1. Current Business Drivers & Trends
Environment
& Resource
Friendly
Products Andy Chatha
President
ARC Advisory Group
Environment Environment
& Resource & Resource AChatha@ARCweb.com
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Supply Chain Plants

2. Today’s Business Environment
Volatility
Uncertainty
Lack of Trust
Lack f Credit
L k of C dit
Lack of Demand
Lack of Visibility
Rising Unemployment
Global Recession
Survival at Stake
Cash is King!
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3. Global Recession
US has been in recession for over a year
Europe f ll into recession in November 2008
E fell i i i N b
Japan is experiencing negative GDP growth rate
China & India growth has slowed down
Brazil’s economy has come to a grinding halt
December PMI was down to 32.4, lowest since 1980
Manufacturing capacity utilization is now <74%,
53% for Automotive
Many new projects are being delayed
Manufacturing is hit hard around the world
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4. Today’s US Business Environment
US is currently facing many crises
• Housing Financial Healthcare, Energy Manufacturing
Housing, Financial, Healthcare Energy,
Political & Social Pressure to:
• Go Green
• Develop alternative fuels
• Bring manufacturing jobs back
Aging Baby Boomers
• Shortage of Skilled Human Resources
Aging infrastructure
• Bridges, Water, Plants, Electric Grid
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5. Automotive Industry Business Drivers
2009 US Market Expected to Decline by >25%
Over Capacity of Gas Guzzling Vehicles
Race to Develop Fuel Efficient Vehicles
Pressure to Develop Low Cost Vehicles to Compete
p p
with Nano from Tata & from others
Need to make significant investments in lower
cost product design & manufacturing techniques
Pressure to Improve Profitability
Fierce Global Competition
p
US Auto Companies are fighting for their survival
Automotive Industry Needs a New Business Model
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6. Oil & Gas Industry Business Drivers
Developing Countries Fueling Demand
Limited Supply, Highly Volatile Prices
Low Margins in Refining vs Production
CapEx Exploding in Oil & Gas Production
New Sources of Oil being Explored: Deepwater drilling,
Oil Sands, Oil from Coal, Arctic Circle
Digital Oil Field of the Future on the Horizon for more
Efficient Production
Industry Increasingly Vulnerable to the Environment &
other Threats
Severe Shortage of Skilled Human Resources
Middle East Experiencing 2nd Oil Boom
Many projects have been delayed recently
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7. Top 10 Automation Business Trends
1. Automation business is still growing in developing countries
2. Automation Companies are becoming Main Automation
Contractors (MACs) providing more services
3. Discrete Automation companies are aggressively pursuing
process business
4. All Major Automation Companies are now offering Operations
Management Platforms
5. Wireless technology is injecting a new life into sensors &
automation systems
6. Integrated Automation & Power Systems are emerging
7. Plant to Business (P2B) connectivity is a must
8. Asset Lifecycle Management (ALM) has become a top priority for
Asset Intensive Process Industries (ARC Virtual Plant Concept)
9. Virtual Servers, Virtual Commissioning, Virtual Machine, Virtual
Plant are ready to go main stream
10. Integrated Automation & PLM/ALM Systems are on the Horizon
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8. ARC 2009 Automation Business Forecast
Process Industries
• Services are the bright spot
• Single digit decline in Japan
• Flat in US & Europe (Negative for US Chemical)
• Single digit growth in China & India
• Worldwide flat
Power Industry
• Power Shortage & Aging Grid require massive
investments
• Flat in Japan
• Single digit growth in US & Europe
• D bl digit growth i Chi
Double di it th in China & India
I di
• Worldwide high single digit growth
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9. ARC 2009 Automation Business Forecast
CPG, Food & Life Sciences Industries
• PLM & Packaging are the bright spots
• Flat in Japan
• Low single digit growth in US & Europe
• High single digit growth in China & India
• Worldwide high single digit growth
Automotive & Discrete Industries
• PLM & Virtual Commissioning are the bright spots
• Double digit decline in Japan
oub e d g t dec e Japa
• Single digit decline in US
• Flat in Europe
• Single digit growth in China & India
• Worldwide single digit decline 9
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10. Top 10 Enterprise Software Business Trends
1. Industry has consolidated to a handful major suppliers
2 Technology & Application Platforms have emerged
2.
3. Data has become the epicenter for all applications
4. SOA & Web Services are exploding
5. Role-based dashboards are simplifying user interface
6. Application virtualization is ready to go main stream
7. Software-as-a-Service i starting to take hold
7 S ft S i is t ti t t k h ld
8. Industry & application specific solutions are becoming
important
9. Focus has shifted from Tier 1 to Tier 2 & 3 (SMBs)
10. Governance, Risk & Compliance are driving customer
investments
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11. PLM & Engineering Software Business Trends
1. Focus has shifted to Collaborative Product Lifecycle
Management (PLM) from product design & engineering
2. Engineering & Design Platforms have emerged
3. Digital Manufacturing is on the horizon encompassing:
• S
Seamless i
l integration of process & product d i
i f d design
• Rapid design validation using simulation tools
• Virtual Commissioning of all shop floor equipment
4. PLM is ready to go main stream in CPG, Food & Life
Science industries
5. Independents are now competing head-on with the
5 I d d t ti h d ith th
Enterprise Software suppliers for PLM solutions
6. Product innovation is driving customer investments
7. Companies are increasingly outsourcing product design &
engineering services due to lack of internal resources
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12. Today IT & Automation Offers Excellent ROI
Yesterday:
Cheap E
Ch Energy Expensive IT
E i
Cheap Raw Materials Expensive Automation
Free Emissions $$
Available Talent Pool
$
TODAY:
Expensive Energy Cheap IT
Expensive Raw Materials Cheaper Automation
Expensive Emissions $$
Limited Talent Pool
$
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13. Ten Ideas to Cut Costs
1. Negotiate Better Relationships with Suppliers
2 Adopt Technology Platforms to simplify architecture
2.
3. Standardize across all plants as much as you can
4. Use Wireless Field Devices
5. Use Virtual Servers for Software Applications
6. Use Virtual Commissioning for new projects
7. Improve Asset Life Cycle Performance with better
Asset Information Management (Virtual Plant)
8. Outsource Non-Core Operations
8 O t N C O ti
9. Upgrade High Maintenance Legacy Systems
10 Benchmark for Continuous Improvement
10.
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14. Current Business Environment is Creating
Opportunities for US Manufacturers
World Economic Forum now Ranks US #1 in terms of
Global Competitive Index
p
Political leaders are motivated to create more
manufacturing jobs through infrastructure spending
US companies have superior supply chain & logistics
management capabilities
Most companies are no longer planning to move
production to China or other low cost countries
Many companies are planning investment in new plants
here in the US or Mexico
Newer technologies such as PLM & Vi t l Plant can help
N t h l i h Virtual Pl t h l
manufacturing companies become more competitive
US innovation machine is at work creating lower cost
products & processes
d
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15. Thank You
For more information, contact the author at
achatha@arcweb.com or visit our website at
www.arcweb.com
www arcweb com
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