A Strategic Approach for Upgrading Process Control Systems, Part 1

Upgrading control systems could be the biggest single issue many process and batch automation system end-users face today. ARC Advisory Group estimates that the combined value of the installed base of automation systems now reaching the end of their useful lives is approximately $65 billion. This represents a big opportunity for end-users in the chemical process industries and their automation suppliers alike.

The dynamics of the market for control system migration have changed somewhat since ARC Advisory Group performed its last analysis back in 2010 following the global recession that significantly curbed capital spending. Today, many businesses require an even stronger value proposition and justification for migration projects than in the past. Despite this and other headwinds, some process and batch manufacturers are rapidly approaching the point where replacing old technology will be a matter of business sustainability.

Automation suppliers continue to expand their migration offerings. This is the case both for migrating from competitors’ systems and for migrating from a legacy system to a new system from the same supplier. It has also become apparent that migration is no longer strictly a distributed control systems (DCS) issue, but has grown to encompass other types of systems. These include process safety systems (SISs); burner management systems; and other automation platforms.

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Manufacturers in the chemical process industries use a number of different approaches when evaluating potential migration suppliers. For many, automation system migration represents a significant change. One thing end-users should take into account is the potential supplier’s ability to provide a solution that will offer real business value while minimizing downtime and risk. No matter how smooth the implementation may have gone, if you simply end up with a functional replacement, you failed to exploit an excellent opportunity to improve plant and business performance. ARC advocates a rigorous team approach that begins with a well-defined strategy and business goals. Developing and weighting the criteria for the control system will significantly improve the ultimate selection of a migration supplier.

Migration Driving Forces

In ARC’s view, migration means moving from an earlier generation of a system to the current state of the art, which ARC defines as the Collaborative Process Automation System (CPAS). Migration involves upgrading an old system to a current system while:
• Preserving as much intellectual property as possible from the existing system
• Leveraging the full capabilities of the new system to improve business performance
• Minimizing the impact on operations
• Minimizing cost
• Minimizing risk

Aging Installed Base and Process Automation System Lifecycle

DCSs were first introduced in 1975. While the lifecycle of these systems can be quite long, this varies from component to component. DCS hardware components, such as wiring and I/O, can have a lifecycle of 30 years or more. Controllers have a slightly shorter lifecycle, but also tend to last upwards of 20 years or so. The workstation and application layer of the system has a much shorter lifecycle. Most major suppliers announce major version changes of their HMI and operator software every 18 months or so. HMI workstations may not be able to run the latest OS after only a few years and must be regularly replaced.

Due to the different component lifecycles, older installed systems today represent an amalgam of older I/O and wiring infrastructure, combined with not-quite-so-old controllers and newer operator workstations, servers and related software and applications. The closer you get to the I/O and wiring infrastructure, however, the more difficult it is to articulate a business value proposition for control system migration.

The Changing Workforce

The profile of the workforce in the process industries is changing drastically. The overall level of experience of workers decreases as more and more experienced employees retire. Much of the knowledge required to run older plants is vanishing along with it. One owner-operator even had to rehire retired workers because nobody had the knowledge in house to restart a plant after it had been shut down for maintenance.

Similarly, the knowledge required to maintain legacy process automation systems is also walking out the door. At the same time, the level of education of workers in process automation is actually increasing. Many operators at process plants are now engineers. They will demand access to more information from the process automation system to be able to make better decisions. The process automation system will also increasingly capture the knowledge of experienced workers via enabling technologies such as automated procedural management for things like startup, shutdown and grade changes. The older generation of systems cannot support this kind of functionality.

The Changing Business Environment

Today’s business environment has shifted to a real-time environment. Things happen much faster than in the past. Opportunities can emerge quickly and businesses must be extremely agile to capitalize on these opportunities. Today’s automation systems must be able to react to increasingly variable costs. Energy costs, for example, can vary significantly at different times of the day. You may be using your process automation system to manage your energy consumption, but if you are using too much energy at the wrong times of day, your costs will still be higher. Modern process automation systems can enhance agility, providing the information needed to make intelligent decisions and manage business risks and opportunities.

Increased Focus on Sustainability

The term “sustainability” is often used when discussing environmentally friendly operations. While reducing environmental impact (which reduces waste and eases compliance with environmental regulations) is certainly a concern in the chemical process industries, “sustainability” can also refer to the sustainability of your existing automation infrastructure. Many automation suppliers have a reputation for supporting their systems for a very long time, probably longer than they should reasonably be supported when you compare the automation business to the world of IT. Eventually, however, availability of spare parts and support for legacy platforms must end. Users must plan for the future and anticipate when their current system is no longer reasonably sustainable.

