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Stay hungry. Stay foolish.

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People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things. Steve Jobs – Apple Worldwide Developers’ Conference, 1997

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We are attending SLUSH and would love to meet you if you are attending. Please contact us so we can set up a meeting or use the Matchmaking tool on the SLUSH site.

Janne-Pekka.Karttunen, CEO
tel: +358 40 093 8267
janne-pekka.karttunen@distence.fi

OR

Timo Tammisto, Board Member
tel: +358 40 8383473
timo.tammisto@miston.fi

BLOG – Timo Tammisto

Continuing from where we finished in the first part, Decreasing Maintenance Costs, of this blog series on “Why should CFO’s in industrial companies be all over edge computing?”, in this part 2, I want to look at the benefits more from a holistic view by including both some balance sheet line items as well some indirect benefits.

Decreasing maintenance costs is a business case already big enough to get every CFO interested in edge computing and digitalization. This includes not only the industrial assets like rotating machines themselves, but also, and maybe above all, the processes that surround them. These processes, such as Maintenance and Operations or Asset Life Cycle Management, are seriously outdated and have fallen way behind similar processes in other industries where new technology has been used to disrupt old ways of doing things, for example vehicle fleet management or information technology, not to mention the consumer side where our entire lives rotate around various apps and platforms. According to Deloitte, poor maintenance strategies can reduce a plant’s overall productive capacity between 5 and 20%. Recent studies also show that unplanned downtime costs industrial manufacturers an estimated 50 B$ each year.

To see the impact of these new technologies, we can approach the benefits by looking simply at a Du Pont formula or the balance sheet and map the changes from moving to a remote condition monitoring system to the components of each formula. Naturally the impacted line items vary case by case, but at a high level some of these could include the following:

New sales and new business model opportunities from understanding how an asset is really being used, what condition it is in, when to offer service, training or other additional services and when consumables and/or parts that wear need attention – this translates into customer intimacy – having the tools to be truly close to the customer, in a true partnership. There are several examples of new revenue streams, ranging from new services, like training, to selling for example filters, not based on time but by how clogged they are.

Taking it one step further, by having this level of information, it is possible to introduce new business models, sell compressed air as a service, torque as a service and so on. These new business models are built on information, full transparency on the asset generating the service and both its cost- and revenue drivers. Not selling assets, but services, has implications on the balance sheet, cash flow and working capital to single out a few.

If the asset is maintained properly and not run to fault, how does this translate into financial numbers? In addition to the cost implications, outlined in the first part of this blog series, there are several direct areas of impact on the balance sheet. Longer asset life means less capital investments and higher ROA. It also means better resale or residual value. Longer asset life also translates into less interruption to the process as there are less installations of new assets. Higher utilization of assets and respectively higher uptime of the process are naturally the ultimate goal.

These are not just groundless promises. It is simple mathematics. The quality of the information, cost and results of implementing these systems can be easily quantified and verified. And have been, as mentioned in my previous blog on decreasing maintenance costs. The concept is straightforward and easy to understand. We can use our own healthcare as an analogy. Is it better for the body and mind as well as for the wallet to maintain a healthy body or to simply deal with it when sick, missing work and paying for expensive hospital time? With machine health, exactly the same principle of preventative maintenance applies. Only now, with edge-computing coupled with the cloud, the transparency has been taken to a totally new level at a radically lower cost.

From a financial perspective, choosing a condition monitoring system can be tricky – the solutions vary greatly in features and functions as well architecture. The more manual “components” the system and the process supporting it has, the more expensive it is. Using legacy components with less than optimal interfaces and firmware add cost and reduce scalability. The more interfaces there are, not only the more expensive it is, but the more expensive it will be to maintain, grow and add new functionality to. The more integrated it is from user interface (UI) to sensor, the better. Point-to-point systems, systems built around PLC’s and on-site fixed systems can deliver great local value, but they are not scalable – no economies of scale nor scope. The most agile systems can be commissioned in days and scale up without limits.

