AVEVA is all in on digital transformation
If we believe Harvard Business Review (and they usually know what they’re talking about), “the failure rate for mergers and acquisitions (M&A) sits between 70 percent and 90 percent.” [The original article is behind a paywall; go here for a synopsis.] Lots of possible reasons: corporate cultures need to be reasonably adaptable to one another; there can’t be a feeling of “we won; you lost” if you hope to build cohesion; key talent needs to stay; cost-cutting can get out of hand and jeopardize the ability to build and sell products — it’s a depressingly long list of what could go wrong.
But none of that was in evidence at the recent AVEVA World Summit (AWS), my first real exposure to the mashup of AVEVA, the plant design people, and Schneider Electric Software (SES), the industrial-automation-and-other-stuff people. Eighteen months after the deal closed, CEO Craig Hayman, deputy CEO James Kidd and COO Ravi Gopinath (from PTC, AVEVA and SES, respectively) have things well in hand and moving forward. There are still people meeting one another for the first time but, in all, the strategy sounds solid, customers seem sold on the value proposition of the merged entity and are truly excited about what AVEVA will now be able to help them accomplish.
This wasn’t a typical user conference, in that there were no training classes and very few detailed case studies. AWS was a strategic event, positioning technology as a key enabler in making oil and gas/consumer product/ship building/and so on companies more ready for a digital era. The company made several product announcement (we’ll get to those below), but here are my key takeaways from the company’s and key customers’ presentations.
First, digital transformation remains an item high on executives’ todo lists — but exactly what that means remains elusive. For Abdul Nasser Al Mughairbi, of the Abu Dhabi National Oil Company (ADNOC), it meant getting more control over the daily operations at the company’s 17 plants — and that meant using technology to gather, integrate and display real-time data in what ADNOC calls Oil and Gas 4.0, built atop a number of the solutions in AVEVA’s portfolio. Mr. Al Mughairbi told us that this wasn’t easy to do, and is a 5-year journey, but that early returns are impressive: ADNOC realized savings of $60 million to $100 million through optimized operations, enabled by integrating and monitoring over 10 million equipment tags across almost 200 dashboards. Big, ambitious, perhaps risky.
For Taoufik Arif, VP Digital, Olam, digitalizing agribusiness is a completely different ballgame. Olam processes and distributes everything from nuts and spices to milk to wood products for industrial use. Mr. Arif told us that Olam is focused on smart factories–for him, that means one that is Connected, making operating data available in real time; Intelligent, with autonomous control and operations; Collaborative, fostering human / cyber interaction as needed; and Virtualized, so that every relevant physical item has a digital twin. To do this across Olam’s fleet of plants, it is using a Start- Scale – Sustain approach: identify an opportunity, pilot a digital solution to demonstrate value, then turn that into a standard solution that can be rolled out to scale. Sustain means building that solution into routine operations.Very different from Mr. Al Mughairbi, but unique to Olam’s needs.
ADNOC’s Mr. Al Mughairbi’s first 5-year plan ends in 2023 but the journey picks up again with different targets. By 2030, ADNOC wants to be using artificial intelligence (AI) to help with geologic feature recognition from 3D seismic scans and predictive maintenance; and robots to be doing something called “driller geosteering”, where real-time geotechnical data is used to position the wellbore in an optimal payload location, and doing more to autonomously operate ADNOC’s processing and petrochemical plants. It’s an ambitious vision that wouldn’t be possible without the work being done now — so get thinking about your long-term “4.0” goals.
One of the reasons the AVEVA+SES merger was so interesting in the first place was the potential to create an environment in which a process designer (using a SimSci tool from SES) could work more closely with the 3D designer (using PDMS or E3D from AVEVA). Shipping data around when something changed was always awkward and could lead to problems downstream if not done often enough. Tadaa: later this Fall, AVEVA will release what it calls a “unified engineering environment” that shares this info across all stages of a capital project, and between owner, operator and engineering contractors, from conceptual design to handover. For the projects that want it, this will form the data model of a digital twin of the operating plant.
But it doesn’t end there. Mr. Hayman said that “cheap access to cloud computing, connectivity between IT [office systems] and OT [plant systems], edge and enterprise systems combined with analytics and machine learning, means that the ability to digitally drive productivity improvements into the industrial world is now unprecedented.”
And that takes us back to ADNOC, which has created an absolutely stunning way to visualize engineering, operations and maintenance information in real time (the tech commercialized in AVEVA’s Unified Operations Center). I’ve tried to capture it in the title image, but Mr. Al Mughairbi’s description of it is even more striking that the visual: “It’s a command center, designed to look like the Star Trek Enterprise in response to a challenge from our CEO to design a workspace that’s innovative, futuristic, beautiful and functional. It’s a 50 meter screen that has all of the data of 17 operating plants on 200 dashboards.” It enables ADNOC to have info across all of its assets, served out in a way that’s useful and accessible. And actionable — once data is visible and transparent, it’s hard to argue with.
You probably know I’ve been following AVEVA’s design and SimSci’s process simulation solutions for decades, but a lot of what SES brought to the party is new to me. I was fortunate enough to be briefed on a whole bunch of tech, but one stands out: AVEVA’s Value Chain Optimization solutions. The answer the all-important question: what should we make next month? Given the cost of inputs, choice of inputs and likely sales price, what are our best options? To make a CAE analogy, it’s optimizing a series of variables into a response surface: which is the best compromise in an imperfect world? AVEVA’s offering here lets planners input massive amounts of data on spot prices for crude, say, plus all sorts of other stuff that would affect likely profit. That’s a spreadsheet exercise that’s far easier to do with a specialist tool, but the magic is what AVEVA brings with the integrated offering: the planner picks the best option available and generates a production plan, complete with machine instructions for the refinery. BOOM – business case to heating oil, in one tool chain. (I think I’m oversimplifying J but it is impressive.)
There’s more than I can go into in one blog post –so. much. tech. –but one thing is clear: The new AVEVA can help operators build a digital thread that connects asset creation to operations, with real-time access to information at every stage. Then, once the asset is up and running, many tools in the portfolio can be used to optimize production — and, as we get further into the digital twin/4.0 era, close the loop between design and profitable operations.
As Mr. Hayman said, “it’s never been easier to begin a digital transformation. But building that into a lasting transformation across a global organization has never been harder.”
We’re starting to see, with ADNOC and Olam and many others, that there’s a real benefit to doing this — and that starting now, wherever you are, is probably a good idea.
The title image is one I grabbed from an AVEVA video about ADNOC’s implementation (source: here).
Note: AVEVA graciously covered some of the expenses associated with my participation in the event but did not in any way influence the content of this post.