Willingness to execute M&A deals is likely what brought CEO Joe Hogan to ABB. With the US economy presently healthier than Europe, ABB's new geographic balance appears well timed. Speaking to the customer meeting, Hogan emphasized his view that ABB should not be regarded as a conglomerate due to the tight synergy between power and automation. He sees ABB riding a "third electrical revolution" that will feature intelligence, power electronics, and growing amounts of direct current (DC) electricity.
These technologies have been ABB strengths for many years. Now the company is working to capitalize on them as the energy world transitions to smart grids, renewable energy, smart machines, hybrid or electric vehicles, and massive cloud data centers. ABB sees all these trends moving in its direction.
Aside from products, Hogan emphasized ABB's international corporate culture as an important distinction. Hogan stated flatly that while ABB's major competitors have largely exported their national cultures into their global operations, he believes that ABB lacks a dominant national culture and that this can be an asset for the firm.
ARC Session Highlights Asset Performance Management
ARC Advisory Group gave five workshops at the event focused on field devices, automation, and asset management. During the session titled, "Synchronizing Operations and Maintenance," ARC provided insights for improving return on assets (ROA) by enabling collaboration among production and maintenance. Many organizations have separate management silos and metrics that often lead to sub-optimal results. Companies can integrate their existing collaborative production management (CPM), manufacturing execution systems (MES), and enterprise asset management (EAM) technologies to improve collaboration and optimization among these organizations.
Often this drive for improved performance requires upgraded or new applications. ARC's presentation provided guidance for financial justification of these projects. Engineers often lament the lack of management attention or inability to obtain funding. People respond to their metrics – including C-suite executives. The business case must make the connection between high-level APM goals, and the financial results of the enterprise. Best practices in maintenance and operations improve revenue, reduce costs, and improve profitability while lowering operational risk – all which affect the C-suite goals for financial results. A thorough asset performance management (APM) business case can win management support.
Automation and Power World's "Technology & Solution Center"
Automation Systems and Migration
ABB now goes to market with three major process automation product lines as well as a TUV-certified safety product. System 800xA is the lead solution for the process industries, with an installed base of ~8,000 systems. 800xA architecture maps well against ARC's Collaborative Process Automation System (CPAS) model in that it provides a vast integration capability for non-automation services such as process safety, electrical equipment, video, telecommunications, enterprise applications, etc. The second line, Symphony Plus introduced in 2011, targets power generation and water utility applications in which ABB has an installed base of approximately 6,000 systems. The third line is based on the Freelance automation product (installed base ~15,000) and is intended to serve smaller, less extensive and more cost-sensitive projects in the process industries. The company supports these three automation offerings with a wide range of software and services.
Expanded system migration capabilities was one area that caught ARC's attention in particular. Over the years, ABB acquired many different automation products and systems, requiring it to develop an integration and migration strategy for these "heritage" systems. Until recently, ABB applied this strategy mainly to integrate its own rather than competitor products. At this year's event we noticed that this has changed, as ABB now supports a minimally disruptive solution for migrating a number of competitive DCS products to new ABB automation solutions. This capability is relatively new, so ARC believes it is an area that end users running older non-ABB systems should watch carefully and gauge early customer experiences.
Decathlon Software Suite
ABB has targeted software as a growth engine. The company has acquired several software firms (most notably Ventyx) and formed a software organization that includes both acquired and some existing ABB software teams. EAM and other enterprise software will carry the Ventyx brand going forward.
As ABB operational software products become more closely integrated, ABB will also market them as a suite, targeting especially the large projects that use its 800xA automation platform. The new Decathlon Suite will include functions such as manufacturing execution system/collaborative production management (MES/CPM), alarm management, advanced process control (APC), control performance, workflow, energy management, and others. In time, this may also include solutions that integrate partner software products. ABB introduced this new branding and showed some of these products at the event.
Energy Monitoring - ABB's Collaborative Production Management (CPM) solution integrates manufacturing systems for real-time visibility, execution, tracking, reporting, and optimizing of manufacturing processes. This results in better production scheduling, execution, and management decisions. At the event, the company demonstrated how CPM's production management data can be used to drive an energy optimization within another product; the cpmPlus Energy Manager.
In an electricity market, the price of electric power varies with time and the rate of consumption. Energy Manager clearly tracks the real-time cost of electricity and provides decision support (or drives automated corrective action) to schedule power consumption, while avoiding peaks and more expensive time periods.
ABB provides a comprehensive product map from plant floor data through ISA95 level 3, and into enterprise applications like enterprise asset management (EAM). ABB products integrate asset information and help users improve reliability, uptime, and asset longevity. Within the Ventyx product line, ARC noted several APM-related enhancements:
Asset Health Center - The Ventyx Software Pavilion included a demonstration of the Asset Health Center solution delivered to American Electric Power (AEP). This has algorithms for assessing the condition of intelligent devices (both ABB and non-ABB). The solution integrates equipment-based operational technology and enterprise information technology. It combines ABB's condition monitoring and performance algorithms with the Ventyx FocalPoint business intelligence solution and leverages deep operational and diagnostic expertise contributed by AEP. The Asset Health Center is designed to automate what can be a time-consuming process requiring highly skilled individuals – obtaining visibility into the condition of critical assets, recognizing performance issues, and prioritizing maintenance activities.
