I devoted a lot of time over several years working with an organization trying to construct a manufacturing IT platform that, using internationally adopted standards, would allow data to move seamlessly from engineering to construction to startup to operations and maintenance. Worley had key members on the team and provided time and effort to proof of concept work. The idea was to close the loop of as-designed to as-built to as-operated such that maintenance technicians could easily locate all necessary data about components and systems during startup and operations.
The project was under the umbrella of MIMOSA, of which I was chief marketing officer for a year. I still believe in the reason for the project, but for many reasons it just didn’t seem to take off. One reason was reluctance of major automation suppliers to sign on for a standards-based approach. With this announcement, it appears the work will be done through one supplier’s proprietary approach.
AVEVA announced that Worley has selected AVEVA’s Enterprise Resource Management solution as its preferred materials management platform. The partnership combines Worley’s Engineering, Procurement and Construction (EPC) knowledge with AVEVA’s industrial software expertise “to deliver the first cloud-based Enterprise Resource Management solution optimized for the EPC market.”
Like many businesses, today’s EPCs are challenged with reducing project costs while keeping pace with changing IT environments. However, as EPC projects operate as mini-enterprises, on-premises configuration and hosting of enterprise projects within private networks is not only costly, but restrictive and unsustainable in an industry undergoing mass consolidation. For global EPCs to remain competitive, the move from an on-premises infrastructure to cloud-based enterprise resource management is necessary.
Worley sought to help its customers find a way to streamline their materials management to deliver on these challenges while also creating process improvements, increased efficiency, ease-of-use and the ability to deliver in-house training. After reviewing AVEVA’s Enterprise Resource Management solution, which had historically been used in marine settings, Worley and AVEVA committed to developing the AVEVA solution to become the industry’s first cloud-based enterprise resource management platform purpose-built for EPCs.
“The EPC market is undergoing a period of change and our customers are looking to us to help them find solutions in this new world. The advances in technology and digital disruption have provided us with an opportunity to rethink our approach to materials management. We needed to deliver an efficient, cloud-based solution customized for the nuances of our market,” said Andrew Wood, CEO Worley. “With AVEVA, we saw a commitment to developing this solution together to create something best-in-class for engineering. We believe the AVEVA Enterprise Resource Management solution marks a step forward for productivity, efficiency and effectiveness that will drive the EPC industry forward.”
The cloud-enabled solution from AVEVA and Worley is the first of its kind and will be fully optimized for the EPC market. By embedding Worley’s subject matter expertise in EPC supply chain management, major updates to the AVEVA Enterprise Resource Management solution for EPCs includes:
- Project-specific functionality: Enabling EPCs to view and work on projects in AVEVA Enterprise Resource Management as standalone entities
- Updated catalogs and specifications module: Migration of Worley’s legacy corporate catalog and specifications to create a robust, easy-to-use model for EPCs
- Training solution: Allowing EPCs to streamline internal training on the new solution
In April 2019, Worley and AVEVA kicked off the final stage of a four-phase program to develop the AVEVA Enterprise Resource Management solution for EPCs. Phase one included design, while phase two incorporated the solution build, moving onto phase three integrations and catalog readiness, and now into phase four—project go-live and decommissioning of Worley’s legacy solution.
As part of the program, AVEVA Enterprise Resource Management reduced training time across engineering, procurement and project controls by 23%. Participants noted the solution was easy to use, provided quality training materials and the right functionality for EPC projects.
“The construct of the co-managed project team exceeded all expectations. We set up stringent delivery benchmarks and executed the project in phases to ensure alignment between the teams remained in place. A transparent and open working relationship with a keen focus on the success of the initiative played a crucial role in adjusting to all project challenges, and this solution is something we are proud to have delivered together,” commented Craig Hayman, CEO AVEVA.
The first official project roll-out for Worley on the AVEVA Enterprise Resource Management solution for EPCs will begin this month. Worley will use AVEVA Enterprise Resource Management and AVEVA Everything3D innovative plant project execution software in tandem, and the two companies have agreed to work to continually mature enterprise resource management for the EPC market.
