Jose Rivera Chief Executive Officer · •CSIA to continue to share the vision and create...

Copyright © 2019 CESMII - All Rights Reserved. 1

Jose RiveraChief Executive Officer

Role of System Integrators in

Democratizing Smart Manufacturing

Jose M. Rivera, CSIA CEOFebruary 28th, 2019

System Integrators in Attendance

02/28/2019 CSIA Presentation at CESMII Annual Meeting – LA 2019 3

Agenda

• Role of SIs in Democratizing Smart Manufacturing

• CSIA

• Challenges Ahead


Smart Manufacturing Transformation

• The vision for Smart

Manufacturing entices

manufacturers to start their digital

transformation journeys along

with their partners.

• It represents a disruptive

proposition for the entire

manufacturing ecosystem and its

success depends on the success

of the entire ecosystem!


Manufacturing at the Center of the Ecosystem

Peer

Users

Global

Consulting

Firms IT SW

Vendors

Manufacturing

Govt.

Standards

Committees

OT

SI’s

EMs

Corporate Staff

• Local

• State

• Federal

• FDA, EPA, DOE, OSHA

• CE

• UL

• Kosher

• HACCP

• ISA

• PackML

Foreign

Govt.

• Plant Mgr

• Quality

• Operations

• CI

• Maintenance

• IT

• Supply Chain

• Quality

• Operations

• CI

• Finance

• IT

IT

SI’s Analysts

OT SW

Vendors


Key Role by SIs in the Ecosystem

Peer

Users

Global

Consulting

Firms IT SW

Vendors

Manufacturing

Govt.

Standards

Committees

OT

SI’s

OEMs

Corporate Staff

• Local

• State

• Federal

• FDA, EPA, DOE, OSHA

• CE

• UL

• Kosher

• HACCP

• ISA

• PackML

Foreign

Govt.

• Plant Mgr

• Quality

• Operations

• CI

• Maintenance

• IT

• Supply Chain

• Quality

• Operations

• CI

• Finance

• IT

IT

SI’s Analysts

OT SW

Vendors

• System Integrators (SIs) turn

products into End User solutions

meeting:

• Industry norms.

• Company requirements and

standards.

• They play a key role deploying

technology, integrating across

platforms (HW and SW) and across

vendors.


Delivering System Integration

System

Integration

System

Integration

1. Most of CSIA SI members.

2. May have other parallel

businesses like electrical

construction, etc.

1. Rockwell Automation and

acquired Maverick Technologies

(SI)

1. End User’s internal

engineering team delivering all

SI work. This set up was very

common in the past in the US,

over time and with increasing

financial market pressure this

function has been outsourced.

Some companies still retain

this capability for either the full

process or “core” parts of it.

System

Integration

Independent

System IntegratorAutomation

Equipment Vendor

End User

System

Integration

1. F&B production and packaging

lines.

2. Automated test rigs for

electronics, integrated into the

manufacturing process.

3. Full packaging line provider.

Machine Builder


SIs cover a Diverse and Broad Spectrum

Automation

Equipment

Programming(PLC, SCADA,…)

Engineering, Design, Consulting

Control

Panel

Assembly

Robotics

Motion

MESERP - link

Electrical

Installation

Machine AutomationProduction

Line

Integration

Automation

Resource

Provider

Data

Centers

Building

Automation

Network

Design,

Installation

Laboratory,

Testing

Automation

Instrumentation

Vision


Independent SIs – A Diverse Community

• Wide network of independent, privately held and geographically dispersed SI companies,

focused on a limited set of industries / applications.

• Offer automation HW / SW vendors with a broad solutions channel.

• Independence gives SIs the ability to integrate across vendors to deliver real customer

solutions.

• Close relationship with End User clients; are viewed as a trusted advisors.

• Visionary SIs setting up divisions to leverage emerging smart manufacturing

opportunities.

• US SI Market: CSIA estimates approx. 3,000 independent SIs (companies and

independent contractors):

• Approx. 440 US SIs with organizations larger than 10 people.

• CSIA with 307 US SIs members.


<$5 M, 42%

$5-10 M, 26%

$10-25 M, 18%

$25-50 M, 9%

>$50 M, 6%

Annual revenue for control system integration workIncludes shop/panel assembly, excludes construction

<25, 37%

25-50, 30%

51-100, 14%

101-20011%

>200, 8%

Diverse SIs serve a Diverse End User Community

Average number of employees plus contract people

involved in systems integration Includes technical staff, support staff (HR, Finance, etc.), and those doing shop/panel

assembly, excludes construction personnel.

Source: Spring 2017 CSIA - JP Morgan survey (285 respondents). Respondents mostly from USA.


Smart Manufacturing to address key SI Challenges

Source: Informal survey to the Board and attendees of the CSIA SI Regional Events in Chicago and Houston – Fall 2018


Current SI Challenges Smart Manufacturing Opportunity

• Core business commoditization and

competition from equipment vendors.

• Digital transformation to stay ahead of the

curve and create differentiation.

• Stronger links to End Users through

deeper expertise and ongoing services.

