The Best of Both Worlds: How Chemical Companies Can
Optimize Value Across Corporate and Plant IT
As part of our ongoing commitment in helping organizations
achieve high performance, Accenture regularly conducts
substantive research to shed light on key challenges our clients
are facing and provide thoughtful guidance in addressing those
challenges. Accenture has recently conducted such a study on
IT for chemical plants.
Accenture conducted in-depth interviews on the topic with
representatives (CIOs, COOs, vice presidents of engineering,
vice presidents of operational excellence and manufacturing IT
leaders) of global chemical companies. An extensive set of data
was collected and analyzed, forming the basis for the point of
view that is presented in this publication.
On behalf of Accenture, I’d like to thank those leaders who gave
their valuable time to participate in our study. I hope you find
the results informative and useful as you consider how best to
establish the IT platform that enables high performance in your
network of chemical plants.
Regards,
David Abood
Managing Director
Global Chemicals Industry Group
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Plant performance and IT
Global chemical companies face a variety of
challenges, from relatively weak economic
growth and increasing margin pressure
to a growing need for customization and
specialization, the rising importance of
sustainability, and a loss of knowledge as
waves of older workers reach retirement age.
As varied as these challenges are, they all
influence the performance of operations in
chemical companies’ manufacturing plants.
At the same time, there is a significant
barrier that limits that performance.
Recent Accenture benchmarking research
on IT-OT convergence found that although
manufacturing leaders agree that the
availability of effective IT tools is essential
to reach higher levels of plant performance,
such tools are often not available.
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The research explored the use of IT in
manufacturing plants in several industries,
including chemicals. It found that most
chemical plants do not yet have the type
of IT platform that can enable improved
performance, and that they are often
not using the tools they do have to full
advantage. The problem is partly the
technology itself, with a need for more
integration and more sophisticated
tools. But it also stems from governance,
and the way that chemical companies
oversee and manage IT in their plants.
The result, too often, is that IT provides
only a fragmented view of operations that
makes it difficult to drive and monitor
performance and improvement programs—
and that can ultimately have a negative
impact on production.
The research not only highlights some of
these issues, but it also points to areas
where new approaches to plant-focused
IT are likely to bring results—and where
companies can focus their efforts to move
forward on the journey to becoming highperformance businesses.
Plant-focused IT: Room for improvement
To realize the full benefits of today’s
technology in manufacturing, it is
increasingly important to have integrated
systems that link operations across the plant
floor, and link the plant and the central
corporate perspective. Such integrated
systems are needed for efficient, flexible
plant operations. But they are also needed
to enable the aggregation of data for
benchmarking and optimized capacity
balancing across plants, and for gaining
detailed insights into storage capacity,
inventory levels and production capacity.
And they are key to the sharing of best
practices and standard operating procedures,
and to driving companywide operational
excellence, six sigma and continuousimprovement programs.
When plant IT systems fall short of that
integrated ideal, problems ensue—and that
is often the case in the chemical industry.
The research found that in most chemical
plants Microsoft Excel® spreadsheets are
the primary tool used to collect and share
production information. In many cases, these
spreadsheets have evolved over years to
become very sophisticated, often including
graphical Gantt charts and interfaces to
databases of production information. The
functionality that they provide may fit very
well with the individual plant’s information
needs. But this approach can lead to
problems. Too often, the effective use of the
spreadsheet tool depends on one individual—
the person that built it. In addition, these
tools are typically error-prone, which
means plant decisions are being based on
inaccurate data. From a companywide
perspective, these locally built tools usually
do not provide the consistent, quality
data needed to benchmark production
performance across sites. Nor do they lend
themselves to the information -sharing
that is required for the implementation of
efficient, enterprise-wide standard operating
procedures.
The research found that chemical companies
are intensive users of data historians, which
are essentially repositories of production
data. However, they usually implement and
maintain these historians locally, and users
tend to draw on only a small percentage of
their potential functionality due to a lack of
awareness of what such a system can offer.
To make better use of historians, chemical
companies can draw on the experience from
other industries—notably oil & gas—that do
make effective use of these tools. That is,
they can take a more centralized, corporatelevel approach, with centers of excellence
that maintain corporate data historians
that aggregate data collected from local
historians into a corporate system that
supports continuous improvement.
A number of interviewees said that their
plants are using commercial off-the-shelf
Manufacturing Execution System (MES)
solutions. But here again, these solutions
tend to be tailored and implemented on a
site-by-site basis, rather than through a
single MES template across sites. Addressing
this is no longer a daunting technology
issue—packaged MES systems are now
mature enough to support such a templatebased approach. One of the companies in
the research had used a commercial MES to
develop and roll out a template across 30
plants. The real barrier to standardized MES
usage is not the maturity of technology but
the lack of an organization to support such
an approach.
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Figure 1: The average maturity of plant IT services is significantly lower in chemical
companies, compared to other industries.