A mere 2.5-hour drive south on I-75 June 13 brought me to the Schneider Electric plant in Lexington, KY that manufactures load centers and other electrical devices. Schneider Electric marketing people invited me down for tours and festivities marking the unveiling of this brownfield manifestation of Smart Factory using the latest of IIoT, AR, digitalization, and other smart manufacturing principles.
• Schneider Electric Lexington facility is a showcase for sharing IIoT integration strategies with End Users, Machine Builders and Partners
• Lexington plant strategically integrates connected EcoStruxure solutions to enhance efficiency and provide end-to-end operational visibility throughout supply chain operations
• Smart Factory has tracked quantifiable benefits from IIoT implementation, including a 20% reduction in mean time to repair and a 90% paperwork elimination
If this plant is to demonstrate “in real time how its EcoStruxure architecture and related suite of offerings can help increase operational efficiency and reduce costs for its customers”, I asked the natural question—“What is EcoStruxure?”
I’ve heard the term for many years, but being a little slow on the uptake, I’ve never really understood what is meant. So, they set me up with an interview with Vice President Domenic Alcaro. Refreshingly, EcoStruxure is neither a platform or a product. Alcaro told me, “EcoStruxure is a phenomenal way to explain our value structure.” The foundation block consists of connected products (connectivity being a key word). The intermediary block is what they call Edge Control. However, whereas many people look at Edge and think hardware, Schneider Electric considers it basically software. Think the InduSoft HMI product, if you will. Atop the model then are apps and analytics.
Back to the plant:
In operation for more than 60 years and employing nearly 500 people, the Lexington factory is truly a showcase of modern integrated digital experience. Among the benefits realized include empowering operators to gain visibility into operations maintenance, driving a 20% reduction in mean time to repair on critical equipment, and process digitization eliminating paper work by 90%.
“We understand the value of IIoT and the positive business impact that innovation and digitization can have on our operations – particularly in our global supply chain. As a living example of how our EcoStruxure solutions deliver benefits to our customers, we are gaining those same benefits in our operation and sharing that knowledge,” said Mourad Tamoud, Executive Vice President, Global Supply Chain, Schneider Electric. “With our latest Smart Factory showcase, we are able to demonstrate this value in real-time, show the solutions at work and share the tangible benefits that we ourselves are seeing from our own IIoT investment as we accelerate our Tailored Sustainable Connected 4.0 digital transformation.”
As part of the Smart Factory program, Schneider Electric exemplifies brownfield implementation for customers who may be facing the same challenges with their existing production facilities. The team is able to offer strategies and talk through the challenges they faced to help customers exploring IIoT connected technologies overcome those same hurdles toward their modernization goals. By sharing their experience in leveraging EcoStruxure solutions, visiting customers can better understand the value of the brownfield modernization and the resulting operational efficiencies.
In this production environment, these solutions have demonstrated operational and quantifiable value since their implementation:
• EcoStruxure Augmented Operator Advisor – Delivered a 20% reduction in mean time to repair on critical equipment where it has been implemented.
• EcoStruxure Resource Advisor and Power Monitoring Expert – Delivered 3.5% YOY energy savings in the Lexington facility in addition to $6.6 Million in regional savings since 2012; sophisticated reporting capabilities and increased transparency also drive operational performance.
• AVEVA Indusoft Web Studio – Delivered powerful Edge digitization of paper processes to eliminate paper work by 90% and cloud connectivity has enabled digital dashboarding of a critical process.
• RFID OsiSense – Eliminated 128 daily fork truck miles and eliminated $500,000 in Work in Progress (WIP) inventory with a 33% first year ROI.
• AVEVA Insight Data – Unlocked and shared silos of data in a mobile manner reducing downtime in critical processes by 5% with ROI of less than 6 months.
• Magelis GTU/GTUX HMI – Provided agile operator management of the process and vivid visual of the process onsite and via mobile devices.
Among the tidbits of information I picked up on the tour include:
Extensive use of Ethernet and IP networking. Interesting in that the very first conversations I had with a Modicon VP 20 years ago concerned how Ethernet was the network of the future. In 1999 that was revolutionary thinking. Today—it’s the backbone. Hat tip to Mark Fondl.
