Events such as the Aveva World Summit are occasionally dismissed as ‘talking-shops’ but a considerable part of the value in these events is all that talking – not just the presentations but also the informal conversations with other users that are at a different point in the pathway. This year’s summit had both a big picture keynote from futurologist Greg Verdino but also included a ‘Delivering Digital’ thread highlighting organisations that have made real progress with digitalisation. These offered their insight into the need for standards, recognising the return on investment and the day-to-day practicalities of getting it done.
Digital transformation dilemma
At Cambashi, we’re conflicted about a grand concept of digital transformation. We are fervent that everything is going to change as a result of digital technologies and agree that it’s important to start change now. However, we don’t agree with Greg Verdino that businesses must completely rethink their business model or be swept away by the rising waters of change driven by new digital technologies. He dismissed faster, better, cheaper as an improved caterpillar whereas what every business needed to do was to envision becoming a chrysalis and then a butterfly.
He gave as examples industries that have changed dramatically. Bookselling, taxis, music, television where new disruptive entrants have made great inroads into the business of incumbents. However, while a new entrant can take a big bang approach we know that change in an existing business costs money and takes time. Lots of change costs lots of money and more time. Is it really the best strategy for established businesses to re-invent their business models? In particular, is this the best strategy for businesses with major capital assets like plant or ships which last for years and where the value of the industry’s products and services has to carry the depreciation of those assets?
Pragmatic digitalisation vision
The other two keynote speakers – Aveva’s CTO designate, Trond Straume; and Industry Analyst Monica Schnitger – offered a more pragmatic vision for the plant and marine industries. Trond Straume points out that when a major capital asset is designed and built a digital twin is created and maintained. However, after handover, the digital twin is rarely maintained to reflect as-built and operational changes. That could be 50 years of operations. He proposes that during the life of the capital asset, right through to decommissioning, the twin should be updated. Monica Schnitger said it was important to start small on further digitisation of processes; for example, selecting one entire workflow across the asset life cycle. To avoid being stuck with conventional wisdom, one could imagine how someone with no history would look at the task being digitalised and the solution they would choose.
These views were repeated by many of the conference speakers and attendees. The few companies that have done this, such as the USA’s Southern Company, a utility company, reported significant benefits. So why is that not standard practice? The blockages seem to be in company culture and contractual behaviour rather than technical feasibility.
Several speakers were wise enough to remember that your people are a major asset and need to be brought along in the digitalisation effort – and that goes for both the practitioner and senior management. Without board level support, digitalisation projects can stall early on. In a panel discussion, Dave Wheeldon, Aveva CTO, advised the necessity of presenting a single coherent view – whether that is the whole management team or a single business unit.
Standard contracts specify the handover in terms of documents, not models. It would probably cost the EPC more to handover a digital twin. How would they be rewarded for that effort? General opinion among the delegates I spoke to was that everyone in the industry network knows what needs to be done, but that very few enterprises are prepared to devote the resources needed to do it.
Digital twin maintenance
It costs serious time and effort to maintain the digital twin and few owner operators do so systematically. There is huge potential if all the parties involved in maintaining the capital asset all had confidence that the digital twin was accurate and comprehensive. The entirety of MRO (Maintenance, Repair and Operations) processes would work more smoothly. Field Service Management and Environmental Resources Management could be transformed as predictive maintenance replaced time based maintenance. Even Enterprise Resource Planning would tell a better truth and cause improved decision making.
However, we don’t think it will be enough to simply hand over a digital twin comprising the geometry. The requirements set for the capital asset need to be defined and handed over. As changes are made during the asset’s life these too need to be maintained. For example, for an oil & gas extraction asset, the geophysical data and the pockets to be extracted should be kept up to date. Similarly the reasons for the engineering decisions that caused the geometric digital twin to take the form it does need to be explicit and handed over. System Engineering data and simulations of the various options should all be part of a comprehensive digital twin.
Digitalisation in the Capital Assets industry
However, this is a long way from the digital transformation that Greg Verdino was talking about. Will the Capital Assets business see some kind of disruptive intermediation or disintermediation in its industry network similar to that in the music and similar industries? In those industries, new players in the industry network have gained profit at the expense of existing players. In the music industry example, the musicians creating (investing in) the intellectual property (capital) that enables the whole industry have not benefited much from digital transformation. On the other hand, delivery platforms like Apple iTunes, Spotify etc. have benefited greatly. Consumers of music have also benefited to some extent in terms of price, but at the expense of receiving well-informed curation of the music scene that someone like John Peel provided. Is cost moving around to other stakeholders the only change?
We would rather see a digital transformation in the Capital Assets industry that was about taking out cost throughout the asset life cycle and sharing that benefit between the various stakeholders. We’re not keen on disruption that could easily lead to compromising safety. Already, there are doubts about industry network fragmentation triggered by the Deepwater Horizon disaster, where the investigations said blame was shared by BP, Halliburton and Transocean. Critically it also said government regulators did not have sufficient knowledge or authority to notice cost-cutting decisions.
We do like the idea of using more digital technologies and a digital twin, maintained throughout the lifecycle of major capital assets. We agree with Monica Schnitger that it is important to start right now or you will be left behind. That means top management having a medium term vision for digitalisation. However, let us all be pragmatic and go one step at a time towards that vision rather than set off in a vague direction driven by a fear that if we don’t do something, we’ll all be driven out of business.
Disclosure: Aveva is a Cambashi client