Average maturity of plant IT services per industry on a scale of 0 (low level of
maturity) to 5 (high level of maturity)
Average
3.12
Energy
4.73
Products
3.15
Steel/Mining
3.63
Utilities
4.16
Chemicals
2.41
0.00
1.00
2.00
3.00
4.00
5.00
Source: Accenture 2014 benchmarking research
Overall, the maturity of IT services
for applications in chemical plants is
significantly lower than that seen in
other industries (see Figure 1). Locally
built spreadsheets are typically without
documentation of any kind. Some plants
are using MES that were configured and
implemented by local system integrators,
and some have outsourced MES support
to local companies because they do not
have the necessary in-house skills, and
often do not want to add such skilled
workers to the payroll. It is important to
note that this approach has significant
risks and limitations, because these local
arrangements often fail to include the
robust service level agreements needed for
effective support.
The low maturity of IT services in chemical
plants is also characterized by a lack
of clear insight into the cost of IT. The
maintenance costs related to specific
systems are often hidden in broad
maintenance budgets that provide little
detail about which applications are related
to which support hours incurred. (Of course,
this is not the case when maintenance is
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outsourced, because plants simply receive a
bill from the third party for the hours spent
on maintaining the application in question.)
Chemical plants’ lower IT maturity
is also reflected in their approach to
security. Process control systems, in
particular, are usually in need of improved
security. They are typically maintained
by local employees who are focused on
production operations, with limited skills
in cybersecurity—or often, even little
awareness of cybersecurity threats or the
basics of security. It is not unusual to find
notes listing usernames and log-in codes
stuck onto control systems; control rooms
that can easily be entered by anybody who
has access to the site; server rooms that are
not locked, and so on. The central IT team
typically does have deeper cybersecurity
skills, but that group and the plant group
usually have little contact. Chemical
companies can address the issue with
enterprise security standards, a program
that pays special attention to security in
the process-control domain, and companywide knowledge bases that can provide
security information to operational teams
The central-local disconnect
Most of the companies in our research use
one of two models for overseeing plant IT.
They either rely on the CIO and the central
IT team, or on the local site managers who
are supported by their local engineering
and automation teams, and sometimes, the
local IT team. Both approaches have their
advantages and disadvantages.
Our research found that in companies
where CIOs are accountable for IT in plants,
the results tend to be mediocre. Although
the maturity of IT services in these cases
is higher than average, there appears to
be little focus on the development and
implementation of solutions that fit with
the specific needs of the chemical plants.
There is often a strong “ERP-unless” policy
in place, and standardization for costeffectiveness gets high priority. Thus,
local IT requirements often fall outside
the CIO team’s attention, and plants are
left in do-it-yourself mode for operational
technology—leading to the proliferation of
locally built and maintained systems.
Some CIOs told our researchers that
their central IT teams are hardly ever
contacted by site managers, so they are
not aware of plant requirements or support
gaps. Meanwhile, several plant and site
managers made it clear that, based on
their experience, the central IT team is not
able to support their needs effectively.
These local managers said that central IT
is not always responsive to the changing
needs of plants. Here, there is a disconnect
in workstyles, perspectives, objectives
and performance metrics. While plants
are often trying to change IT quickly to
meet shifting production and customer
requirements, the central IT team tends
to embrace a structured approach, with
technology changes coming in formal
release dates. From the plant perspective,
the result is a long wait, perhaps for months,
for something that they need right away.
Often, the central IT team does not
have a grasp of day-to-day life in the
plant, which can lead to communication
disconnects that manufacturing employees
find frustrating. In one example cited by
interviewees, two plant operators called
central IT support about an issue they were
having with the application that controlled
the chemical process. The support person
asked a typical IT question—“how many
users are affected?” The answer—two—
meant that it was a lower-priority issue,
even though having those two users online
was key to keeping the plant running.
We see a different set of problems where
local site managers, rather than the CIO,
are in charge of plant IT. There is some
logic to using this approach, of course.
Site managers are ultimately accountable
for everything that happens on their
sites, including safety and security,
and IT could be seen as part of that.
However, even though site managers have
responsibility for IT in the plant, they also
have responsibility for many other things.
They may not have the time or skills
needed to manage IT, and they often rely
heavily on individuals in the plant to do
so—individuals who may also lack deep IT
skills. In companies using this approach,
our research found fairly low levels of
maturity in IT services; relatively low usage
of commercial, off-the-shelf solutions
(which means more custom and locally
built applications); low maturity around
applications security; and relatively high
IT costs. Beyond the individual plant, there
tends to be no effective reuse of IT-related
effort, and no sound basis to build and
maintain a knowledge base for use across
plants.
Clearly, both approaches—the strictly
centralized and the strictly localized—have
their drawbacks. The findings suggest that
the recommended approach would be to
draw on the perspectives of both worlds,
and balance local knowledge with central
IT’s rigorous approach to technology. In
our research, a small number of companies
in the full, cross-industry sample did use
that kind of approach. In these cases,
accountability for IT in the plants was
assigned to a vice president of engineering
overseeing a central team of automation
and engineering professionals. The VP and
this team essentially act as a link between
plants and central IT. The companies
using this model actually had the highest
maturity levels of IT services in their plants
and the highest levels of user satisfaction,
and were most likely to be heavy users
of commercial off-the-shelf solutions
across their plant networks. There were
not enough of these companies to allow
for a solid statistical conclusion about this
approach, but the finding certainly suggests
that chemical companies should consider it.