Great use of data tracking involving RFID tags, MES software, Ethernet connectivity, and visualization that coordinates all the products and containers throughout the company-wide power-and-free conveyor system.
Oh, and a Megelis computer/HMI collecting data from sensors and passing it on uses Node-RED for programming. It’s only the second instance of Node Red I’ve seen in automation.
Finally, Schneider Electric plant management correctly combines digitalization with Lean principles enhancing their daily stand ups and feeding continuous improvement.
Impressive facility. When our politicians and east coast journalists go ripping on American manufacturing, they should be forced to take deep dives into plants like this one.
Calling the action “transformational”, AVEVA completed the incorporation of Schneider Electric Software (Wonderware, Avantis, and so forth) proclaiming “a new software leader is born.” Of course, now the hard part starts. How do they get all these different parts to work together? How do they transform a culture that underwent the shocks of Invensys into the bureaucracy of Schneider Electric into this new company? Or, do they?
“88% of leaders in capital-intensive industries say that digitalisation would increase their revenues*”, said Craig Hayman, Chief Executive Officer at AVEVA. “Yet less than half of these companies are actually in the process of adopting a digital strategy. This represents an incredible opportunity for AVEVA to be our customer’s digital transformation partner.”
“Digitalisation demands a fundamental rethink of the way organisations operate. They need to be confident that their technology investment will deliver a high return on capital and can lower the total cost of asset ownership. AVEVA’s combination of proven solutions, industry-specific knowledge and a global partner ecosystem will drive innovation across capital-intensive industries, as companies plan their digital transformation journey,” Mr Hayman added.
The combination brings together AVEVA’s design, engineering and construction capabilities with Schneider Electric’s industrial software business, which ranges from simulation through to real-time manufacturing operations management. It creates a global leader in engineering and industrial software, expanding the markets and industries the company serves. Customers can benefit from improved profitability, efficiency and performance.
The net effect is to move AVEVA into direct competition with parts of Siemens and its digitalization strategy following the acquisition of UGS some years ago. Does this mean that there might be an AVEVA Mindsphere on the horizon? We’ll see.
Cybersecurity, digitalization, and asset performance management headlined the various press events with Schneider Electric at the recent ARC Forum. I took notes from Kim Cousteau’s presentation on APM at the main press conference and expected a follow up press release for details. I have not received one yet.
Remember the “reverse acquisition” of Aveva where Schneider Electric placed all of its software divisions into Aveva and then took a 60% share in the company? The deal is about to close. Schneider spokespeople assured me that digitalization is proceeding apace with the leveraging of Aveva design through construction applications into operations and maintenance applications—Schneider’s strong suit. This, on paper, brings the company into the competitive marketplace with Siemens and its UGS acquisition of several years ago. This is an interesting area to watch.
Schneider called a special press event, with lunch, to talk specifically about cybersecurity. This response to an incident in which the company’s Triconex safety system earned some publicity—but not always accurately portrayed. The incident was a cyber attack that caused a situation that the safety system caught and initiated a safe shut down.
However, the event caused renewed concern for cyber defense. ARC Vice President, Larry O’Brien, said, “This is a wake up call for people to follow existing security standards.” Gary Freburger, who heads that division of Schneider, said, “It’s everybody’s job.”
We received this official statement from Peter Martin, vice president of business innovation and marketing, Schneider Electric
At Schneider Electric, we heartily encourage all collaborative efforts to strengthen cybersecurity. The growing problem of cybersecurity is not specific to any single company, institution or country. Rather, it’s a threat to business and public safety that can only be addressed and resolved when suppliers, customers, integrators, developers, standards bodies and government agencies work together. This collaboration starts with common standards, agreed-upon rules, appropriate funding and active cooperation. It extends beyond national borders and transcends competitive interests.
Schneider Electric continues to work diligently with our customers, partners, developers and industry peers to make the shift from reactive to proactive cybersecurity management through compliance with evolving industry standards, agreement that cybersecurity is a journey not a destination, and a commitment to standing together in the face of cyber threats.
