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hat’s the second thing you ask when you see a new piece of automation hardware or software? The first thing you probably ask is “What does it do?” Or, if you already know something about what it does, you might ask “How does it work?” Then the second thing usually is: “How much does it cost?” It’s just human nature to ask the price.
When the buying decision is subjective as it is in personal purchases like a new digital camera or a new car, its priceis the right thing to focus on. But purchases of new technology for automation applications should only be for objectively estimated benefits. That means that for automation the better question is “Will it deliver net benefits that exceed my company’s hurdle rate?” If so, it should be installed whether it costs $5,000 or $500,000; if not, then don’t buy it.
We often ask the cost question to make a quick analysis of whether we will be able to get it approved. If a level of credibility does not exist in your company that allows new automation with good benefits to get approved, then you have some work to do. Of course there are some companies that will not spend any money on anything regardless of the benefit, but that is hopefully a temporary situation and at any rate that is a different story.
A Short History of Automation
Distributed control systems (DCSs) began to be installed in the late 1970s with most of the installations done in the 1980s. This was a Good Thing. Digital gave much better control than analog and the DCSs gave the operators much better tools to run the plant. This was such an obvious Good Thing that companies often did not require a specific, well-defined justification for their approval.
In many cases, the intent of replacement projects was to just duplicate the analog control functionality so as to not give the plant too much change too fast, but to allow improvements in the future. Most of these systems did deliver benefits that justified their cost, but they often delivered only a fraction of the benefits they could have. And those future improvements often never happened.
In the 1990s many companies realized they were not getting full value from their control systems. Monsanto did a key benchmarking study that showed fewer benefits from DCSs than did other leaders in the industry. The study resulted in more than 120 automation professionals working part time for several years to identify and achieve more than $60 million of new benefits annually with minimal capital.
"Automation projects can yield significant dividends enterprise wide. But returns should not be counted only in dollars and cents terms."
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