Selling S88

Benefits to OEMs

It’s interesting looking at S88 benefits from an OEM perspective. There are many overlapping benefits with end users, but the level of importance may vary from benefit to benefit. For solution providers, including OEMs, systems integrators (SIs), and other vendors, let’s focus on market share, customer satisfaction, and revenue.

First of all, get out of that rut

Please forgive us while we be a bit critical. We realize there are many innovative and progressive OEMs and other solution providers in industry, but our recent experience shows that most of you are stuck in a rut.

Putting it another way, despite technology available today, it is surprising that there are OEMs and SIs that continue to sell solutions

  • with obsolete control systems and design methods
  • that are uniquely designed for each customer
  • follow outdated project and revenue strategies

These technology and delivery laggards are being hounded by their old methods and designs.

Okay, enough of being critical. For those of you that we’re talking about (and you know who you are), we’re going to try to convince you to stop engineering the way you always have.

Engineering and automation can be your competitive edge. Anyone can sell a piece of equipment that makes widgets or packages something, or sell services to retrofit a control system. The engineering and automation tools that you use could allow you to deliver solutions quicker or cheaper or provide more flexibility in the final customer solution. Any of that will get you more business.

Market share

OEMs or SIs in demand are often limited by their own capacity to provide solutions. Here is how S88 can increase your capacity, either by allowing you to work on more projects simultaneously, or finishing projects quicker:

Now, let’s talk about the realities of these benefits. First, to experience all of the gain requires you to have many reusable modules already completed. Creating a module (again phase, equipment module, control module, HMI screen, etc.) is not outrageously expensive, but it isn’t free either. If you want to create an entire library of modules during one project, that first project can be pretty expensive and long. So, you need to create a module development strategy that includes creating a library over several projects.

That all said, you can realize benefits even during your first project, as there can be intra-project replication. Plus, it’s easier to add items or remove items from scope when using a modular approach. (A customer changing requirements in the middle of a project? No way?!? This doesn't really happen, does it?)

Next, most companies can replicate from project-to-project, but let’s face it folks: how many of you have programmers that replicate by copying/pasting code or HMI screens from a previous project? To get the maximum benefit will require a “master” set of modules in a library from which all projects can pull. The module may be created initially by a single project and then placed in the library. Then, it’s about discipline to keep using that module intact and not modifying it for every subsequent project.

Customer satisfaction

Customer satisfaction has a broad meaning, but let’s just say a satisfied customer feels very good about the value for the price paid for equipment or a solution. We’ll break this down into three areas:

Revenue

There is a tremendous upside to revenue growth using an S88 approach, but first, let’s talk about the realities of the investment needed:

Now that said, let’s talk about how your revenue strategy must change as well. First, your revenue-per-project will most certainly fall on the first few projects. This is caused by the higher investment needed to build your first set of modules and deliver your first set of modular solutions.

But more importantly, if your costing method focuses on engineering hours expended, then your revenue-per-project may fall permanently. (If you are spending less time designing and building due to replication, you have less hours to bill, right?)

To prevent this problem from occurring, you may need to change your costing (and bidding) process to one that is based on fixed-price. That way, you are balancing your internal costs with the profit you hope to achieve. Your price to the customer is then based on the value that your solution will provide. (And this should help you link more closely with customer satisfaction.) If you already use a fixed-price costing strategy, you may be just fine.

If you can absorb the investment and have a fixed-price costing strategy, here are the key reasons why your revenue will increase:

So, that’s our story (and we’re sticking to it). Don’t forget to read the next section on the human element, to learn more about people aspects of project challenges.