Today, we commend the signatories to the “Charter of Trust.” It’s another important step toward ensuring that the promise of digital transformation and automation will prevail over the threat of cyberterrorism.
Regarding APM, Kim Cousteau discussed a new release of Avantis that expanded machine learning from the power industry to oil & gas. For maintenance, it incorporates a team system for operator rounds and improved workflow. It incorporates augmented reality and virtual reality (AR/VR) “because workers are so new and need help to get up to speed. Look for updated analytics to aid in catching anomalies ahead of failure. She cited a customer who has been tracking savings from this feature alone and is up to $65 million.
A little consolidation in the industrial software space. Remember when Schneider Electric was shopping its software division a couple of years ago and came up with a reverse acquisition with AVEVA? And the deal fell apart almost a year ago?
Well, it seems that Schneider spent the year internally restructuring such that it could pull off this weird financial transaction. Announced Monday evening, the two companies have reached an agreement to ship SE software to AVEVA forming a new company with SE as a 60% owner and AVEVA holds the other 40%. Plus AVEVA shareholders get some cash in the deal.
Management touts the transaction as having a clear and compelling business logic. Reasons include building a “global leader in engineering and industrial software”, covering entire asset lifecycle management, and positioned for further acquisitions.
I’ve believed that Schneider would sell off its software businesses ever since the deal for Invensys was announced. Some venture capitalists have talked with me about potential acquisitions. Evidently no one wanted to buy it. I thought maybe Wonderware could make it on its own as a spinoff, but there probably wasn’t enough financial payoff for Schneider with that sort of deal.
However, this also isn’t a clear divestiture. One is left wondering what the future will bring in a couple of years when this transaction matures.
The Management of the Enlarged AVEVA Group will be comprised of:
- Key members of the existing executive management team of AVEVA, namely Dave Wheeldon (Chief Technology Officer and currently also Deputy Chief Executive Officer) and Steen Lomholt-Thomsen (Chief Revenue Officer) are expected to remain in place following completion;
- Ravi Gopinath, currently Executive Vice President of the Schneider Electric Software Business, will be appointed as Chief Operating Officer of the Enlarged AVEVA Group. He will report to the Chief Executive Officer of the Enlarged AVEVA Group; and
- David Ward will continue in his current role as Chief Financial Officer of AVEVA, until a new Chief Executive Officer is appointed. Following such appointment it is intended that David Ward will be appointed to the role of Company Secretary of the Enlarged AVEVA Group.
I received this from Vertical Research Partners analyst Jeff Sprague:
- Deal Structure Overview – Schneider Electric announced today the combination of its industrial software business and AVEVA to create a global leader in engineering and industrial software. On completion, Schneider will own 60% of the combined new AVEVA group while existing AVEVA shareholders will have 40% equity ownership. However, SU is contributing a little over 60% of the proforma EBITA in addition to a £550MM payment, and allowing AVEVA to distribute a £100mm dividend to AVEVA shareholders at or around completion. Schneider will benefit from unlocking the higher trading multiple of its Software business outside of the Group structure, in addition to future synergies (unquantified). We estimate the transaction creates 42 euro cents of value to SU’s stock price. Closing is expected to be at or around end of 2017.
- Strategic Rationale – The combined company will provide engineering services and industrial software, with combined revenues of £657.5mm and adjusted EBITA of £145.8mm for the financial year ended March 2017. The combined portfolio will cover process simulation to design and construction to manufacturing operations/ optimization. As shown below, AVEVA is very strong in the front end design and engineering work while SU is strong in O&M and asset optimization. The company noted an ability to create a more streamlined solution as it will control both ends of the spectrum. Management also indicated plans to scale up with future M&A. AVEVA will also enhance the value proposition of Schneider’s existing IOT platform (ExoStructure).
The only interest I’ve seen with total asset lifecycle management is with the OIIE platform from MIMOSA (download whitepaper from my site). A few end-user companies have shown interest in that, but I don’t know that the combined companies will offer much of a competitive advantage in that regard. That would require strong management bringing the disparate parts together into a whole.
For example, I only point to GE Digital whose recent public woes with the Predix system point to the difficulties of software integration.