Every day we read about how the aging infrastructures of developed industrialized nations show need for replacement. From corrosion in the Alaska pipeline to leaking water mains to failures in the power transmission grid, the industrialized world and many parts of the developing world rely on an installed base of assets that need to be replaced. In the first half of 2007, for example, a third of U.S. oil refineries were shut down due to a record number of breakdowns, power failures, fires and other incidents.

Process automation end-users are a conservative lot, however, and thus often reluctant to dispose of an asset, even one that has outlived its usefulness. Return on assets, in fact, is often viewed as more important than metrics such as lifecycle costs. Eventually, however, the infrastructure must be replaced. This presents end-users with a completely new set of challenges as they strive to justify the investment for migration; embark on the task of selecting a supplier and a system offering; and decide how to execute the installation, startup and ongoing support and roadmap for the new system.

When Is the Right Time to Consider Migration?

It’s becoming increasingly difficult to justifying capital spending on automation as end-users focus in on getting the most out of their installed assets. Any automation project today requires a compelling business case. ARC has identified several scenarios in which migration is required. Like other capital assets, automation assets have a lifecycle. At the end of that lifecycle, it becomes necessary to plan and execute a system migration. Any or all of the following situations can mark the end of the lifecycle:

1. Reliability Issues: Poor reliability threatens operational continuity and threats can emerge in two ways.
• Basic repair: frequency and criticality of failures. An increase can indicate the end of the lifecycle.
• End of Support: Suppliers regularly obsolete or replace products with functional equivalents, or in the worst case, their businesses fail. Any of these can trigger the need for end-of-life planning.

2. Unsupportable Opportunity: The capability of automation assets inevitably erodes over time and legacy assets often cannot satisfy new business opportunities. Many times, these opportunities become evident when functional requirements expand beyond fundamental manufacturing. When the existing automation cannot satisfy these new requirements, it may be time to consider migrating to automation assets that can.

Of course, the case for migration is most urgent when the old system reaches the point where an unscheduled plant shutdown or incident is a real possibility. The system may be so old that replacement parts and support are unavailable or extremely limited and cost prohibitive. The old system may not support many of the available new technologies that provide real economic advantages, such as plant asset management (PAM) applications, fieldbus, advanced production management applications and Ethernet-based control networks.
Even worse, the old system can be burdened with a high volume of custom code and custom point–to-point integration that make long-term support cost prohibitive, as companies struggle with shrinking labor resources and a lack of qualified personnel. The veteran who understood all the custom code in place (probably because he/she wrote it), will retire and be replaced by a worker who knows only open technologies and standards.

Of even greater importance is the opportunity cost associated with supporting an outdated system. This is the cost of a business opportunity missed when your system does not have the capability and/or flexibility to take advantage of a swiftly emerging or fleeting opportunity. In these instances, an old or outdated system can result in lost business. This is especially true if the end user lacks the visibility into plant operations that enables him or her to prevent abnormal situations and avoid supply-chain disruptions. An inflexible system hinders the ability to react quickly to shifts in market demand.

Migrations Start with a Strategic Process

Developing the correct strategy for a control system migration is a strategic team process. The team should have a good understanding of the issues, a sense of urgency, balanced judgment, critical technical knowledge and the respect of peers and management alike. Team members should be chosen not only as decision makers, but also as the “doers” that will ultimately follow through on the decisions made.

The team members need to understand their mission and feel empowered by management to complete it successfully. To ensure successful implementation, they must first feel an obligation to make decisions that optimize the corporation’s performance; and, second, secure the support of their peers by conveying an understanding of the rationale. The team should not be any larger than it needs to be to satisfy the preceding requirements. Generally, a team of six to eight people is a good size, but this is not an absolute.

We have to stress that the team’s participation may be required for all phases of the strategic process. This is not only because the team makes the process work, but also because the comprehensive team deliverable is a strategy document that serves as a basis for the process and a mechanism for making the control system migration successful.

The dynamics begin with the team discussing the mission statement provided by management. The purpose of these discussions is to translate the mission statement into the team’s vision statement. This is where the team begins to forge its identity and take ownership of the project. The vision statement also provides a natural segue into defining justification and quantifying measurements for success.

The team comes together with a common understanding of the problems and challenges it faces during discussions establishing current reality. The insight the team members bring to the problems associated with the strategic process comes from their common experiences. The challenges the team members face derive from the vision and justification upon which they have just agreed. This largely defines the problem to be solved.

