How to Get Executive Buy-In for Automation

Sometimes executives view automation as a black hole where money goes in, but no benefits ever come out. In the third in a four-part series on increasing the return on automation investments, we explore how to justify the investment to win over their support.

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The U.S. economy continues to grow despite challenges within certain industry segments and from beyond our borders, and yet it might be harder than ever to win a place in the capital budget for projects involving automation technology. That’s because executives who decide on expenditures are asking tougher questions and demanding proof that significant business returns will be delivered with every investment.

“We’re at an inflection point now,” says Frank deJong, vice president of global projects at Emerson Process Management. “The marketplace is asking for a step change in execution because they no longer have the margins to cover up cost and time overruns. There’s also been a step change in technology, people’s comfort with it, and new tools to make process improvements happen.”

Though executives can be very skeptical of the value of automation, they also know they need it to achieve their business goals. Engineers who can speak the language of business value are in a strong position to help guide their companies to a more profitable future.

System integrators and automation suppliers, which have years of experience working with the managers who make funding decisions, can be valuable sources of information and tools for engineers seeking the best way to make a case for an investment in automation.

Think Like An Accountant
“Automation applied correctly can add more value to the bottom line than any other business investment, but it requires talent that understands both the human rules of accounting and the physical laws that govern engineering,” says Peter G. Martin, vice president of business value consulting for Schneider Electric. “Unfortunately, many automation investments are made mostly to reduce the nuisance factor from existing systems, so a lot of automation is going in that’s not driving value. Its true financial impact on the business is also not widely understood.”

Martin thinks most people understand what the basic costs are for components and engineering, but few know what the benefits are. “Companies are focused on lowering project costs, which reduces automation to a commodity,” he says. “When you relegate automation to a benefit-less role, it’s no wonder that executives ask, ‘Why not just do a replacement?’”

Although accounting is the department that ultimately determines value at a company, a major challenge is that cost accounting systems can only measure the cost of a project. Since accounting looks at the plant as a whole, rather than on a unit basis, they also never know which unit is actually responsible for any benefits.

“To change that playing field, you have to evaluate the cost of an automation investment based on its economic value to the business,” Martin explains. “Then you have to do real-time accounting at the work-cell level, which lets you measure operator activity. By modeling accounting in the control system, using the same accounting rules like GAAP (generally accepted accounting principles), you can establish a baseline and store a history, which allows you to watch performance before and after each investment.”

It can take a change in mindset for engineers to embrace this idea, according to Martin, but many have begun the shift. “Engineers often go through their entire careers without being measured on their activities beyond whether they’ve completed a project on time and on budget,” he says. “They need to be on planning teams and at the executive level, talking about business value rather than [just] project schedules.”

Dashboards that relate production data to financial data can be powerful tools for both operators and managers. “Historically we’ve put things like cycle time on dashboards, but putting real-time financial and production information at their fingertips allows them to make better decisions,” says Randy Otto, vice president of business development for ECS Solutions, a member of the Control System Integrators Association (CSIA).

What’s your story?
As they say in the advertising business, what’s your elevator pitch? It’s the quick, compelling story of the value you can deliver, how you’ll do it and why it’s essential to the future of the business.

You have to capture the attention of executives who are often more comfortable living in the world of numbers than on the factory floor, then spell out your business case using charts, graphs and any other visuals needed to demonstrate your proposition.

To do that, you need to speak the language of business, which is focused on productivity improvement, higher revenues, lower cost structures, risk avoidance and opportunities for growth. That’s why projects designed to reduce downtime can often be as important in generating business value as those whose goal is process optimization.

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