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Most talk is cheap, some discussions are good, but a few conversations are priceless.
One of these rarer and more valuable discussions was held by a five-person panel of ABB's leadership on the second day of its Automation and Power World 2010 event at the George R. Brown Convention Center in Houston. Participants in the "Chat with ABB Executives" considered, responded to and chewed over some of the biggest questions, topics and challenges facing their company and its many customers.
The gathering was moderated by Andy Chatha, president of ARC Advisory Group. ABB's five leaders included:
When asked what they've been up to lately, the panel led off with individual synopses of recent activities and efforts in their divisions.
Hepperla: Because of the recession and because one of our core businesses is drives, we repositioned ourselves around energy efficiency and savings. As a result, we pursued retrofit upgrade opportunities even during the downturn, so energy efficiency work in our business didn't really see a slowdown. This was a good move for us and allowed us to provide some added value to our customers.
Santacana: We began with our commitment to the smart grid, so we've been developing products and making acquisitions to aid this effort. Of course, a big piece of completing this puzzle was acquiring Ventyx, which is the world's largest supplier of energy and utility software. So we're very excited for the future.
Reinikkala: The recession really hit the big-time process industries hard, so we've also been trying to focus on services and see how we can help customers get more from their existing facilities. Energy efficiency is part of this, but we're also looking at other improvements customers can make that won't cost a lot of dollars. A big company like ABB always has a lot of internal activities going on, but we've really tried to shed some of those inside meetings, so we focus even more on how we can help customers the most.
The second questioner asked how can ABB help users cope with new regulations that may come as a result of the recent oil spill in the Gulf of Mexico?
Reinikkala: We always try to help improve safety at all our sites, and the oil companies are very concerned about safety first as well. I think the media reaction has been very negative, and that hasn't helped. Everyone in the process industries is trying to get out from under this catastrophe.On a related environmental note, Chatha asked if the recent volcanic ash from Iceland has disrupted ABB's supply chain, and what can be done to avoid disruption in the future.
Spiesshofer: The volcanic ash has proven that we need much stronger globalization and a better distribution footprint. For example, about 45% of our resources go to work in emerging economies, but our worldwide spare parts centers in Europe depends on air transport, and it was down for a couple of days due to the ash. So, we're going to need better distribution around the globe. Thank goodness, we already have a good distribution footprint in many different regions, and that helps a lot, but we also have to strengthen our export capability.
Paul Studebaker of Plant Services magazine asked how ABB plans to deal with the security and safety needs of its customers' ever-larger applications and equipment in the future?
Terwiesch: As we get onto the smart grid, there's going to be even more information going back and forth, so cybersecurity will become even more of a concern. We've spent the past five years ramping up our internal efforts and external collaboration on this issue. For example, we've been working with Idaho National Laboratories on its development of a supervisory control and data acquisition (SCADA) test bed, which is helping users harden their cybersecurity solutions at the system level and for individual devices to further help mitigate risk.
Spiesshofer: The oil rig explosion and spill was very unfortunate, and it and other supply chain-related problems can increase risk. However, once we begin to enable our customers' wind and solar and other renewable applications, it will give them a larger portfolio of energy choices, and that will help spread out some of the risk that used to be more concentrated.
Reinikkala: We're also trying to help users do less work out on their platforms or other relatively hazardous locations. This can be done by delivering more power from shore and by locating control systems on shore as well to minimize the staff that has to be there. These all can be significant improvements to indirect safety and give users a better chance to respond to problems than they've had in the past.
Another question from the audience asked how ABB's measures non-monetary success in each of its groups?
Spiesshofer: We check market share, of course, but we also use enhanced customer satisfaction scores. These are based on a range of responses about whether a customer would recommend us to a friend or not. This is a key method for helping us learn how we can improve.
Santacana: The recession has been a tough period for everyone, so we've been measuring success even more on project execution. But we also continue to align supply and demand, so we don't lose our edge. For instance, we suffered a 20% drop in demand, which was very drastic. We'd never seen such a drop in such a short time, and at times like this, it's very easy to let some things fall through the cracks. So we've been doing more training and awareness efforts to keep our operations execution at the top of the list.
Another questioner inquired what metrics has ABB been using to break down some of its organizational silos?
Reinikkala: We've been taking a lot of actions to lower some of our silo walls. In fact, our whole company management is being evaluated on group-level scorecards. So everyone from ABB in this room is measured against the success of the entire company, not just measured by the success of their own division, and this also is increasing cooperation. In the past, dealing with several different divisions at once used to confuse customers. The next level is for management to represent themselves to customers, and show that we come from one company. We've already been doing this to some extent and are showing some good results.
Santacana: About 15 or 20 years ago, ABB had separate objectives for each individual country, so we've been working to establish a more regional focus in recent years. We now have eight regional divisions worldwide, and they're run by regional managers with their own target-setting objectives. This allows a lot more cooperation, both between the divisions and with the overall corporation. We're light years ahead of where we used to be.
Hepperla: Now our customers do say that they like us getting rid of the silos, but they also want us to keep our close focus on their specific technology needs. One way we've been doing this is to have more account managers that represent a cross section of disciplines and divisions. We also went from having about 19 enterprise resource planning (ERP) systems to settling on just one for better optimization. This and some other efforts have helped us flatten our organizational structure. As a result, customers can now use one invoice or purchase order to pull solutions from the whole company.
Chatha asked how ABB can convince its own users that combining their power and automation divisions is a useful strategy.
Reinikkala: We just have to talk to the executives of those companies and begin to show them the holistic view of power and automation.
Hepperla: In fact, after working to combine our power and automation events, we began to feel like we were on the right track when we realized that topics like renewables, efficiency and hybrid vehicles weren't on one side or the other. We're still trying to tie these two power and automation worlds together, but there's no longer any debate that energy is what underpins everything.