RoI is the real influencer in deciding to adopt new technology
Published on : Saturday 19-10-2019
What are the latest trends in automation for the industry?
The latest trends in the Automation industry are all about robotics, AI (artificial intelligence), ML (machine learning), IIoT, big data analytics, data security, Blockchain, engineering services, etc.
Is the pace of changing technology too rapid for user industries to adjust to?
The answer is Yes & No. Technology is rapidly changing and, in this environment, we must keep abreast with the technology and use it purposefully for the intended application. Investment in latest technology by the user industry along with reskilling of the workforce is the key element to capitalise on technology and reap the benefits like increased productivity, enhanced safety, minimum downtime, etc.
Along with the technology, it has its own drawbacks like data compromise, security layering, extracting meaningful data from big data, etc.
Are the user industries, especially SMEs, adequately informed and equipped to handle digital transformation and its challenges?
Many of the user industries and SMEs are well informed about the availability of various products on digital transformation, related to their industry.
However, the main dilemma faced by the industries are:
a) Is it required? Why change when it is working?
b) What benefits will it bring to organisation vis-à-vis the capital investment?
c) Are the employees ready to adapt to the new technology?
d) Is it possible to reskill the employees and at what cost and time?
e) What will happen to the existing machines? Will it be obsolete?
f) Is it possible to install latest technology on existing machines and at what cost & time?
g) Is it possible to switch over to old methods, in case of failure of new technology to deliver the products as anticipated?
h) What changes are required to be implemented in the present operating procedures?
i) What sort of IT security measures are required to safeguard the data/production?
j) What will be the investment on IT infrastructure – both on capital and recurring cost?
k) What sort of support can be expected from the technology suppliers and to what extent of time?
l) By implementing new technology, can my production increase without compromising quality?
These are some of the points, which every user industry/SME ponders over before adapting to the latest technology.
The Indian market always has its own challenges when it comes to technology adoption, especially the RoI factor. Are things changing?
RoI is the real influencer in deciding to adopt new technology. The capital expenditure for any user industry is directly proportional to the extent of digitalisation proposed/planned. This varies from type of industry, to the strength of work force.
In case of a green field project/new set-up the digitalisation cost can be added as capital expenses upfront. Here during the initial planning, the complete digitalisation can be planned and executed, including the IT infrastructure to achieve safe operating plant with increased safety and productivity. The manpower can be selected based on the required skillsets for operating the plant/system. Though the capital expenses would increase marginally, it outweighs the end results. In such cases RoI would not be a key issue and justifying to the management/board would be a cakewalk, as the user industry benefits from depreciation both on technology and equipment.
In case of brown field/revamp projects, this becomes very tricky. Here many points as outlined above becomes realistic and management always would try to bring the balance. Here RoI calculations goes haywire, as depreciation benefits for capital equipment’s has already gone down. Depreciation on electronics and technology is very high and the industry may not get the full benefit. The key factor is whether the work force would be ready to adapt to the new technology and are ready for reskilling?
The government should encourage the industries to adopt digitalisation by empowering the Banks and Financial Institutions, to provide credit facility with extended payback period, tax rebates, subsidised infrastructure, etc. Though present government is aggressively pursuing digitalisation by giving various incentives, liquidity crunch is forcing the financial institutions and banks to refrain from disbursing large credit facility. The market is highly price sensitive, as customers focus on getting the required products, whether done through digitalisation or otherwise.
Is there a fine balance between total automation and safeguarding jobs?
This is a notional fear and depends on mind-set. Automation is very good for repetitive type of works. Automated process increases productivity with increased safety. The key factor is reskilling the workforce and the main conflict of arises between various segments of workforce. This requires paradigm shift in our labour policy. This also requires alignment of syllabus in Universities to make the students ready for employment in industries. If the workforce is ready to adapt to new technology and are ready for reskilling, then job redundancy is out of question. In today’s market, there are ample jobs, but availability of right resource is a problem.
My experience with Engineering Sector is majority of the draftsmen, designers and engineers are ready for adoption of new technology, as this gives them a leading edge in any competition.
Dr VP Raman has 38 years of experience in the field of Design and Detailed Engineering, Operations and Business Development related to EPC, EPCM, FEED, Basic/Detailed Engineering, Procurement, Commissioning related to oil & gas (upstream and downstream) industries, fine chemicals, petrochemicals, refineries, fertilizers, manmade fibres, water & waste water, cross country pipelines, etc.