The next logical step is for a consultant or expert in the focus area to present the possibilities. This should be a learning experience for the team in which it is challenged to consider both a range of current solutions and a roadmap to its ultimate solution. If the team finds everything in the consultant’s presentation acceptable, then either he or she has not been forward thinking enough, or the team is not being conservative enough. The team must use its collective knowledge to create a target solution that is rational and reasonable. With the problem and solution in hand, the team should be able to establish the filters or high-level criteria necessary to select the correct path to a solution.

Definition extends the high-level criteria to the details associated with each class of automation. Definition presents the largest threat to team dynamics and overall project success of all the phases of the strategic project. ARC feels it is not reasonable to expect the team members, who are experts in manufacturing processes, to also be experts in the details associated with the hardware and software they must choose. It is more important for the team to understand the range of technology and functional choices available and the merits of each, so it can make thoughtful decisions about which best satisfy its requirements. Requiring the team to become immersed in the myriad technical details would get in the way of it determining the best available solution from a business perspective.

Team members will always bring individual preferences and prejudices to the process. The best practice for addressing this issue is to utilize a structured, highly consistent criteria weighting and solution rating tool. This approach minimizes decisions based on emotion and allows the team to collaborate more openly based on knowledge and facts. Healthy team dynamics will ensure an understandable, supported and correct strategy.

Justification

Justification may be as simple as replacing a “mission-critical” automation system following a catastrophic event. However, in most cases, justification supports a business initiative with definable requirements. These projects have capital expenditure ROI targets and are intended to satisfy a unique set of key performance indicators (KPIs). Some businesses have evolved their KPIs into a “balanced scorecard” as a convention. If the company had not previously institutionalized performance measurements, this would be a good place to start.
The selection criteria should support these KPIs directly and be measured in terms of value to the company. When considering the value derived from the investment, it is important to ensure the selection will first satisfy the utilization requirements dictated by the business initiative (essentially the justification). It is also important to consider the total cost of ownership (TCO) benefits inherent in a new purchase. However, the team should base system selection on the enhanced asset performance and reduced total cost of ownership proposed by the supplier candidates.

A company can enhance its overall asset performance by improving the way it utilizes its assets and eliminates constraints. This almost always involves a business initiative. On the other hand, a process or platform initiative is required to reduce TCO (another name for “lifecycle cost”), which can help increase value.

Strategic control system migration project teams should use a lifecycle perspective when considering lifecycle cost. Initial installed cost is only a small part of the overall TCO. Installed cost is typically less than 25 percent of the overall cost of ownership. For example, the life cycle of an automation investment will typically range between 10 and 15 years, depending on the industry. Over this period, maintenance, training, reengineering and – ultimately – retirement of the asset will account for the other 75 percent of the lifecycle cost.

Definition

Requirement definition may consume the largest amount of time in the strategic project. This phase often accounts for over 80 percent of the total time and effort for strategic control system migration project. The definition should reflect the company’s manufacturing strategy and the KPIs discussed earlier and must define the “must have,” fit-for-purpose capabilities. For example, it is critical for a pharmaceutical manufacturing company to be able to satisfy regulatory requirements such as Good Manufacturing Practices (cGMP). In the heavy process industries where maintenance turnarounds come few and far between, online software upgrade capability is critical to keep the investment current.

It will also be necessary to have a detailed specification for each class of system or major software package being considered. This specification is critical because, without it, you would not be able to differentiate between the suppliers and the process would likely become emotionally charged, resulting in loss of any chance for consensus. The detailed specifications should have a best-in-class focus and be supplier neutral. They should also reflect your unique requirements and indicate the relative importance of each. For clarity and understandability, it should require the suppliers to respond point by point.

When positioning its definition of requirements, the team should consider all other associated systems and software, including both field devices and business systems, since the definition and ultimate decision could have significant impact on the business as a whole.

A commitment to standards is critical. Standards reduce uncertainty, improve productivity and extend the life of the investment. Relative to standards, three categories apply to these types of technology investments:
• International standards – promote choices and deliver the benefits mentioned above
• De facto Standards – limit choices usually to a common source of supply, such as Microsoft operating systems
• Proprietary approaches – eliminate choices

Technology advancement can provide the selection team with both anxiety and excitement. If the team needs to deal with an existing legacy infrastructure, there is anxiety because the legacy represents a point on the technology evolution curve that needs to be bridged to the current technology under consideration. The obvious acceleration in the technology can magnify this anxiety. When approached using a clean sheet of paper, the decision becomes more exciting because users have the opportunity to make unencumbered use of the technology for maximum performance.

The definition of the purchase specification will have a major impact on the commercial aspects of the decision. The first consideration should be to extend the value received from the economic investment over the longest practical time period. Since adherence to core standards usually helps avoid premature obsolescence, standards must be part of the detailed product specification.

