Market outlook: Cloud computing may boost chems

21 April 2014 00:00 Source:ICIS Chemical Business

The rapid development of innovative technologies such as cloud computing, big data and analytics has dramatically changed some industries. The chemicals industry has been slow to initiate such changes, but they are taking place now, and at high speed. Technology-driven change is under way at many companies, transforming the way chemicals companies do everything, from routine activities such as processing invoices to key strategic initiatives such as opening new markets, improving the customer experience and optimising the utilization of major assets.

 

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The chemicals industry now generates vast quantities of data

Data – vast quantities of structured and unstructured data from internal and external sources – is at the core of this transformation. Chemical operations have always produced large amounts of data; the question has been what to do with it, that is, how to control, organize and analyse it to create useful and actionable insights. As data proliferates from sources ranging from online sensors to biometrics to social media, the business case for cloud computing becomes more and more compelling. An integrated approach combining cloud, big data, and analytics along with complementary technologies such as mobile and social media can deliver significant benefits to chemicals companies seeking both to control costs and to exploit new opportunities.

At a basic level, cloud adaptation can speed up and enhance process improvements. Many processes in the chemicals business – such as human resources, performance management, and compensation – are fragmented and scattered across different regions. Moving to the cloud can help break down these geographic barriers through consolidation and standardization.

At a more sophisticated level, the cloud can deliver specific benefits in a number of other key areas.

First, it can help relieve pressure on chemicals companies’ supply chains, which have become progressively more diverse, complex and distributed in recent decades. The cloud enables these companies to integrate and centralize their logistical data across the entire distribution and delivery system and to share this information with suppliers and customers. This takes supply chain collaboration to a whole new level, while eliminating the need for costly custom programmes linking the company with each individual supplier.

CLOUD CREATES CONSISTENCY

Second, cloud computing supports real-time, remote, predictive and mobile asset monitoring and maintenance capabilities. Chemicals companies’ major production facilities and pipeline systems run 24/7, and maintenance and upgrade shutdowns are planned years in advance. The disruption and cost of even a short unplanned shutdown can be disastrous, especially in the current environment, where margins are under pressure and customers demand just-in-time deliveries.

Remote and/or mobile monitoring sensors can help companies track and analyze the ­status of the thousands of pieces of equipment within a chemical plant in real-time. The data can be combined with other information, such as weather and geological conditions, to create a flow of information relating to asset health and risks. By using predictive analytics, the company can isolate and identify patterns that provide an early warning of likely failures, and can then act to anticipate and address such failures. The cost of in-house analytic systems with sufficient scale to analyse the volume of information flowing from sensors would be prohibitive for most companies; cloud technology provides the only realistic option. This will become even more critical as remote-controlled drones come into general use for asset surveillance.

Third, as powerful analytics, massive data storage and processing capabilities become essential to establishing and maintaining competitive advantage, the costs of processing and analysing big data will become too great for any single company to bear on its own. We anticipate that common industry utilities based on “community cloud” models will emerge to handle these activities, sharing costs on a flexible, pay-per-use basis. Rather than paying for licensed ERP platforms that run on internal data centres and managed by in-house IT departments, companies are more likely to reduce costs and boost agility by switching to shared industry cloud platforms. This, in turn, would free up funds for investment in growth and innovation in products, operations and business models.

Manish Panjwani Accenture

“Companies will develop hybrids involving in-house solutions and public clouds”

Manish Panjwani
Accenture

And finally, as is the case with many other industries, chemicals companies are facing the loss of older skilled workers to retirement at a time when it is hard to find qualified and motivated new employees. Cloud platforms powered by mobile and data analytics can help chemicals companies capture, share and transfer skills and knowledge systematically throughout the workforce. For example, cloud-enabled two-way video links on mobile devices could allow an expert to inspect and suggest actions to correct malfunctioning equipment in real time, anywhere on the planet.

Clearly, moving to the cloud can provide numerous operational benefits for chemical companies. Most large companies, however, are unlikely to migrate all of their data, applications and systems to the cloud. Some in-house applications and data may be too expensive to migrate to the cloud. Security concerns may keep other applications in-house.

Rather, companies will develop hybrid models involving in-house solutions, private clouds and other solutions relying upon public and/or community clouds. Getting this right will require a holistic look at the entire IT environment, making sure that the architecture, governance and tools are in place to leverage the benefits of the cloud. Increasingly, IT groups or external providers will find themselves playing the role of “services broker”, sourcing, managing, integrating, governing and coordinating internal and external cloud and non-cloud services. The potential benefits of this model include delivery of the appropriate applications solutions to the right users at the right time; stronger and more consistent governance and security management; and a reduction of the total cost of ownership.

SEEKING SUCCESSFUL PILOTS

The more a business can simplify its IT architecture and services, the better positioned it will be to realize the benefits of cloud computing. Rolling out pilot services to test the benefits of new cloud-enabled mobile and analytics platforms in specific segments or geographies can help companies experiment with cloud solutions at relatively low risk and cost. Successful pilots can be scaled up for global adoption.

The chemicals industry may have come late to cloud computing, but companies throughout the industry are now evaluating and adopting these solutions. And, since cloud lowers costs and barriers to entry, new and relatively unknown competitors are ­establishing cloud-enabled business models. Companies that fail to embrace and exploit cloud computing are likely to miss out on some of the most exciting opportunities for growth in a rapidly changing industry ­environment.

  • Manish Panjwani is managing director and head of Digital for Accenture’s Resources operating group in North America.
By Manish Panjwani