How Automation Powers Digital Transformation

REACHING THE TOP QUARTILE HOW AUTOMATION POWERS DIGITAL TRANSFORMATION

Manufacturers today are working in a pivotal time. The challenges arising from rapid technological innovation and a dynamic business environment grow larger every day. To succeed, it seems sometimes we must find a way to balance seemingly opposing challenges: How do we embrace innovation and new technology while leveraging our existing investments? EXECUTION How do we evolve our businesses to be adaptable while METHODOLOGY maintaining tried-and-true practices? How do we help our organizations cope with rapid technology changes and evolve our personnel to the jobs of the future? The challenges, at times, can seem overwhelming, but overcoming them is crucial for companies to reach and maintain operational and project performance in the Top Quartile, or top 25 percent, of peer companies. Over decades of experience helping customers face and overcome these challenges, Emerson has identified the building blocks to navigate the digital transformation successfully. It all begins with business justification—why should your business invest in the technology, and what goals will it help you achieve? Then comes identifying the execution methodology—the predictable, scalable plan and actions needed to implement TECHNOLOGY digital technologies—and the right technology platform to bring the vision to life. PLATFORM And finally, to ensure success, companies must prepare their people and inspire behaviors needed to develop the workforce of the future. Together, these elements, explored more deeply in this ebook, can help companies navigate the digital transformation and realize Top Quartile performance. Emerson PEOPLE AND will continue to work tirelessly in pursuit of tools, technologies and practices that BEHAVIORS help our industry partners and customers succeed. I hope those outlined throughout this ebook are helpful and lead you and your company to the next level of success.

Sincerely, Mike Train Chairman, Emerson Automation Solutions

ndustrial organizations today are under A proven approach to achieving these performance HOW CAN tremendous pressure to not only stay goals is to move strategic engineering decisions I competitive, but also deliver greater value into the earliest project stages. Historically, from their investments to shareholders. For some companies tend to make critical decisions MANUFACTURERS$135 many companies, the challenge to complete in the later stages of a project, when there is million % capital projects on time and on budget as well as the least flexibility to implement the changes, ACHIEVE TOP QUARTILEINEFFECTIVE56 achieve Top Quartile operational performance%— ultimately resulting in schedule% disruption AT RISK communicationperformance in the top 25 percent of peers—often and increased cost. Successful project teams, appears difficult, if not unattainable. however, engage an industry expert during the projects over65 $1B 35 PERFORMANCE? Too often,around industrial the firms world overlook the planning stagesprojects of project under$500M design and execution. transformative power and game-changing It’s important to work with partners that not For every $1 billion spend on a capital project, performance of new executionFAIL methodologies and only have a track record FAILof global consistency of $135 million is at risk. 56% of that ($75 million) technologies.A When project automation is considered technologies— to have faileddelivery, if the schedule but also followslips or a theproven project methodology is at risk due to ineffective communication. sometimes viewedoverspends as commodities by more or than necessary 25%, the executionfocused on time completing is 50% longer, projects or onthere time are and –2013 Pulse of the Profession, Project Management Institute but non-strategic—aresevere and continuingtreated as partoperational of a problemswithin budget. into the second year of the project. broader business–Speed Kills,performance Klaver, Ali. 2012 strategy, Project Manager the Magazine 40 percent of projects in the oil and gas industry result can be a tremendous improvement in are subject to budget and schedule overruns. value achieved. –Capital Project Execution in the Oil and Gas Industry. Companies can attain Top Quartile performance M. McKenna, H. Wilczynski, D. VanderSchee. 2006 Booz Allen Hamilton survey from 2006 of in a variety of ways: % 20 companies (super-majors, independents and EPC firms) PROJECT CERTAINTY 20 cost savings Traditional approaches to % project engineering/execution 30 can introduce project risk, extra % budget & schedule anticipated valuecost and extended startup time. By 39 focusing on automation early in the process, schedule DISAPPEARS Good front end OVERRUNS companies can reduce this capital project risk, REDUCTION Up to 30 percent of anticipated value planning leads to as eliminating cost and time overruns to save 20 much Goodas 20% front-end cost savings disappearsto during30 percent the onturnover/ their investment. According planning leads to commissioning and ramp-up phases of and 39% schedule reduction % to industry benchmarking data, Top Quartile as much as 20% new asset lifecycles. for total project design and –Deloitte. Effectiveperformers Operational Readinesshave 54 of percentLarge Mining lower Capital costs and construction.cost savings and 40 Projects - Avoiding49 valuepercent leakage shorterin the transition schedules from project thanexecution fourth –Construction39% Industry schedule Institute: Adding Value Through into operations. Article, 2012. Front End Planning. CII Special Publication 268-3 quartile performers. Top Quartile performers reduction for total Construction Industry in capital projects not only achieve schedule project design and Institute: Adding Value Through Front-End Planning. and cost goals, but also derive faster ROI, construction. CII Special Publication 268-3 PERSONNEL which improves shareholder value. TO