Related to standards, the specification also needs to emphasize the requirement to keep the selection current in an economical and predictable manner as the product evolves through revisions in hardware and version releases in software.

Finally, the team needs to think about developing an integration strategy for moving legacy software and systems forward with its selection. Here, the team can use a consultant to develop an integration roadmap, if it cannot be accomplished at commissioning.

Several purely commercial decisions also need to be addressed in the definition phase. To determine a fair price, the team must determine the prevailing market level price. The team will probably accomplish this by correlating the price and functionalities offered by the candidate suppliers carefully and involving the consultant, if needed. The second commercial decision deals with cost creep. Scope changes or modifications can often require suppliers and customers to return to the negotiating table. ARC recommends the use of an extended unit pricing framework, negotiated before commitment, as the best way to both control cost creep and predict future cost when scope changes or modifications are required. Finally, the team should use the definition as the purchase specification to ensure the company gets what it needs.

Selection and Purchase

The team needs to select only what is actually needed. Definition is an extension of the justification process. Similarly, as the team goes through selection, it must correlate its decisions and judgments to the conclusions reached in the justification phase.

The team should use a selection matrix to compare specification criteria between suppliers. ARC suggests basing the selection matrix on Kepner Tregoe techniques, which ARC has implemented in its STAR Selection Process. This approach will provide a basis for comparison that facilitates the selection process and provides an audit trail. The team can use the matrix to test the decision initially and demonstrate the decision trail later. The selection matrix must accommodate the buyer’s priorities, prioritize best in class to emphasis current value, and preserve investment to emphasize lifecycle value. It does not make sense to wait for the ideal solution, which may not even exist. It does make sense to exercise a best-available-solution rationale and move quickly to take advantage of what the new system has to offer.

The team is the key to a successful strategic process. Management must charter the team with clear and achievable objectives. As previously mentioned, every team will be made up of members with individual preferences and prejudices. ARC suggests an approach using advocates for each supplier. As a part of the team, all advocates collaborate with the suppliers in the discovery process and share the rationale for the ultimate decision with the suppliers. This collaboration binds the team together.

We mentioned earlier that the detailed product definition could consume more that 80 percent of the team’s time and effort. Developing a detailed purchase specification can be a Herculean task, one not always accomplished successfully. This shouldn’t come as a surprise. While team members normally focus on and are experts on the company’s applications and business, they do not normally focus on the automation industry. This is why it often makes sense to employ a consultant or other impartial third party to work with the team to develop the technical details, providing team members with the time to focus on project details and general business requirements.

The selection team follows a straightforward and logical process:

• Establishes the current reality
• Works to develop an ultimate position
• Moves to a position it feels is realistic and satisfies the needs of the company. This is the definition reflected in the purchase specification
• Institutes strategy filters, representing the requirements established previously
• Evaluates alternatives to candidate suppliers and approaches

Although selection and purchasing are linked as a natural progression in the process, it is important for the team to stay focused on selecting the correct solution and separate this from the purchasing process. Overall lifecycle costs need to be taken into consideration when making the solution purchase. Lowest initial bid is not necessarily the lowest lifecycle cost or the optimum generator of lifecycle business benefits.

Continuous Improvement

Selecting and purchasing the best available solution is not a destination, but an ongoing journey. As we discussed, selection is also a result of a best-available-choice rationale. As such, continuous improvement is needed. The successful supplier will continue to enhance its products, and it is important to have a process in place that allows the user company to continue to enhance its purchase to keep it current and deliver maximum functionality.

Regularly exercising the selection matrix and graphing the results to determine progress (or absence of it) can measure the results of working with the successful supplier to facilitate convergence between the strategic solution and the best available solution. As discussed earlier, keeping the platform current is a commercial function.

Keeping the Team’s Vision

The continuous improvement cycle begins by first revisiting two correlations as a final due diligence check on the overall selection process. The first is the correlating strategic solution definition created during the justify/define phases with the best available solution of the selection phase. The second is the ongoing convergence of best available choice and strategic solution over the improvement phase.

By correlating the selection to the justification, the team and its management can be confident that they have selected the best available solution that meets the original justification. This is a project-closing activity. On the other hand, the company should continue to perform exercises to correlate the best strategic solution and best choice with the definition throughout the life of the production facility. By doing this, the company can make continuous improvements.

This is the first in a three-part series on optimizing process control system migration projects. A session at the upcoming ARC Industry Forum in Orlando on Feb. 8-11, 2016, will also feature ARC and process industry end user presentations on this important topic. For more information about the forum and related ARC research, readers can visit www.arcweb.com.