Can the effective use of IT add significant value to a chemicals business and if so how should IT be managed as a strategic resource?
From experience this appears not to be the case. This lack of business and IT alignment is partly due to the lack of skills within the IT community to bridge the gap between business and plant/engineering disciplines. For example, we still see IT and the plant systems managed separately in many chemicals companies, and in most companies there is also no evidence of a strategy to manage and bring business and plant systems together to exploit the potential of an integrated approach.
IT professionals battling to maintain their own skills in a fast-changing technology environment are finding that to include an understanding of manufacturing, engineering and plant operations is a challenge.
For IT professionals to be effective in the chemicals sector there are three primary areas where specialisation and in-depth knowledge are required: an understanding of the business environment; a good understanding of ERP systems and their limitations in process industry and a good understanding of manufacturing execution systems (MES) and process control systems.
The business environment
Over the past 10 years, the chemicals sector in South Africa has undergone several fundamental changes. Following a period of high-profile mergers and acquisitions in the late 1990s, there have been a number of less publicised disposals of companies, with full or partial transfer of ownership from global companies to local management and shareholders.
During this time the chemicals service industry, characterised by many smaller niche players, has emerged. Whereas the chemicals sector was dominated by a few stable companies 10 years ago, the situation is now more complex and in a state of flux. It is likely that this restructuring will continue.
IT professionals engaged must base their technology and operational decisions on a solid understanding of the business context. The business environment today is changing rapidly and companies are subject to frequent restructuring in the form of disposals, mergers and acquisitions.
If a disposal is envisaged, an all-encompassing ERP solution for all subsidiaries may not be a good idea because a tightly integrated system can constrain or hamper agility and the ability to restructure quickly.
A comprehensive understanding of context is a prerequisite to aligning IT with business strategy. The IT professional requires a strategic understanding of the industry. This is obtained by ongoing participation at management level with the business decision-makers. Without understanding the business context, IT decisions will end up inhibiting the growth and agility of the business.
ERP systems
Ironically, the chemicals industry was largely to blame for the early adoption and growth of overly complex ERP. Initially designed to integrate financial information to physical materials movements in a manufacturing environment, ERP was intended to centrally manage and plan all resources in order to optimise financial objectives.
It is hardly surprising then that given the financial roots of ERP systems, and the complexity of the business reality, many ERP installations in the chemicals sector have fallen short of the original goals and in practice are still no more than glorified and very expensive accounting systems.
From a business perspective, under-utilised ERP provides many opportunities to help a company reduce costs, increase sales, and improve plant efficiencies and equipment utilisation. For example there are chemical reactions which rely on physical parameters (pressure, temperature, concentration, catalyst age). Standard ERP does not model any of these parameters. The skills to effectively configure standard ERP to meet these industry-specific challenges are generally unavailable, and techniques that work in discrete manufacturing are applied inappropriately to process plants.
There are several specialised software packages, including a number of process-centric ERP systems designed for the process industry which overcome these problems. However, these niche solutions are sometimes perceived as a risky option when measured against big brand software vendors.
Another complexity when introducing standard ERP into a process plant is that the units of time differ significantly between the business and plant systems. At the one extreme the process control systems execute transactions in milliseconds; and on the other extreme accounting systems use months as their time period, or supply chain planning system where planning horizons could be quarters and even years. Feeding data from one system to the other is meaningless unless the time dimension is properly handled and the appropriate adjustments made to the data.
The IT professional needs to control the instinct to integrate business systems with plant systems by weighing these decisions against a good understanding of the fundamental differences in purpose between process modelling systems and ERP/accounting systems.
MES and plant-level IT
Process engineers like to believe that the real complexity is at the plant; where the worlds of process control and MES come together. IT professionals in the chemicals industry therefore have to understand this area in some detail.
No longer can plant engineers isolate their world from IT; activities such as service pack deployment, antivirus scans and software patches now affect both the business systems and the plants simultaneously. Web browsers can now access mail systems, ERP data and process control parameters through a common network, and introduce several security risks to process control integrity.
To understand the world of the process engineer, IT professionals must maintain an awareness of IEC 62264 and a good understanding of the S95 standard and its uses and limitations.
IT professionals should be familiar with the formal standards such as IEC61508 and IEC61511, which are internationally adopted standards for any electrical, electronic and computer devices deployed in combination with a safety system in a manufacturing environment.
For more information contact Gavin Halse, ApplyIT, +27 (0)31 275 8080, [email protected], www.applyit.com
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