The new business models and architectures allow a fast and flexible way to implement new systems. When the data transfer relies on mobile technologies, there is no need to penetrate fire walls and integrate the system at the local level to the IT-infrastructure. The sensors can be often attached without stopping the process and due to the fully integrated architecture, commissioning is done in days. Standardized but agile solutions are scalable and can be used to monitor numerous types of assets simply by choosing the respective sensors accordingly.

The business model is simple. The smart units, edge-computing devices, have a unit price and the data transfer, user interface and analysis components are charged on a monthly subscription fee base. Naturally the entire system can be subscribed on a monthly fee as well, including hardware and the cloud offering. Easy to budget and easy to scale up.

Data collection with the intention to only process it further in the cloud will come back to haunt you. Sophisticated vibration monitoring tools, that are the basis for understanding machine health, generate giga bytes of data every day. Moving that amount of data around from numerous assets is prohibitively expensive but also unnecessary. Edge computing is a must here. Embedded algorithms that can be updated and modified from the cloud process the data at the edge, at the asset level, into smart data before transferring only a carefully chosen amount of smart data to the cloud. A scalable, fast-to-deploy, pay-as-you-grow architecture is key.

 

At the end of the day, it is the information you are interested in, not the infrastructure.

 

Below are some benefits from Part 1 as a refresher to think about, and to map back to the Balance Sheet and ROI calculations.

As a final thought, digitalization of assets with condition monitoring solutions is easy to pilot. A proof of concept, or POC, can easily demonstrate the financial impact of these new technologies. “Fire bullets, then cannonballs “, as Jim Collins put it. A worthwhile opportunity for all CFO’s to revamp the financials around industrial processes.

  1. Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
  2. Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
  3. Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
  4. Optimizing the performance and uptime of assets.
  5. Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
  6. Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
  7. Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
  8. Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
  9. Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
  10. Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
  11. Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

BLOG – Timo Tammisto

Part 1. – Decreasing Maintenance Costs

New technologies and tools such as digitalization open up radical and concrete new ways for industrial asset owners to totally revamp the financials around industrial assets. These new technologies give asset owners tools to affect both the balance sheet and the P&L with substantial benefits, be they OEM’s or Service and Maintenance Organizations.

In Part 1. of this blog series we will look at decreasing maintenance costs and in Part 2 take a look at a more holistic view.

Digitalization touches on financial elements on both sides of the Balance Sheet as well as both income- and cost sides on the P&L. The impact on the bottom line can be significant. Or, what would you say about payback times measured in the best case in days? Though we have witnessed these cases too at our portfolio company Distence, not all customer cases are that good, but I venture to say, under 12 months in most cases anyway.

We can look at the framework through a very basic but common example. Rotating machines, such as pumps, gears and motors are the basic components of many industrial processes. This is by no means a small asset category. There are an estimated 4 billion rotating machines in service globally with a market value of some €68 trillion. These processes be they energy production, oil and gas, food processing or any other, depend on these components to function. Should they fail, the process stops – and we all know, that is what really costs. In most cases there are tens if not hundreds of them in one single plant, so lots of potential failure points. In one case in Finland, one power plant that has some 20 units, pumps and motors, under constant online monitoring, prevented thanks to the monitoring and warning system the shutdown of the plant twice in one year, resulting in savings over €200.000. Now, if we take just the asset under scrutiny, a pump as an example, some 80-90% of the life cycle cost accumulate after the asset has been commissioned. Not only do these direct costs play a significant role in the LCC but as the life of these assets is very long, 20-30 years, any inefficiencies in any of the cost components compound. Maintenance, spare parts, downtime, energy etc. account for the bulk of the cost. The biggest component in maintenance is labor. Not only is labor expensive, the efficiency is low as well. How much of a workday goes to actual efficient maintenance work and how much into supporting processes? There is a lot that can be done.