• Thinning of tech pool at End Users and

frequent changes in their organization

impact established relationships.

• Deliver new business models to End

Users to reduce their capex and reduce

demand on End User tech pool.

• Competing new players (e.g. IT) challenge

acquisition, development, and retainment

of talent. Increases pressure on wages.

• Updated culture, work environment and

paygrade to attract and retain next

generation talent.

To balance during the transition:

Conventional opportunities today vs. Investment to deliver on emerging opportunities tomorrow.

Smart Manufacturing Requires Change by SIs

• Industry Vertical / Process / Application vs. Product / Platform technical expertise.

• Geographical proximity becomes secondary.

• Ongoing services, new business models to supplement project centric business.

• Scalability in mind from the start.

• SIs as enablers of IT OT convergence.

• Grow / Partner to meet larger End User needs.

• Remain nimble and agile, increase margins.

• Open to external capital.


SIs have historically supported transformations

Hardwired Logic

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

Proprietary

programmable

controllers

Time

SMART MANUFACTURING

02/28/2019 CSIA Presentation at CESMII Annual Meeting – LA 2019

IIoT

IT/OT

Convergence

Data

Analytics

Consulting

3D

Printing

Edge

computing

Transformative

Biz Models

Ongoing

Services

Industrial wireless,

open protocols and

architectures,

standards

Agenda


• CSIA



CSIA - The Control System Integrators Association

• Founded in 1994 as a not-for-profit global trade association

to advance the industry of control system integration.

• CSIA Membership: >430 SI companies and >115 vendor

Partners.

• Helps SI improve their business skills, provides a forum to

share industry expertise, and promotes the benefits of hiring

a certified SI.

• Conference, webinars, training, to keep SIs abreast of

emerging trends, challenges and opportunities.

• The Industrial Automation Exchange connects

manufacturers with the SIs and industry suppliers.


Certified outperform Non-certified SIs on 5 KPIs

Percentage that certified companies outperform non-certified by quartile

Based on information reported by CSIA companies

participating in benchmarking program (Pulse). Caveats: 1.

Less than two years of data 2. Small sample size (34 total, 19

certified, 15 non-certified) 3. Potential selection bias (“Only the

healthy go for a checkup”) 4. No access to raw data

(confidentiality) – report prepared by company managing

benchmarking platform.


Transformative Business Models

Exec Conferences Prepare SIs for the SM Future


Growth through Innovation

Adapting the Organization to enable

continuous Growth

CSIA Role In Smart Manufacturing Democratization

• Real opportunity to advance the SI industry by delivering to a real and emerging need by

End Users.

• CESMII-CSIA Collaboration with leading role by End Users and active support from

Automation equipment vendors enables to development of a solid SI ecosystem

component.

• CSIA to continue to share the vision and create enthusiasm within the SI community. We

need to bring a grand vision to a practical entry path.

• CSIA community to continue to share their experiences and provide support in their

collective journey.

• CSIA to create a sense of urgency and need to invest for the future. SIs are currently

extremely busy delivering on traditional SI opportunities.

• CSIA BP Manual: To continue to provide solid SI company management fundamentals

AND to evolve and deliver on the newer demands placed on SIs by the new opportunities

associated with smart manufacturing.


Agenda


• CSIA



Challenges Ahead – Broader View

• Smart Manufacturing represents a disruptive

proposition for the entire manufacturing ecosystem.

Its success depends on the entire ecosystem!

• Imperative to address the complexities of manufacturing

systems.

• The Cultural / People component within the Ecosystem

can’t be overlooked. Intricacies of change management

can’t be underestimated.

• Smart Manufacturing provides SI with an opportunity to

address current key challenges to their business. As a

critical part of the Ecosystem, SIs need to find their role.

• SIs will support the effort if they can visualize their future

in it. The role of Early Adoption End Users is key and

so is the support by equipment/solution vendors.


Challenges Ahead – The SI Community View

• SIs have supported technology transformations in

the past.

• SIs are nimble and agile companies with limited

ability to conduct “basic research”. They need to

gain confidence that Smart Manufacturing creates

a profitable future for them as well.

• SIs currently extremely busy delivering on

traditional SI opportunities. A strong case needs

to be made for them to invest in a new and

unproven proposition.

• Strong End User support is key.

Source: Dec 2018 Global System Integrator Report – A supplement to

Control Engineering and Plant Services publications by CFE Media.

Source: CSIA EZ Stats – Business Sentiment.


Conclusion

• Smart Manufacturing is critical to ensure that the US industry remains competitive. It is not an option!

• Getting it right requires the entire ecosystem to join in.

• In the past SI have supported technology evolutions and they will do it again if they see the opportunity and feel supported through their onboarding process. CSIA committed to support this initiative.

• SIs need to continue to deliver on their traditional business while building or acquiring new capabilities.

• End Users need to play a key role getting the ball rolling through pilot projects and later adoption. Early adopters will gain a competitive advantage.


Jose Rivera Chief Executive Officer · •CSIA to continue to share the vision and create...

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