Digitalisation: Why now?

Duncan Micklem's picture
Duncan Micklem, Director of Business Planning and Strategy, KBC (A Yokogawa Company)
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The process industries are under threat. Their products are encountering substitution at the same time that market demand is stagnant; their means of production are challenged by alternative technologies; their neighbours do not like dangerous, noisy, smelly or highly visible assets on their doorsteps; regulators are making it costlier to operate; retiring employees are depleting the industry knowledge pool; tech industries are attracting potential new talent.

Faced with such an environment, investment choices are limited and capital is scarce; physical infrastructure is ageing and inflexible.  OT (operational technology) is required to last a quarter of a century – many process operations are controlling their plants with systems bought in the 1990s with only superficial upgrades since then.  Such technology is limited in scope and therefore the plant’s ability to manage its assets holistically rather than as individual stand-alone units is impaired. This makes them particularly vulnerable.

The focus of most plants has had to be on “operability” but little time is devoted to driving “excellence” – the OT infrastructure and tools to get the most out of the entire plant are not readily accessible and the organisation is not geared up to manage a change in focus.

Plants that are committed to the medium and long-term must have robust strategies to counter these threats and to guarantee their relevance and competitiveness.  Digitalisation is one of the key strategies that a plant can adapt to address these challenges by spending a modest amount of capital yet generating quick and effective results, sustainably.

Didn’t the industry ‘digitalise’ in the 1980s?  No – it ‘digitised’

The 1980s went through a digital revolution as old pneumatic and electronic instruments and controllers were upgraded to digital technologies.  But that was ‘Digitisation’, not ‘Digitalisation’. Digitisation is simply a change of format from analogue to digital, but essentially business as usual. 

Digitalisation, by contrast, has a far greater outcome-oriented ambition – it is the scalable application of the digital technologies, and alignment of the organisational capabilities that we believe an energy or chemical process operation should have and master with digital information at the core, in order to achieve excellence. 

What do operations leaders think about Digitalisation?

Many in the industry are confused or irritated by Digitalisation.  On the whole, IT vendors are to blame. They push the idea that Digitalisation is an IT issue yet cannot explain its relevance to an operational audience. They flood their offerings with new buzzwords but fail to articulate a compelling value proposition when challenged with operational reality.

Despite this, Digitalisation really should not be ignored, and plants should look past the confusion to uncover their own unique value and outcomes.

One of the three major trends identified in a recent survey KBC commissioned of 100 operational leaders was the influence of technology on the industry.  Respondents showed a strong desire to obtain a digital blueprint for the future yet felt underprepared within their organisations for the adoption of current technologies including the Cloud, IIoT (Industrial Internet of Things) and AI (Artificial Intelligence).

Why digitalise?

The same research also showed that Digitalisation leaders can access as much as 800 per cent higher human productivity in operations, compared to industry laggards. Although still in its infancy, Digitalisation is clearly already having a massive impact. The potential business impact is truly transformational.

Digitalisation allows a plant to manage day-to-day performance safely and reliably, so that it can respond to swings in market dynamics, operate at a true optimum, squeeze down on the gap between potential and realised profitability, create more utility for its end customers/consumers, and outmanoeuvre the competition. It also enables a process operation to extend its problem-solving ecosphere beyond the plant: to engage the support, brainpower and technologies of the plant’s key partners, customers and suppliers who can each bring their own specific expertise and experience to augment the plant’s own capabilities and resources. 

Digitalisation can turn a distracted organisation that is bogged down in reacting to day-to-day issues and inundated with data, information and advice, into an agile, well-oiled machine that proactively anticipates issues and organises to prioritise and solve them before they escalate.

Digitalisation – Now is the Time

Digitalisation done right creates revenue, improves business performance (not just process), solves problems that could not be solved before, empowers personnel and makes them more effective.  It builds a culture with digital information at the core.

Digitalisation has been enabled by the rapid growth in technology capabilities and the acceptance of new business models.  Most in the industry are only just beginning their Digitalisation journey, but some are already embracing Digitalisation and are pulling themselves ahead of the rest.  Digitalisation creates and sustains competitive advantage, and those who are not Digitalising now are being left behind – they will be consumed in the marketplace.

Plants should not delay and should start any one of a number of ‘quick win’ Digitalisation projects now.  The right project depends on where the plant is on its Digitalisation journey, but what is important is that it mobilises the workforce to embrace a culture of Digitalisation and convinces the executives who hold the purse strings that their investments are reasonable and in safe hands, bringing noticeable and measurable returns.

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