3 It takes an average of six to seven years to develop new employees into autonomous petrotechnical INTRODUCTORY HOW CAN MANUFACTURERS ACHIEVE THE FIVE COMPETENCIES OF DIGITALLY OPPORTUNITY ABOUNDS TO BOOST OPERATIONS, ROI FROM IIOT: PUTTING TECHNOLOGY LETTER TOP QUARTILE PERFORMANCE? TRANSFORMED COMPANIES BUT IT WON’T BE FOUND IN THE SAMEprofessionals OLD PLACES who can makeTO WORK non-standard, FOR YOUR OPERATIONS original technical decisions. 6 –2010 SBC Oil & Gas HR Benchmark, Schlumberger Business Consulting Energy YEARS Institute, March 2011 % expected to 7 50 RETIRE 50% of experienced and managerial personnel in national and international oil Bring the most complex projects to gas processing companies are expected to retire in the coming decade. SUCCESSFUL IMPLEMENTATION –Society of Petroleum Engineers, “The Great Crew Change: A www.emersonprocess.com/integratedprojects/ Challenge for Oil Company Profitability”, April 16, 2011.

EMERSON. CONSIDER IT SOLVED. OPERATIONAL CERTAINTY Achieving safe, reliable operations is critical to a company’s success. Unplanned downtime—the loss of production availability—is one of the biggest AS MUCH AS causes of reduced profitability, not to mention safety and compliance risk. These unplanned 37% outages result in excessive maintenance, repair OF ENERGY BROUGHT and equipment replacement. This is just part of INTO INDUSTRIAL a performance issue that leads to more than $1 PLANTS IS WASTED trillion in operational losses across the globe. ANNUALLY Having top operational performance can make a huge impact on a company’s bottom line. In fact, according to industry benchmarks, bottom-quartile companies spend nearly four times as much on maintenance costs as Top Quartile performers that often leverage the power of predictive intelligence built into Department of Energy study, as much as 37 new technologies. percent of energy brought into industrial plants PEOPLE PRODUCTIVITY In the pulp and paper industry, for example, Companies that can all but eliminate these is wasted annually, and 15 percent or more of Standard maintenance practices companies that have implemented preven - costly unplanned outages set the benchmark for generated steam is lost. Among contributing are labor-intensive and inefficient. tive and predictive maintenance informed operational performance. Emerson’s methodology factors, inadequate monitoring of furnaces Through better training of personnel by advanced automation technologies have for its Operational Certainty approach can and gas-fired heaters can cause excessive fuel and modern automation technologies, increased process efficiency by 20 to 30 percent help customers pinpoint the causes of poor consumption, increased emissions and added industrial firms can safely improve workforce and productivity among maintenance staff up performance, prioritize actions that can yield the maintenance cost. Energy is also wasted as the performance and productivity by 60 percent and to 66 percent. They have also seen reductions greatest improvement and establish a scalable result of leaks and process variability due to give employees improved insight into process of safety incidents by two-thirds. work plan for moving forward. inadequate monitoring. and equipment conditions—empowering them As these examples demonstrate, redefining By delivering stable, reliable power, energy to make better-informed business decisions performance expectations and taking a strategic INDUSTRIAL ENERGY companies can reduce fuel consumption, on the plant floor. Industry leaders typically approach to automation technologies can MANAGEMENT waste, emissions and maintenance costs. In operate with the leanest staff, seeking labor materially change the economic outcome of a Outmoded technologies and inade - fact, studies show that an effective energy efficiency and the fewest safety incidents. Yet, company’s plant operations or capital projects. quate monitoring of process energy management information system can result in traditional procedures such as routine walk- Manufacturers that measure their industrial consumption result in unnecessary energy savings of 5 to 15 percent—translating to arounds and reactive maintenance result in projects and plant operations against these new cost and wasted resources. Energy is one of millions of dollars saved annually. Top Quartile wasted labor, poor prevention and increased thresholds of performance typically expect no the biggest operating costs in manufactur - manufacturers have energy costs among the risk. Conversely, companies that adopt pro - on-time or on-budget slippage on their greenfield ing, accounting for as much as 40 percent in lowest in their industry, despite maximum gressive digitally transformed maintenance projects or plant upgrades, nor any unscheduled industries like refining. According to a U.S. utilization of production facilities. procedures see game changing improvements. plant or production equipment failures. l