On the cost side, some examples of reducing manual work significantly include

    • moving from on-site spot checks to online continuous metering and analysis
    • catching anomalies very early on with the help of 24/7 tools such as vibration measurement before they turn into   downtime for the process
    • optimizing spare parts inventories
    • eliminating driving time impacting both the carbon footprint as well as labor hours
    • turning scheduled maintenance to need based maintenance

Maintenance today is mostly manual, performed by service technicians on site or by crews driving from site to site – spot checks, manual vibration metering, juggling spare parts, troubleshooting. Most of the time of a technician goes into driving to sites, organizing spare parts – anything but the actual fault analysis.

…with modern tools we get another critical asset on our side

– TIME –

time to plan

According to a study by Distence, assuming that a maintenance engineer uses 30% of his or her time on knowledge-based analysis, leaving the other 70% to collecting samples and general tasks, and of all the monitored machines only 10% are found faulty and require action such as repair, we can deduce that only 4.8 hours (3%) of an engineer’s time is actually effective. This operation has not been disrupted for decades. The 80-90% portion of the life cycle cost can be reduced by 60% with new tools and the engineers effective time increased multifold respectively. Reliability of assets can be increased significantly by moving to online monitoring and predictive maintenance. Not only can we save on direct costs, but with modern tools we get another critical asset on our side – TIME – time to plan. Furthermore, we get knowledge, continuous flow of information, material to learn from, understanding of the customer or user of the asset and subsequently a longer asset life. The technician can focus on value adding tasks and leave the data collection to the system. AI, machine learning tools, algorithms process the data and offer deep analysis on the health of the machine automatically, and in the very near future even suggest solutions. All this at a comparable cost of a few visits from a maintenance crew to a site some 30km away.

Cutting costs by rolling out new ways of condition monitoring is easy and fast with new cloud-based solutions that are integrated closely with edge computing smart terminals and sensors and are purpose built. New solutions can be commissioned in days – that’s how close the CFO’s dream is from coming true.

Here are some benefits to think about and to map back to the P&L

1.     Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
2.     Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
3.     Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
4.     Utilization. Optimizing the performance and uptime of assets.
5.     Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
6.     Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
7.     Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
8.     Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
9.     Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
10.  Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
11.  Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

In the next blog, I will discuss a somewhat more holistic view and benefits that go beyond cost cutting.

The author is an investor and Board Member at Distence Oy

Distence and SKS have evidence the industrial IoT is moving from hype to action. Distence’s Condence product helps industrial machine builders and operation and maintenance organizations digitalize their products and services. SKS is  a well recognized innovative solution provider among these industrial players. Together, with this partnership, Distence and SKS believe to be able to serve the market better, offer new disruptive value to the market, and increase the attractiveness of both companies.

Creating a competitive offering
The challenge of transforming from machine builder to industrial IoT provider is great. The modern way of tackling this challenge is to partner up with the best players on the market. Combining the best players is at the core of the partnership with SKS and Distence. SKS is an established player on the market with in-depth know-how on industrial automation and existing machinery. Distence has more than 15 years of experience from connected machines and Industrial IoT. Together these strengths can be extremely beneficial for Finnish machine builders.

Global market and global challenges
The global market today demands global scalability. This can now be achieved with easy access to cutting edge productized technology and without lengthy and costly R&D projects. Distence Condence technology is already in use worldwide. Taking the standard Condence platform and “start-up kit” from SKS, it is incredibly fast to get to the market and start benefitting from smart data and 24/7 visibility to assets globally.

“We believe that SKS will be a great partner for us and by combining our complementing areas of expertise, we can bring new tools to our end customers to gain radically longer asset life and better efficiency. SKS has an excellent understanding of the market and applications. Distence is delighted to partner up with SKS.” Says Janne-Pekka Karttunen, CEO, Distence Oy

”Condition monitoring, telemetry and remote diagnostics is not only increasingly helping machine builders and their customers, but it is also a necessity for staying ahead in the market. For us, Distence is the perfect partner with their proven and best in class Condence platform. When combined with our long expertise in providing products and solutions to machine builders, we can now help our customers to succeed in their smart data plans as well.” Notes Jussi Sirpoma, Managing director, SKS Control Oy

Read more about SKS Control Oy

Root cause failure analysis was performed on paper machine rolls, resulting in an find that in almost 90% of the cases, the root cause of the failure was actually water that had gotten inside the roll.