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The payoff of effective plant IT
An increased focus on specialty
chemicals.
The specialties segment is growing faster
than the commodities segment. Specialties
plants often need to produce chemicals
in smaller batches, which requires more
changeovers. An integrated, balanced
approach to IT can help companies optimize
production and inventory, across a network
of facilities, to match customer needs.
This can help schedulers manage changing
production while making sure that storage
capacity is available for these varying
products and assets are being used optimally.
Sustainability.
An integrated, balanced approach to
overseeing plant IT can help ensure that
decision makers across the organization
have the right information needed to
improve plant and company performance—
on a network-wide basis. A more effective
approach to IT can help chemical
companies address a variety of plantrelated challenges, including:
Cost reduction and efficiency.
There is always pressure to control cost
in chemical plants. Integrated IT enables
companies to coordinate cost-reduction
efforts and operational-excellence
programs from a central perspective.
Harmonizing data across manufacturing
sites can be a challenge, but doing so can
enable more effective comparisons and the
identification of recommended practices.
That in turn, enables the establishment of
efficient standard operating procedures
across plants.
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Product innovation and
customization.
For many in the industry, it is increasingly
important to customize products for
specific customer needs—and in general,
product and service innovation is
becoming more and more critical. An
integrated approach to plant and central
IT can help R&D, sales and manufacturing
communicate more effectively, and
share knowledge on specific customer
requirements and product and production
processes. This heightened communication
can help speed up the new productdevelopment process, from initial idea to
production and delivery. An integrated
approach can also help sales and
manufacturing work together more closely
to share customer product requirements
and production-status information.
The market is looking for more information
on the sustainability characteristics of
products. At the same time, chemical
companies are finding that reduced energy
usage is a key to reducing costs. Integrated
IT can help on both fronts by providing more
detailed insight in the production history of
chemical products, the amount of energy
and water consumed, and related waste and
byproducts. In short, it can enable more
effective measurement, monitoring and
reporting at manufacturing plants.
The changing workforce.
There is growing need for talent in chemical
plants—a challenge complicated by an
aging workforce and the retirement of
many individuals who have production
knowledge, as well as the scarcity of
incoming operations or science, technology,
engineering, math (STEM)-skilled
personnel. Integrated IT can open the door
to increased automation of production
processes, and for remote access to plants’
information and control systems—helping
chemical companies make the most of their
employees who have key skills.
Getting organized
Each company is different, and each
will need to find its own way to balance
central and local control over plant IT.
The key is take a step back, develop an
overall corporate /plant IT strategy, and
formally address the topic of who should
be accountable for which components—
based on an understanding of the strengths
that central IT and local manufacturing
personnel both bring to the table. The
right organizational structure will enable
companies to tap into the best of both these
worlds, and to take a collaborative approach
to managing plant IT for high performance.
F
C
How responsibilities
are divided: Locally,
federated, centrally
L
F
C
Manufacturing
Council
Manufacturing
strategy
Manufacturing
Benchmarking
Best practices
Harmonization
Information requirements
F
Continuous
Improvement
C
Engineering
Automation
Production process
Control system
Safety systems
Suppliers
C
needs
L
Chemical companies should consider
defining accountabilities and
responsibilities for central and local
employees—those who work in IT,
manufacturing, engineering and continuous
improvement teams—to enable structured,
daily collaboration between all these key
stakeholders (see Figure 2). Within each of
these teams, various responsibilities can be
handled locally, centrally or in a federated
model that shares responsibility across both
groups. An overall governance structure
should spell out how these teams work
together. The idea, ultimately, is to build
collaboration into the organization.
L
F
Doing so will require change. Companies
will need to look at the increased
integration of systems—across each plant
and between plants and the central ERP.
Figure 2: Chemical companies need to establish an organization that facilitates
ongoing collaboration between stakeholders.
L
In our research, interviewees made it clear
that they recognize the shortcomings
associated with their current approach
to managing IT in their plants. Indeed, all
manufacturing operations leaders involved
were in favor of having a more centrally
driven approach, instead of having every plant
build and maintain its own solutions. And
according to our research, high performers
have an established governance structure that
enables convergence of IT and OT.
IT Team
Infrastructure
Enterprise
Architecture
Cybersecurity
Harmonization
Suppliers
L
F
C
Source: Accenture
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About the research
This report draws on the chemicals-related findings from an Accenture study conducted in
2013-2014 that looked at operational technology across industries. The respondents from
the chemical industry included 21 individuals (CIOs, COOs, vice presidents of engineering,
vice presidents of operational excellence and manufacturing IT leaders) representing 13
global chemical companies.
Figure 3: Research participants, by industry.
Number of participants per industry
(Total: 49)
25
20
15
21
12
10
10
5
0
10
Chemicals Products
Metals/
Mining
3
3
Utilities
Energy
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Contact us
David Abood
Global Chemicals Industry Lead
[email protected]
Bianca Scholten
Research Lead
[email protected]
About Accenture
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