INTRODUCTORY HOW CAN MANUFACTURERS ACHIEVE THE FIVE COMPETENCIES OF DIGITALLY OPPORTUNITY ABOUNDS TO BOOST OPERATIONS, ROI FROM IIOT: PUTTING TECHNOLOGY LETTER TOP QUARTILE PERFORMANCE? TRANSFORMED COMPANIES BUT IT WON’T BE FOUND IN THE SAME OLD PLACES TO WORK FOR YOUR OPERATIONS • Decision Support: Leverage analytics and This group consistently pointed to personnel embedded expertise to provide actionable as the most important factor for success, insights that reduce complexity and enable identifying the need for companies to consider higher quality, faster decision-making new ways to doing things, improve workflows • Workforce Upskilling: Identify approaches that and educate and upskill their employees to empower workers to acquire knowledge or expe - effectively leverage technology investments. rience faster and more effectively, and support This new era of manufacturing is taking a higher level and collaborative decision-making familiar path: History textbooks will show the • Mobility: Provide secure, on-demand access advent of new technologies transforming the to information and expertise regardless of status quo and disrupting the traditional nature location, enabling collaborative workflows of work time and time again. But you’ll also see • Change Management: Strategies, processes, tools the same disruption consistently presenting new and expertise that, in the right combination, opportunities and net employment growth, not THE FIVE COMPETENCIES OF simplify and accelerate the institutionalization loss. Companies that embrace the opportunities of operational best practices are the ones that come out on top. These themes are not necessarily DIGITALLY TRANSFORMED new, but the Industrial Internet of Things (IIoT) is bringing BY IMPLEMENTING THE FIVE COMPANIES unprecedented opportunities to COMPETENCIES AND PROVIDING evolve performance in each area. EDUCATION AND UPSKILLING Mastering these competencies can help OPPORTUNITIES FOR EMPLOYEES, or the past three decades, manufacturers Change, while essential, is always a chal - manufacturers fully take advantage MANUFACTURERS WILL BE BETTER have been focused solely on efficiency as lenge—especially when we’re approaching a of evolving digital technologies. POSITIONED TO ACCELERATE, F the key to performance gains and technology never-before-seen productivity era in manufac - To help the industry leverage INSTITUTIONALIZE AND SUSTAIN integration, but this mindset is beginning to turing. Companies are understandably searching these competencies to their fullest, fade as ever-growing industry expectations and for answers on how to get today’s manufacturing Emerson created the Operational TOP QUARTILE BEHAVIORS AS PART competition demand a new approach. workforce from Point A to Point IoT. Certainty Consulting practice made OF THIS IOT-DRIVEN REVOLUTION. Modern manufacturers must reorient their To help industry approach this transfor - up of Emerson planning, operations business plans with an eye toward digital mational challenge, Emerson analyzed the and engineering experts to help transformation and a laser focus on the resources organizational behaviors of Top Quartile indus - guide companies through digital transformation. Today is no different. Companies and employees that drive business performance: people. This try performers and identified five essential Companies are eager to get there. In a 2017 ready to adapt to the rapidly transforming digital transformation will require a digital workforce competencies critical to realizing the value study conducted by IndustryWeek and Emerson, landscape stand to achieve the greatest success. By with the skills and know-how to leverage new of digital transformation: manufacturing leaders from a variety of industries implementing the five competencies and providing technologies and innovation. Their success is • Automated Workflow: Eliminate repetitive said they believe IIoT will bring new possibilities education and upskilling opportunities for employ - critical for companies to achieve Top Quartile tasks and streamline standard operations fueled by increased real-time information, a ees, manufacturers will be better positioned to performance and stay among the top 25 percent to focus personnel on exceptions and other more tightly connected enterprise and improved accelerate, institutionalize and sustain Top Quartile of industry peers. opportunities that require human intervention analytical tools—but obstacles remain. behaviors as part of this IoT-driven revolution. l

