In a recent ARC Insight, we examined the challenges industrial end users face when trying to balance the need for innovation and change with the imperative to maintain stable operations in their plants. Although these challenges are not new, balancing innovation and stability has become even more pressing with increased digitalization and the need for improved cybersecurity.
To validate the assumptions and observations associated with this research, we invited several end users to share their perspectives and experiences at the recent ARC Industry Forum in Orlando, Florida. Session speakers included Dan Rozinski (The Dow Chemical Company), Jim LaBonty (Pfizer) and Richard Eckhart (ExxonMobil). Joining them were panelists Don Bartusiak (ExxonMobil), Chris DaCosta (Air Products), and Thomas House (Rockwell Automation).
Although the original intent was to explore all aspects of balancing innovation and stability, each of the speakers chose to focus on how this is addressed in the specific area of operational technology (OT) cybersecurity. Nonetheless, the presentations contained several common themes that are also relevant in other areas. The most fundamental of these is that while innovation is often required to address competitive pressures, operations groups must still deliver quality products in a safe and predictable way.
Balancing innovation and stability has implications for all areas of operations. These range from selecting technologies and products to defining business processes and staffing. It requires examining the current situation, identifying trends, interpreting the business strategy, and identifying specific areas for innovation and improvement based on a solid business case.
Although the session speakers and panelists came from different industry sectors, their operations environments are very similar. As a result, many of the fundamental requirements, trends, drivers, and constraints are also similar.
Technology-driven trends are common across sectors, although the responses may differ somewhat. Virtually all industries are trying to determine how to take optimum advantage of increased digitalization or the increased availability of digital systems and the associated increase in available data. Although digital or automated solutions may have real benefits, they also add to the complexity of the environment and may require infrastructure with a significantly shorter half-life than the facilities in which they are applied.
Virtually all sectors must balance the opportunity for improvements through change with the increased effort and expense incurred in supporting these systems. The irony here is that digitalization or automation may be justified in part by increased productivity, while increased resources and specialized skills may be necessary for their support.
At the same time, the stakeholder expectations in areas like product quality, process efficiency, and environmental or safety performance continue to increase. Each improvement in performance becomes a new benchmark, potentially becoming the basis for subsequent regulation. Increased awareness of potential risks often leads to the additional imperative to address those risks, either by preventing negative consequences or responding to them quickly when they occur.
Common Challenges Balancing Innovation and Stability
Similar environments lead to similar challenges. Although the response may be different across sectors as determined by strategic alignment and priority, several of the challenges are common.
System complexity – The complexity of the installed base and lack of support for legacy or obsolete systems can present a significant challenge. Complex systems and obsolete components are often viewed as an inevitable consequence of the imperative to maintain stable configurations. There is a fallacy in this argument since it is possible to maintain stable operations through controlled change.
Organizational barriers – Organizational structures can also limit the flexibility of the response. It is all too common for the optimum solution to a problem to be almost unattainable because of lack of clear accountability or other difficulties associated with how a company is organized.
External Drivers - Several potential external drivers can also add to or complicate the challenges faced in balancing change and stability. While these may vary by industry sector, typical examples include regulation and organizational changes resulting from mergers, acquisitions, and divestitures.
Unchangeable systems – All sectors have complex integrated information and control systems employing a variety of technologies. In many cases, these include components that are viewed as unchangeable. Some may be hosted on operating systems and associated software that are no longer supported. Others may host an application that is validated and cannot be changed without jeopardizing this validation.
System Inventories - The challenge of maintaining an accurate systems inventory is also common across sectors. Stability may be considered as a means to avoid the need to regularly update systems inventories. The reality is that no matter how stable the overall system, some changes are unavoidable as components fail or become obsolete. At the same time, the drive to increase productivity in operations often leads to a shortage of resources available to update inventory and other records as these changes occur.
Defining an Effective Response
While the speakers and panelists generally agreed on the nature of the challenges, there were different views as to the effectiveness of available methods, tools, and technologies with which to mount a response. Each speaker provided a brief overview of their experiences in this area.
Dan Rozinski characterized the challenges as “The Good, The Bad, and The Ugly.” Although it may be a disruptive trend, digital innovation is viewed as good in that it provides new capabilities that in turn lead to increased opportunities for value. The increased risk resulting from external forces such as new and emerging cyber threats is generally considered as the bad, while it is possible that the increased potential for compromised safety may be the ugly. In simple terms, the task is to take advantage of and build on the good while addressing the bad and preventing the ugly.
Another important consideration is what Dan referred to as “Technical Debt.” This concept is commonly used in software development to describe the implied cost of additional rework caused by choosing an easy solution now instead of using a better approach that would take longer. It can also be applied to describe the burden presented by legacy IT/OT investments that often places constraints on possible responses. While it is not reasonable to expect all legacy systems to be replaced at once, some sort of regular replacement or upgrade program must be in place to make progress. Continuing to use obsolete or out of date systems simply because “they work” is not a viable strategy in the long term.
Jim LaBonty presented the cybersecurity program at Pfizer as an example of how to manage the innovation-stability balance. That program has the following primary objectives:
- Up to date and complete inventory of system assets
- Mitigate the risks associated with treating IT and OT assets as not subject to change or upgrade
- Rapid visibility of and response to threats to stability, such as IT and OT malware
- Protect manufacturing platform and applications from compromise
- Limit traffic and access to critical manufacturing systems by prohibiting direct connection of manufacturing ICS systems in the OT layer to the internet
He suggested that while there are certainly challenges, there are means to address each of them and that the response should be fairly straightforward. Other speakers were less optimistic about this.
While the number and variety of tools and methods available to end users have increased in recent years, availability is only part of the solution. The abundance of solutions and technologies presents a new challenge for end users as they now have many more options to evaluate before making their decisions. Many are looking for guidance in how to make these choices. They must also have the wherewithal to apply these methods to their individual situation and a well-defined plan or program for doing so.
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Keywords: Change Management, Innovation, Operations, Reliability, Safety, Stability, ARC Advisory Group.