In 2015, process and power automation companies around the world saw glimmers of relief from the global recession rocked by free-falling oil and commodity prices, as well as fits and starts in economies from the Americas to Europe and China. “The past one-and-a-half years have been pretty challenging,” said Gary Freburger, president, process automation, Schneider Electric, to many of the more than 800 attendees from 40 countries at the company’s CONNECT 2016 customer conference this week in New Orleans.
“Oil prices have put pressure on industry as a whole to look at things differently,” Freburger said. But Schneider Electric is weathering the storm and is well positioned to take full advantage of today’s industry trends, with or without rising commodity prices.
“Five years ago, we began fixing our business, our products and the way we go to market. With Schneider’s support, we’ve spent a lot of money, and now we’re in a good place. We have the technology the market needs to reduce risk, speed time to first production and lower overall cost. With the recent fall in oil prices and slowdown in capital expenditures, we have been able to gain a lot of ground. But expectations are changing—things will look different—so we must continue to innovate at every level.”
Chris Lyden, senior vice president, Schneider Electric, said, “Life at $40/bbl looks a lot different than at $115. We’ve needed to reduce project costs by 30-50%. You can’t just chase low-cost engineering around the world; you have to get the man-hours out. And when oil prices go up, we can’t raise our prices. So we have to stay good, to get projects justifiable at the new level.”
To do that, Schneider Electric has increased flexibility to get automation off the critical path. “We’ve done a lot of work on tools, our process and technology.” Lyden said. One example is the FLEX system for flexible execution, a mix of technologies to minimize risk in project time to first production and overall cost while optimizing project execution and quality.
Schneider Electric has customers at every level to support and drive innovation. For example, at the system level, ExxonMobil is driving an initiative to open, simplify and automate the engineering, configuration and commissioning of its systems. “We subscribe to that concept and support it,” Freburger said. “It’s a once-in-a-career opportunity, over the next three to five years, to participate in making multi-generational changes that we all will live with for a long time.”
Other frontiers of innovation include connectivity and the Internet of Things (IoT); further integrating Modicon, energy businesses and services; and cybersecurity.
In connectivity, wireless is moving from secondary measurements to being secure, cost-effective and robust. “A real opportunity is coming, and it’s an enabler of IoT and open systems, including networking of control components,” said Lyden. “When it comes to IoT, everybody has something on the website, everybody has their own ideas. We have ours; it’s just not ready for release yet.”
IoT is offering the potential for a digitized services transformation, with connection, analytics and business models to reduce operations expenditures and improve efficiency, said Nathalie Marcotte, vice president, Industry Services, Schneider Electric. “But it’s easy to get caught up in the technology and what it can do. We have to keep all the end users—operations, maintenance and the user—in mind and be sure the business case is there.”
IoT and connectivity bring cybersecurity concerns, “but we can build it in and apply patches as a remote service,” Marcotte added. “Users will learn that connectivity is a value, not a risk.”
Connectivity brings great opportunities in analytics and predictive technologies, with ways to see where something is different and where it is going wrong, said Raja Macha, vice president, process automation, Schneider Electric. “It takes innovation at multiple levels to move 35-40% of the cost out of the system.”
Innovation also is apparent in project delivery. “We mainly deliver in two ways: directly on large projects, with a full range of offerings from power through automation, where FLEX technology and universal I/O are great enablers. And through system integrator (SI) partnerships,” said Chris Dartnell, vice president of global sales, Process Automation, Schneider Electric.
“It’s a challenging mix of direct and indirect,” added Freburger. The company spent the past year rebuilding its SI model “with a lot of good feedback from the SIs,” he said. “There has to be a balance there, and we think we have a pretty good view of how that balance can work.
“It’s really a services business, whether it’s a greenfield installation or support services. Migration, integration of Schneider Electric products, connecting across the business and Modicon—services mean more than maintaining the installed base. We must stay close to the market and provide the right balance of building on success and being where the market will end up. If oil goes up to $100/bbl, good, but it won’t change the path we’re on.
“We are so lucky to be part of this business at this time, to be able to change the way the next two generations of how this business works. Our part is innovation at every level—technology, product, services—to constantly ask and answer the question, ‘How can we bring value?’”