Clearly, any new automation project requires economic justification. While this often involves hard “dollars and cents” quantification of cost savings from increased production, reduced raw material costs, or increased uptime; it is also about “soft” benefits, such as reducing risks and improving agility. All contribute to making your company more competitive. This article will focus on the latter, while also highlighting considerations for the former. It will also share some best practices that ARC Advisory Group has identified.
When considering a change of any kind and researching the alternatives, it is very important to understand that your business is likely to be flooded with opportunities to invest capital and that change needs to be justified for the benefit of the company. Personal or department goals need to be subordinated to corporate goals. In the automation domain, a number of factors should be evaluated for their economic contributions to a justification. But it doesn’t end there. Justification must take into account the broader opportunity to better position your company for future competition, likely involving greater agility, additional products, or improved quality.
Example Items to Consider in a Justification
Maintenance and Service Costs – These will increase for older equipment. Spare parts may be difficult to find. Direct replacements for a component disappear. Those familiar with the technologies may become a rare commodity. In addition to increased costs of repair, older systems are likely to have a longer mean time to repair. If repair requires production shutdown, this downtime will clearly affect production throughput and it will be important to know your cost of downtime.
Energy Costs – Older systems typically use more energy. For example, fixed-speed motors are giving way to variable speed drives for energy savings. Loose process control may cause cycling that can waste energy or affect product quality. Process control designs can be improved along with more energy efficient process design.
Recycling and Sustainability – These factors may also be relevant in corporate culture or product costing. Recycle costs or construction materials may figure into the value of a system or its replacement.
Improved Control Dynamics – will also lead to shorter startups, improved product quality, quicker product changeovers and quicker shutdowns. These will all have associated cost savings.
Removal of Physical Constraints – Modern control systems, for example may improve space utilization even with expanded operations.
Improved Data Analytics – Today’s advanced analytics can help streamline operations through system modeling. Perhaps a new solution can rely on data analytics – process modeling to remove the need for physical product sampling. An example of this is predictive emissions monitoring systems (PEMS) replacing continuous emissions monitoring systems (CEMS) in some applications.
Added Flexibility – Existing systems may have been designed and implemented for a specific product and purpose, but are difficult to change and adapt to new product or business requirements. These can include product variations or changes to batch or lot sizes. A new system can provide a great deal of flexibility, which could provide significant benefit for your business.
Now, for a couple of items that may not be as intuitive:
Upgrades to complex systems, such as a control system, often provide the ability to make continuous improvements over time, plan for graceful degradation of an automation system, and perform future expansions in a well-managed, modular fashion.
For example, redundancy is typically a requirement in medium-to-large automation applications. But for smaller applications, the loss of a display console may be compensated for by a backup Web-based HMI interface direct to a controller. This level of backup can come at a drastically reduced price, while also delivering added flexibility and functionality on a day-to-day basis.
A concentration on modularity for a new system can deliver a great many new features that can be surprisingly easy to implement. Perhaps you’ll want a text message while you troubleshoot a challenging issue. Perhaps you’ll want a special report while you are making some control enhancements to generate “before-and-after” analytics. Or, perhaps you’ll want to plan ahead for integrating additional sensors that you know will be coming with a new enhancement down the line. Relying on standards and leaving the door open to third-party products and interfaces; ad hoc and short-term enhancements, outside the core functionality of a system could help your company adapt to changing needs. Selecting the right technologies and data infrastructures and focusing on integrating best-in-class components can address your current needs well; while also significantly improving your ability to respond to future and transient requirements.
Many factors will impact the success of automation or related IT projects. But first considerations should be based on overall company directives with respect to its competitive stance. What will make the company more competitive in the future and how can this project influence that?
Then, it’s important for everyone to be involved with the process. Communicate widely throughout your organization. Consider all alternatives and re-evaluate and tune the process to drive toward your desired outcome. If your staff is new or inexperienced in making this type of strategic decision, involve industry experts as necessary, to assist with selection criteria development, architecture development, vendor selection or cost justification. However, don’t delegate the responsibility completely. Make it a team effort.
Roy Kok has worked in the automation industry for more than 30 years, in the areas of OPC technology, communications, HMI/SCADA software, historians, embedded software, and industrial computing. At ARC Advisory Group, Roy is responsible for all marketing management, working with our team to deliver value for both the market and ARC clients. Roy’s experience includes management positions with Intellution, GE, VenturCom, Nematron and Kepware, among others. He has run his own consulting business offering business development and marketing services to a variety of hardware and software companies and he specializes in the areas of strategic positioning, sales process, messaging, social media, and website SEO.