ABB Ability Featured at Customer World Event

Overview
ABB held its biannual Americas customer meeting March 13-16 in Houston. Formerly named ABB Automation and Power World, this year the meeting was renamed ABB Customer World.  The company used the occasion to introduce a new group-wide industrial cloud strategy, a number of important new products, along with new corporate branding.

ABB Ability
The most important new announcement was about "ABB Ability."  This is a new group-wide brand for ABB’s portfolio of digital solutions.  Most have already been developed by various ABB business units.  This brand has been assigned to about 180 products.  Examples include ABB’s flagship automation System 800xA with new Select I/O and project tools (more about this below), the Asset Health Center, and the ABB Smart Sensor.  In many cases these existing ABB products had previously been targeted at specific vertical industries or customer classes by individual ABB business units.

In the new strategy, these products will be given corporate support and developed and extended to become applicable to larger sets of ABB customers and industries.  A first example is ABB Ability Collaborative Operations, extending the technical capabilities of ABB Ability by also introducing a new operating model in which ABB can work closely with the customer in real time.  This originated from the Marine sector, but is now rolled out to all industry sectors, receiving the imprimatur, promotion, and resources of ABB’s new brand.  Collaborative Operations gives the customer instantaneous access to a subject matter expert from ABB to help and assist when needed.  By utilizing digital means to collaborate and jointly look at available data and turn it into information, problems can be solved before they become failures, saving millions of dollars.  Collaborative Operations also eases the customer’s digital transformation, as it enables not only collaboration between the installation and ABB, but also tighter collaboration between the customer site and that company’s own technical support staff.

A second example is the ABB Smart Sensor.  This credit-card sized wireless sensor is attached to existing electric motors to monitor their condition while running.  ABB featured this product at the 2016 Hannover Fair, where it was introduced to German Chancellor Angela Merkel and then-US president Barack Obama.  For the first time, at last week's event ABB customers could see the devices working, hold them in their hands, and discuss their usefulness with some pilot customers.

ABB announced that the Microsoft Azure platform will serve as the platform for ABB Ability applications.  ABB’s Chief digital officer, Guido Jouret, explained that the choice of Microsoft combines that company’s cloud reach with ABB’s domain-specific software products.   He emphasized ABB’s viewpoint that there will be no “binary outcomes” in the IIoT cloud platform market.  Rather, multiple cloud service platforms serving the industrial IoT will persist and certainly one of the major differentiators for these platforms will be their ease of integration.  Envisioning a future of “inter-cloud” integrations, ABB believes, lends extra weight to its choice of Microsoft as the primary platform, given its massive developer base.

ABB Ability System 800xA Select I/O
From the process automation standpoint, certainly the most significant announcement was Select I/O for ABB Ability System 800xA.  While certainly not first to market, ABB could be classified as a follower in the race to develop smart configurable I/O for its flagship DCS and safety systems.  However, ABB has used this extra time to take advantage of early end user experiences and has delivered both an excellent product and a set of accompanying software tools that will add value to the new I/O in projects.

The new single-channel I/O modules appear to have an excellent design with several important features.  Besides supporting selectable types of sensor I/O, the modules support a field disconnect mode in which they are connected to the automation system, but remain isolated from the field device.  ABB has also introduced fully pre-engineered I/O cabinets so that additional process I/O can be ordered as a commodity by project teams.

Going even further, ABB introduced new software tools that effectively de-couple the configuration of I/O hardware and the check-out of field devices/terminations from the DCS application engineering task.  This process, dubbed “xStream Engineering,” is one of the wisest developments that ARC has seen in the DCS market.  Technicians use the software tool at the I/O cabinet to interrogate and test the associated field devices.  This captures their “as-built” tag and configuration information.  This field data is then merged with the application engineering software, but not until commissioning, when the tags are matched.  This accomplishes the “late binding” of DCS hardware and applications that ARC identifies as a necessity in our Collaborative Process Automation System (CPAS) vision of state-of-the-art process automation systems.

With the release of this new I/O product and engineering tools, ABB seems to have realized the requests of customers such as ExxonMobil for systems that require less customization, are more immune to late engineering changes, and support rapid checkout and commissioning.   Indeed, some current (and former) ExxonMobil employees appeared to express a degree of pride of ownership in these new 800xA capabilities.

Exhibit Floor Projects a Customer-centric ABB
The exhibit floor at the event was notable in that, for the first time, it was impossible to discern the boundaries between business units.  Rather, the floor was structured around ABB Ability applications showing the collaboration of plant control centers, remote support centers, and corporate headquarters.  Surrounding this were areas of the floor dedicated to various vertical industry solutions.  The overall exhibit was divided roughly in half around this circle between solutions for industry and infrastructure and solutions for utilities.  This exhibit reorganization may seem like a small change, but it was refreshing to see and reflects some truly different thinking at the group level at least.

Straddling the border between industry and utilities was an area focused on services.  ABB’s existing ServicePort is an on-premise edge system that hosts several remote monitoring and service applications for ABB products as well as plant operations. ServicePort has been around for several years.  Initially, ServicePort was used to comprehensively monitor automation system performance.   But the intention for the platform has always been to add new capabilities that ABB customers could purchase through a subscription model.   This capability meshes well with the new ABB Ability strategy, and the set of subscription services is now growing.

Cevian
One unmentioned “elephant in the room” was the recent election to the ABB Group board of a representative of Cevian Capital, an activist shareholder with a 5 percent stake in the group.  In the past, Cevian had called for ABB to simplify its group structure by spinning off its power grids business unit, but the board rejected any such plans in 2016.  It seems to this analyst that any breakup value gained through a simpler group structure and simpler governance would be unsustainable.  It would require forsaking the synergies between the power and automation businesses, especially in R&D.  Both units of a split up ABB would find themselves competing against the same global firms with which they compete today – firms with both a power and automation business.   In ARC’s view, these competitors would be much happier to compete against a split up ABB, which we see as an argument in favor of continuity.

ARC’s Take
Does the new roll out of ABB Ability reflect simply a Johnny-come-lately strategy in response to the initiatives of rivals Siemens and (especially) General Electric?  While the proof will be in the execution, ABB appears to have “turned a corner” culturally and these new introductions may reflect that turning.

At the event, we learned that ABB had recently undertaken a complete and thorough census of all software developed and marketed by each of its four business units.  To our knowledge, this is the first time this has been done.  The objective was not only to identify redundancies, but to expose the software “hidden gems” to a broader set of ABB employees and (eventually) customers.  If ABB can do this, it will likely bring them greater success.

For many years, these technically excellent software products had largely been restricted to a narrow market and known by and promoted only within a small subset of ABB's customers.  If managed strategically as a group-wide asset, their software especially offers the potential to move the company beyond past self-limiting practices.

It is of course far too early to declare the ABB Ability strategy a success or failure, but the important aspect of extending ABB software products transparently across its business units and markets will likely determine its long-term success.  In the process automation space, the new System 800xA Select I/O hardware and engineering capabilities position ABB at the front of the pack in the DCS market, reflecting the position ABB maintains as market share leader.  The gauge of success will be to see whether the capabilities of ABB's hidden gems have continued to spread across its diverse businesses and customers at the next ABB Customer World in 2019.

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Keywords: ABB, Automation, Cloud, IIoT, Industrial IoT, Process Automation, ARC Aadvisory Group.