montague

Engineers can use their math know-how to deliver financial value

May 10, 2016
Exploring Dr. Peter Martin’s ‘Bottom-Line Automation’ CSIA keynote
About the author
Jim Montague is executive editor at Control and Control Design magazines. Jim has spent the last 13 years as an editor and brings a wealth of automation and controls knowledge to the position. For the past eight years, Jim worked at Reed Business Information as news editor for Control Engineering magazine. Jim has a BA in English from Carleton College in Northfield, Minn., and lives in Skokie, Ill.

A long-ago music teacher of mine once told me, "You're good at playing the fast, complex notes, but you don't seem to want to pay attention long enough to play the slow, simple notes." Guilty then and now. I still get fired up to pull apart and explain complex topics, but paying bills and balancing the checkbook? Yawn. Wake me up for the late charges. 

Because of my bad attitude, I was grateful for Dr. Peter Martin's recent wake-up call, "Bottom-Line Automation: Making the Financial Case for Investment in Automation,' which he delivered on April 21 at the Control System Integrators Association's (CSIA) 2016 Executive Conference in Puerto Rico. Martin is vice president and Edison Master at Schneider Electric.

Basically, Martin called on system integrators, control engineers and other technical professionals to use a little of their mathematics know-how to show their accountants and managers how their process automation applications generate huge—but typically unacknowledged—financial values for their companies.

"Most accounting systems can’t show the value created by process control applications. However, if they can’t measure it, then it didn't happen," says Martin. "Fortunately, our industry can begin to solve these problems."

Martin reports that many plant-floor improvement projects are unable to add value because they’re constrained by budget estimates and specifications that require them to reproduce the same controls and capabilities they had before, even though they could make use of much-improved computing tools. "Not much value can be added and few breakthrough improvements will happen when you replace old technology with new, but only ask it to do the same jobs as before," says Martin. "Likewise, assigning your best people to a project but then only measuring that they're on time and on budget is really like tying their hands, and won’t lead to significant value improvement."

Martin says the final barrier to value creation in many applications is a lack of effective measurements of how they add value. "Clients and their accountants know what they spend to run their plants, but they usually can’t measure the benefits they get from process automation. This means engineers and their applications are relegated to being costs with no demonstrable value," adds Martin. "However, the fact is that process engineers and system integrators add tremendous value, and this is a situation that we must turn around. We have to measure the value from automation, but engineers don't like accounting and find it distasteful, even though it's mostly addition, subtraction, multiplication and division—and usually not much multiplication and division."

Martin is calling on process engineers, system integrators and their colleagues to develop dynamic performance measures that can convert process automation functions into financial terms, feed results back to the plant operations team, and create a business/profit control loop. "Developing these accounting measures just requires visiting the site to collect data, including identifying resources and schedules, finding out what's important to the plant, and learning how they do existing calculations and alogrithms," explains Martin. "Next, you do a simple accounting decomposition analysis and source-data analysis; develop new equations and calculations that can usually run right in your controllers; and implement real-time accounting measures that can show, for example, how a shift change or adjusting setpoints can add or subtract value.

"Once you close this loop and free up the traditional constraints on value, you’ll be stunned at how much value operations can add. Engineering is the most valuable profession in an industrial plant, and it’s time for us to reclaim that rightful place."

About the Author

Jim Montague | Executive Editor

Jim Montague is executive editor of Control.