INTRODUCTORY HOW CAN MANUFACTURERS ACHIEVE THE FIVE COMPETENCIES OF DIGITALLY OPPORTUNITY ABOUNDS TO BOOST OPERATIONS, ROI FROM IIOT: PUTTING TECHNOLOGY LETTER TOP QUARTILE PERFORMANCE? TRANSFORMED COMPANIES BUT IT WON’T BE FOUND IN THE SAME OLD PLACES TO WORK FOR YOUR OPERATIONS utomation has been a pervasive focus correctly, they can focus maintenance efforts of investment for decades, largely on identifying and addressing potential issues A targeting core production equipment, before they result in breakdowns, as well as and the industry is already realizing substantial get early notice of unpreventable failures. efficiencies as a result. But the advance of That results in a dramatic reduction in costly automation has also created a new challenge unplanned outages, not to mention a reduced for many companies: skills and work practices risk of safety incidents. Availability goes up must evolve to keep up with more powerful and maintenance costs go down. technologies and highly complex facilities. 2. End routine trips to the field. Scheduled manual Technology has outpaced skills advancement inspection of equipment for both safety and in many cases, which is marginalizing the reliability is still common practice. However, game-changing performance improvements broader online sensor coverage of both safety that companies could realize. Additionally, and reliability has become cost-effective to many work practices in areas like reliability are install due to nonintrusive, easy-to-maintain based on decades-old processes that fail to take wireless sensors. Data from these sensors can advantage of tremendous technology advances in sensors, communications and mobile applications. MANUFACTURERS MUST Manufacturers must fundamentally FUNDAMENTALLY UPGRADE upgrade their work processes to ensure THEIR WORK PROCESSES TO they’re able to produce effectively ENSURE THEY’RE ABLE TO to turn a profit in this environment. PRODUCE EFFECTIVELY TO TURN Those who stick with the way things A PROFIT IN THIS ENVIRONMENT. have always been done will be outmaneuvered by those who are seeking Top Quartile performance—performance be fed to remote experts who can monitor and OPPORTUNITY ABOUNDS in the top 25 percent of peers—in both capital manage operations at multiple facilities via projects and ongoing operations. remote integrated operations centers. Often, they To achieve sustained profitability this year and can direct on-site crews equipped with video TO BOOST OPERATIONS, beyond, it’s time for the industry to think differ - and audio tools, avoiding travel. Advances in ently about these five long-standing practices: prescriptive operations can empower equipment BUT IT WON’T BE FOUND 1. Stop “run-to-failure” scenarios. Traditionally, to “learn” what problems look like and take plant maintenance crews spend most of their steps to address problems before they occur, time scrambling to fix broken equipment. But preventing downtime and lost production. This IN THE SAME OLD PLACES. today’s monitoring and control automation dramatically increases the reach of valuable capabilities provide real-time predictive expertise and allows the experts to focus more intelligence. When teams are using this information time on their critical work.

xecutives are hearing plenty these days early performance improvement gains. The key about the promise of the Industrial Internet to this approach is a flexible set of technology E of Things (IIoT) . While the technology solutions called Plantweb™ digital ecosystem, enables connected devices to monitor, collect, backed by Emerson’s deep domain expertise. analyze and deliver valuable information that Plantweb, a portfolio of interoperable technologies, should translate into smarter, faster business software and services, helps customers realize decisions, it’s not always easy to establish a measurable improvements in reliability, safety, clear business case for making what could be a energy management and overall operations. The sizeable investment. digital ecosystem gives customers total flexibility One reason for the cautious attitude on the and scalability in the way they adopt IIoT and puts part of many executives is that most scenarios them on the road toward digital transformation. for implementing IIoT programs paint a picture of The key to success is connecting your technology complex data architectures and massive enterprise- to ensure the plant ecosystem works together. Many wide investments, requiring extensive engineering companies have already incorporated plant floor and a long-term commitment. Executives facing technologies—such as sensors and smart valves— these multimillion-dollar or larger investments that can monitor production lines and industrial are left wondering: How do I know I’m investing processes in real time, tracking temperature, in the right approach? How do I measure the flow, pressure, valve openings and closings, and value derived from my investment? other factors that influence production. Both The popular business mantra of “go big or go process and discrete manufacturers have also made home” certainly has its place in time, but when significant investments in alarm systems designed it comes to implementing IIoT, the opposite to react to sensor data and shut down machines, route may be the preferred approach. Companies if needed, reducing the risk of catastrophic failure are helping customers find finite yet scalable and extended downtime. options to lower the risk of adoption while still Innovative sensor technologies —that measure reaping the benefits of the IIoT. vibration, corrosion or gas leaks, for example— Emerson, for example, is focused on helping help customers more easily and cost-effectively industrial manufacturers gradually adopt access real-time data pertaining to important technologies that strategically tackle a defined operational domains such as safety, reliability, business problem, enabling customers to achieve optimization and emissions.

Emerson is a global automation engineering and technology leader, propelling the world’s premier industrial companies into benchmark-setting performance throughout the lifecycle of their investments. At Emerson, we call it Top Quartile. For decades, leaders in oil & gas, refining, power, chemical, mining and other process industries have turned to Emerson’s expertise and innovations to deliver predictable project success. Emerson has been called upon to provide services and technologies to the world’s largest and most complex projects, helping customers eliminate unnecessary capital construction costs, reduce project complexity and restore schedule certainty. Once an asset is up and running, our clients leverage Emerson’s unparalleled automation technology portfolio to achieve Top Quartile operational performance through maximum production availability and throughput, lower energy costs and reduced safety risk. Emerson’s leadership extends from pervasive sensing technologies and the most reliable control elements to the industry’s most advanced software platforms for operations management and asset health. Emerson’s more than 74,000 employees in 150 countries around the world wake up each day ready to take on our customers’ toughest challenges, turning “never been done before” into “consider it solved.”