In the past, many organisations involved in the process industries, which are characterised by large, complex industrial plants, have invested heavily in IT solutions to support their production and distribution activities.
Typically these investments take the form of enterprise resource planning (ERP) systems and are designed to integrate business functions in the back office.
The engineering disciplines in the process industries, however have not enjoyed the same levels of integrated IT support. Reasons for this include the complexity (functional and political) of the business processes associated with plant engineering, the complexity and range of the IT solutions required and the limitations of available integration technology. Typically engineering IT systems exist in isolation from each other with limited links between them. But now companies are realising that an integrated environment would greatly improve the management of information throughout the lifecycle of an industrial plant and across the whole organisation.
How to implement such an environment
The first point is the clear distinction between the two IT domains within process engineering. There are also significant differences in the way that IT has traditionally been viewed. In the business domain, IT strategy is usually based on:
– commercially available, integrated sets of applications (ERP systems), the deployment of which involves wholesale reviews of business processes;
– recognition of the benefits of corporate-wide standardisation of fundamental processes and infrastructure;
– top management sponsorship of the drive towards such standardisation;
– careful and open-minded analysis of the consequences and business benefits of outsourcing IT;
IT strategy in engineering is based on:
– emphasis on point-solution functionality rather than integration;
– maintenance of a complex mixture of in-house and commercial systems;
– tolerance (or encouragement) of local practices and IT initiatives;
– rare inclusion in considerations of outsourcing;
There are understandable reasons for the difference in approach between the two domains; the engineering activity requires a set of applications that are very complex in themselves and each supports an activity or set of activities in a complex network of tasks. The majority of these tasks fall within distinct phases of the asset lifecycle, leading to an “in-phase” focus rather than a broad project perspective. The project activity is often shared among a number of organisations, each of which has its own view of IT priorities.
However, the principles of integration, appropriate standardisation and end-to-end process improvement that are commonly driving IT strategy in the business domain are equally applicable in the engineering domain.
Indeed, failure to adopt these principles in engineering IT is leading to a situation where organisations are attempting to leverage their investment in business systems into the engineering domain, often inappropriately.
Further, for many companies, the move to outsourcing in the business domain means that at least some of the engineering IT activity, usually infrastructure management, is already outsourced as part of the corporate outsourcing deal.
Few organisations have the skills and knowledge in-house to manage their way through an engineering IT implementation project. For those organisations it can make sense to outsource engineering IT to a third party, which can provide “managed services”.
The potential benefits of working with an engineering IT partner can be categorised according to the three aspects of the organisation’s engineering IT strategy: namely, IT improvement, business impact and commercial exploitation.
It is important that a clear understanding exists at the outset between the client and the managed service provider as to the target mix of these aspects of the IT strategy.
The benefits sought here stem from improving the efficiency of the IT service and so are manifested in reduced costs, improved levels of service and better visibility of IT spending. In the engineering domain, maximising flexibility and control is of major importance. The ability to quickly adjust the level of IT support to the fluctuating levels of engineering activity is of substantial benefit, while the inability to do this can be damaging in terms of both unnecessarily high costs when activity is low and poor support when activity is high. IT improvement can also assure access to a wide range of skills and expertise and ensure that the company is kept abreast of the latest technology developments.
The business impact agenda is concerned with improving organisation performance through IT-enabled process change, and with opening up new business opportunities on the basis of enhanced, or even new capabilities, arising from more effective exploitation of IT.
This aspect of IT strategy can involve anything from improving market position, through enhancing the IT component of an organisation’s proposition to its clients to actually marketing IT assets resulting from technical developments undertaken to improve internal business operations.
Making it work
There is a wealth of experience of implementing IT managed service and outsourcing arrangements across many industries. Success tends to require:
– careful up-front thought about the scope and objectives of the partnership;
– clearly defined service levels for the operational aspects of the service;
– a provider that understands the business;
– a provider that is flexible and able to work with other vendors;
– an atmosphere of trust and a match in the cultures and styles of client and provider.
A partnership that addresses these “top five” issues has a strong chance of success and of delivering substantial business value.
- Tony Christian is president of Aveva Consulting.
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