Update Nov 2006

Effective information management saves money

The importance of information management in our age
When did you last see a colleague look down in a meeting and read e-mails from his handheld PDA phone instead of carefully listening to what was being said in the meeting? Probably very recently.

There are two main observations:

  •  E-mail is the most frequently used and important tool for widespread enterprise co-ordination.
  • That meetings are good for fast verbal discussion of diverse issues but are not efficient in either providing comprehensive co-ordination nor are they efficient in the use of the valued time of the participants.

This all-too-common scenario demonstrates an important reality; what is the lesson learnt? The widespread use of e-mail today confirms that Information Technology is vital to efficient coordination. The sheer volume of messages and attachments the average person receives and sends proves that there is great demand for information management tools assisting with coordination. If we aggregate the need for correct figures to manage a global enterprise the need for figures at every level of decision making within the company, one begins to understand the value of information technology.
We can estimate the value of e-mail and maritime software applications in a marine enterprise but what would be the point of that if we have no intention to return to telex, letters, manual book keeping etc. So instead let’s look at the value of comparing modern methods of information management in shipping.

Areas where information management can avoid significant undesirable outcomes
In the tanker industry, acquiring a vessels' clearance requires that a company successfully address a vast range of information management issues. Increasingly, PSC and other inspections are applying similar scrutiny to documentation. Examples include the recording of maintenance and repairs, keeping an inventory of critical machinery spares, risk assessments, verifying procedures, records of deviations, etc. Failure to adequately address this issue can cost tremendous time and energy to rectify, while certain other oil company clearances continue to remain outstanding. If the system needs corrections this could translate into a loss of earnings related to the time spent remedying those problems. Ulysses estimates that avoiding information management failures in vetting approvals is worth about $40,000 per vessel per year in lost earnings alone.

Lack of coordination, missing machinery experience information, missing cargo experience, missing port experience, and any information known in one part of the company/vessels and not in another could cause incidents that could increase premiums. A complex calculation of how this translates to premiums and uninsured repairs can be formulated. A ballpark figure yielded by such a calculation is about $15,000 per vessel per year.

Downtime is fundamentally affected by the coordination and dissemination of timely and accurate information such as detail spares requirements, delivery schedules, repair details, concurrent repair opportunities, service prices, port restrictions, etc. A good information management system makes downtime coordination possible by alerting stakeholders, both ashore and onboard, to the right information at the right time. This allows companies to save on coordination-related ship''s time and repair opportunity losses. Reducing a ship''s time by twelve hours per year through the selection of better downtime slots combined with better task execution can result in about $7,000 of savings per vessel per year.

Examples of areas where well-designed software can save a company time and money
The differences we point to below are in the saving of time and valuable preoccupation of the busiest staff in the company.

To conduct Planning maintenance and critical machinery spares replenishment for all the machinery on board (approximately 800 maintenance activities), using spreadsheets or a poorly designed software, it requires about 400 man- hours per year; using properly designed ergonomic software reduces the time requirement to 100 man-hours per year. This is equivalent to a savings of $13,000 per vessel per year.

Another area where well-designed software can save a company valuable time and money is crew familiarisation training with company procedures. Ulysses Systems executed a Training and Familiarisation Benchmarking Test comparing the Task Assistant to a well-designed conventional electronic document management system. This test demonstrated that with the Task Assistant, a company typically reduces its training expense per each new crewmember by between 29% and 53%, while also increasing crew familiarity with the SMS System by up to 42%. This indicates an overall familiarisation efficiency improvement of 60% to 80% based on the same familiarisation expense or 60% to 80 % reduction in expense. The latter is easier to measure in value and is equal to about $3,000 per vessel per year. However we all know that familiarisation can be difficult to enforce, so a 60% to 80% improvement in familiarisation efficiency may well save the error that we all want to avoid.

Many of the e-mails and attachments we circulate in the company require filing and quick retrieval access if we are to gain adequate value from them. For example, to execute a comprehensive overview of current enterprise activities via email messages and attachments would require a substantial indexing and informational structuring effort in order to ensure that all outstanding technical issues are brought to the attention of company staff at the time of need. But that's not all. We want to save e-mails and attachments to work on them later; we want to have discussions via e-mail to reach better understandings of situations, and we need to find discussions about important issues - including risks and problem-solving - and point them out to the right people at the right time etc.
Indexing, filing and retrieving documents is a major area of corporate attention. A well- designed system can save about $11,000 per vessel per year in time spent archiving and retrieving documents - savings related to unnecessary preoccupation and lost information is immeasurable.

It is also worth mentioning the process of filing and distributing additional risk discussions. This is a new industry requirement that is not yet established and is therefore difficult to estimate a company's time expenditure. Risk discussions need to be followed by risk assessment, by remedial action, temporary action, remedial action once again, and finally by closeout. This new requirement could become a substantial source of extra work in reporting and coordination unless managed properly.

It is also worth noting that the distribution of SMS manual and form updates adds two man-days or $700 per ship per year. This is not a significant expense and the process does not demand very much attention by senior managers on board, but it is still about 75% of the license cost of software.

In short, managers should expect savings in the order of $90,000 per vessel per year, purely from using well-designed software that helps minimize informational gaps. This saving is equivalent to a new vessel''s dry-docking and special survey costs.

How can shipping companies estimate a Return on Investment for software?
To arrive at this answer would require a side-by-side comparison of a large number of processes - comparing productivity gains, as well as compliance or control related savings, reduced incidents, better price control, etc.
In reality, an in-depth Return on Investment quantification process is too intensive for each potential software buyer in the marine industry to conduct independently. However there are some key indicators to help companies arrive at very reasonable approximations of ROI figures, which can in turn be very helpful in their decision-making. Ulysses would be pleased to discuss an ROI methodology that clients can apply internally, which can serve as a reasonably accurate estimation.

What is the key element that makes a software system a tool that saves money and manages information more effectively? What is Ulysses'' approach?

User convenience is the key to effective information management and significantly reduced operational costs. Systems must have the capacity to organize all relevant data, but as the marine industry has demonstrated time and time again, people cannot be coerced into reporting, or learning how to use a new system. Anyone can speak to the advantages of his software, but the bottom line is how the software performs in the field. Ulysses remains on the cutting edge of user-friendly software, as TA continues to lay the groundwork for better enterprise results.