March 2019


Digital: Digitalization—Why now?

The process industries are under threat.

Micklem, D., KBC, a Yokogawa Company

The process industries are under threat. Their products are encountering substitution while market demand is stagnant; their means of production are challenged by alternative technologies; local communities 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; and tech industries are attracting potential new talent.

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

The focus of most plants has been “operability”—making sure that each asset is available and runs reliably and safely. Little time is left to devote to driving excellence; the OT infrastructure and tools to get the most out of the entire plant are not readily accessible, and the organization is not prepared 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. Digitalization is one of the key strategies that a plant can adopt to address these challenges by spending a modest amount of capital yet generating quick and effective results, sustainably.

Didn’t the industry “digitalize” in the 1980s?

The 1980s went through a digital revolution as old pneumatic and electronic instruments and controllers were upgraded to digital technologies. However, that was digitization, not digitalization. Digitization is simply a change of format from analog to digital, but essentially business as usual.

Conversely, digitalization has a far greater outcome-oriented ambition. It is the scalable application of digital technologies and the alignment of organizational capabilities that an energy or chemical process operation should have and master, with digital information at the core to achieve excellence.

What do operations leaders think?

Many in the downstream industry are confused or irritated by digitalization. Overall, information technology (IT) vendors are to blame. They push the idea that digitalization 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, digitalization cannot be ignored, and plants must look past the confusion to uncover their own unique values and outcomes.

The author’s company recently commissioned a survey of 100 operations leaders across the oil refining and petrochemicals industry to understand how they are responding to market conditions and setting themselves on a more sustainable path. One of the three major trends identified 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 organizations for the adoption of technologies such as the cloud, the Industrial Internet of Things (IIoT) and artificial intelligence (AI).

Why digitalize?

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

Digitalization allows plant personnel to manage day-to-day performance safely and reliably, so that the facility can respond to swings in market dynamics, operate at a true optimum, squeeze the gap between potential and realized profitability, create more utility for its end customers/consumers and outmaneuver 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, each of which can bring specific expertise and experience to augment the plant’s own capabilities and resources.

Digitalization can turn a distracted organization 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 organizes to prioritize and solve them before they escalate.

Digitalization—now is the time.

When performed correctly, digitalization creates revenue, improves business performance (not just processes), 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.

Now is the time to digitalize. Digitalization has been enabled by rapid growth in technology capabilities and the acceptance of new business models. Most in the industry are only just beginning their digitalization journey, but some are already embracing digitalization and are pushing themselves ahead of the rest. Digitalization creates and sustains competitive advantage, and those who are not digitalizing now are being left behind—they will be consumed in the marketplace.

Digitalization actions to take now

The following are steps companies should be taking to advance digitalization within their organizations.

Table stakes. Plants should be properly readied to embark on their digitalization journey. Appropriate infrastructure should be in place, data should be trustworthy, and people should be prepared and accepting. Legacy technology should be assessed against present objectives to determine if it stays (maybe in an upgraded form) or goes.

Investments should be holistic and scalable in nature—they should consider the impact of any change in one area on the end-to-end plant economics. They should be smart enough to identify problems and recommend solutions, not to just present information without context.

Problem-solving can extend beyond the plant through the use of the cloud. Suppliers, customers and third-party experts can be engaged as stakeholders in the desired outcome, no matter where they are located.

Digitalization solutions should be easy to use and maintain. As much as practical, solutions should be automated so the human becomes an implementor and supervisor of strategy, rather than a number-cruncher and tactician.

Playing for competitive advantage. Plants should start any one of several ‘quick-win’ digitalization projects now. The right project depends on where the plant is on its digitalization journey. It is important for plant operations leaders to mobilize the workforce to embrace a culture of digitalization and convince executives that their investments are bringing noticeable and measurable returns.

An exciting digital future

The digital future will look quite different: decision-making will be streamlined, and conclusions will be drawn with more certainty; operational execution will be largely automated; and people will be empowered with a wider scope of accountability, resulting in greater job satisfaction.

The digitally wise will operate plants with a massively reduced number of unexpected events; excellent levels of reliability, safety performance and environmental compliance; and extraordinary efficiency. Assets will operate with agility and flexibility. Competition will have been left behind. HP

The Author

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