. That sounds cool. I like that. I like that approach. And I like that focus. So what we have, from a from a business case perspective, we've got to understand the outcome of the business. Got it? Number two, is, are there steps in this that we need to be aware of? 13:51 Yeah, well, you need to understand the business outcomes. And then the next step is to figure out what value you need. And there are different types of value. You know, there's what I call hard value, that that's the easiest part, it shows up over on a company's financial statements, we sell more product, we increase the revenue, we reduce our maintenance cost, or our spares cost, we lower the cost of goods sold, both of which improve gross profit, that's one kind of value. Often what happens is we may go in and work with a customer and we may focus for six months in an area. And let's say we reduce the maintenance costs 10%. Now we have a choice. Do we take that out of the budget? Or do we reallocate that to another area of the facility that needs improvement? I call that firm value. And then of course, there's risk reductions. And that's at the heart of what we do in reliability it is it is finding that we've got a bearing problem a month before the actual failure, ordering that Barry planning the work and replacing that bearing and nobody even knows about it. So there's a lot of risk reduction activities and and then lastly, there's our intangible values. It's it's how we do our work. It's all of those things that fall into that category. 15:05 So, back to the example that you provided about a million dollar bottom line value, you were focused on the assets, but then the VP would be focused on the operations, which, which would pretty much fall into say, let's say, tangible value, that, you know, how can we be more efficient, whatever that whatever that focus needs to be? I like that. That's correct. Give me an example of risk reduction sort of nebulous. From my perspective, what is that? 15:39 Well, let's, if we think about these projects, let's just think about what happens with a project. Oh, we may do some front end engineering, then we do detailed design. And if it's a software related project, as many of them are today, we do some internal testing, we do user testing, then we go live, right? We go live, and many times the customer doesn't have a plan. What happens after we start this new system up? Whether it's a CMMS system, an APN? system, some other system? We started it up? Now what so there's a lot of risk associated with that. And those, those those risks, if we aren't thinking and planning ahead, could be in a variety of things. No, Postville go live value creation plan. How about this one, this is huge. And all these projects, it is an adaption governance, and a chain management plan. We're changing the work processes that everybody use, we're changing the technology, they're tools. And if we don't put an adoption plan in place, that's a huge risk that can negatively impact the return on investment. Now, the flip side of that is we typically think about risk in a...