Mobile Workforce Management - The Ventyx Software Pavilion also included a mobile workforce management demonstration covering work order processing for maintenance technicians, inspections, and production work orders.
Ventyx Mobile Inspector is being extended into a broader work processing application that enables mobile workers to collect and manage data relating to physical assets and production materials. Work order processing provides a transaction that updates other APM applications.
Services Keep Automation Systems Running
Engineering, automation, and IT staffs often have to support highly complex systems, even though the responsible individuals may not have had these roles adequately defined. The remote location of assets and scarcity of skilled support staff further limit serviceability. Furthermore, many process automation engineers and plant technicians believe their IT-related work adds little value to the manufacturing operations and believe their time would be better spent optimizing the plant assets and processes and working with operations.
ABB has introduced a lifecycle value manager toolset to address the entire lifecycle of an automation system. This tool, called ServicePoint, uses a framework that exposes clients to the full range of the company's service offerings and, more importantly, helps users map the available services to their specific goals and requirements.
ABB recognizes that the automation system is a vital asset in any production or manufacturing facility. A variety of services extend deep into the real-time control systems to provide proactive monitoring and maintenance. Core services already include on-demand field service support, spare parts support, evolution and upgrade services, training, and some remote support services to help maximize system and process performance.
As part of the remote and on-site service offering, ABB's Cyber Security Monitoring Service helps owner-operators identify, classify, and prioritize threats and vulnerabilities. The company's Loop Performance Service targets process control performance to help reduce process variability. Using a similar methodology as the cyber security service, Loop Performance collects data and analyzes and identifies problematic control areas that require attention and maintenance.
The company's newly introduced ServicePort capability enables secure delivery of remote services. It includes configuration tools, diagnostic applications, improvement activities, and condition monitoring. ServicePort provides a single access point on the automation system for system health and maintenance. ABB also offers the 800xA Advanced System Fingerprint as a service, enabling the company's service specialists to perform detailed analysis and reporting of fundamental system parameters.
Services Extend to Cloud Applications
To complement the 800xA Lifecycle services, ABB (like several other industrial software providers today) is moving its plant historian to cloud services. The Cloud allows manufacturing and industrial plants to deploy quickly and then scale up as demand grows. It reduces IT management and server administration tasks, can provide organizations with a high-availability architecture, and enables collaboration by increasing access to knowledge and visibility throughout the enterprise. Cloud addresses key user pain points. These include IT costs, application lifecycle management (version control), patch management, and application monitoring. It also helps foster faster adoption of new products and technologies in situations where customers may not have the appropriate infrastructure or skill sets. ABB now offers a tiered cpmPlus History in the cloud, increasing project deployment speed for owner-operators.
ABB also has demonstrated proof-of-concept for its cloud control approach, now in development. This demonstration featured ABB's model predictive control (MPC) platform in a tiered environment, with the execution models running in the cloud and writing control setpoints to a local controller. The company believes that with this type of remote cloud control operators would be less likely to turn off the MPC, which could provide significant business value.
ARC believes that the Windows Azure cloud platform, which ABB now uses, is becoming a de-facto standard for cloud-based manufacturing software solutions and services.
Thomas & Betts
ABB's most recent acquisition, electrical supplier Thomas & Betts, exhibited at Automation and Power World for the first time. T&B is a good example of ABB's disciplined approach to M&A. The company sells low-voltage electrical equipment as its "bread and butter." These include items like conduit, junction boxes, and conduit connectors. T&B goes to market through a large network of electrical distributors that, in turn, supply electrical contractors. While T&B does feature innovative designs, by most definitions these are commodity markets. The electrical or industry codes determine the equipment specifications. To differentiate itself, T&B has organized its business process to take out costs usually carried by its distributor customers by using an Amazon.com-style approach.
T&B operates a huge modern warehouse operation close to a major logistics hub. This enables it to provide next-day delivery, even for customer orders placed very late in the business day. Distributors can receive mixed-order pallets segregated by end user order. This simplifies and speeds the distributor's work process and reduces distributor inventory requirements. T&B also enables distributors to create and schedule orders of pre-defined electrical assemblies, reducing cost both for the distributors and the jobsite contractor.
The annual ABB Automation and Power World customer event continues to grow and attract. ABB's strategy and performance have been solid and appear to be paying off. The company has combined its deep technological expertise with many sound product strategies and absorbed and leveraged its recent spate of acquisitions with minimal breakage and struggle.
The challenges for the company are to give its collaborative and international corporate culture greater speed, agility, and coherence. Arriving on time for tomorrow's energy party will demand that all the company's technical and human expertise be available to address rapidly evolving customer needs. So far, ARC believes that ABB has done this pretty darn well.
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