The water inside the roll will over time lead to corrosion or reduce grease lubrication properties which will damage the bearings and eventually cause a failure.

How does the water get inside the roll? In many cases as a result of unintentional behavior or mistakes from the users. The users might not add sealing grease or uses high-pressure washer to the roll ends. Water can also merely condense as the process is changed.

After introducing the Smartbow application (Powered by Condence), users are now notified on potentially dangerous use or practices, making them visible, and thus preventive actions can be taken.

As a result, Rolls are more reliable, last longer, and if plants return these to the manufacturer before failure, they can be reused.

With monitoring, and as a result, avoiding moisture issues, there is evidence of extending the lifetime of rolls from 40% up to 200%. Naturally, the wide range is due to the environment of the installation. In all cases, however, the solution changes the return of investment significantly.

Without a proper monitoring solution, a plant is risking an unexpected failure and unplanned downtime, that might lead to repair times as long as a full shift and losses from lost production in the range of €250.000 – €350.000; not to forget the cost of a spare roll, that should be available on-site just in case.

After installing Smartbow, it is easier to manage the lifetime use and remaining lifetime. As a result, it is now possible to refurbish the rolls, as they are still functional at the time of replacement. Once these are returned to the original manufacturer, only wear-parts need to be changed at a cost of only 30% compared to a fully new one. This leads also to an estimated 70% lower carbon footprint in the 2nd round of use.

·       200% extension to lifetime
·       Reuse saves 70% of costs and reduces the carbon footprint
·       €300k savings from unplanned downtime

Read more: https://finbow.fi/en/roll-innovations

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Single line blockquote:

Stay hungry. Stay foolish.

Multi line blockquote with a cite reference:

People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things. Steve Jobs – Apple Worldwide Developers’ Conference, 1997

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HTML Tags

These supported tags come from the WordPress.com code FAQ.

Address Tag

1 Infinite Loop
Cupertino, CA 95014
United States

Anchor Tag (aka. Link)

This is an example of a link.

Abbreviation Tag

The abbreviation srsly stands for “seriously”.

Acronym Tag (deprecated in HTML5)

The acronym ftw stands for “for the win”.

Big Tag (deprecated in HTML5)

These tests are a big deal, but this tag is no longer supported in HTML5.

Cite Tag

“Code is poetry.” —Automattic

Code Tag

You will learn later on in these tests that word-wrap: break-word; will be your best friend.

Delete Tag

This tag will let you strikeout text, but this tag is no longer supported in HTML5 (use the <strike> instead).

Emphasize Tag

The emphasize tag should italicize text.

Insert Tag

This tag should denote inserted text.

Keyboard Tag

This scarsly known tag emulates keyboard text, which is usually styled like the <code> tag.

Preformatted Tag

This tag styles large blocks of code.

.post-title {
	margin: 0 0 5px;
	font-weight: bold;
	font-size: 38px;
	line-height: 1.2;
	and here's a line of some really, really, really, really long text, just to see how the PRE tag handles it and to find out how it overflows;
}

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Developers, developers, developers… –Steve Ballmer

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Getting our science styling on with H2O, which should push the “2” down.

Superscript Tag

Still sticking with science and Isaac Newton’s E = MC2, which should lift the 2 up.

We are attending SLUSH and would love to meet you if you are attending. Please contact us so we can set up a meeting or use the Matchmaking tool on the SLUSH site.

Janne-Pekka.Karttunen, CEO
tel: +358 40 093 8267
janne-pekka.karttunen@distence.fi

OR

Timo Tammisto, Board Member
tel: +358 40 8383473
timo.tammisto@miston.fi

BLOG – Timo Tammisto

Continuing from where we finished in the first part, Decreasing Maintenance Costs, of this blog series on “Why should CFO’s in industrial companies be all over edge computing?”, in this part 2, I want to look at the benefits more from a holistic view by including both some balance sheet line items as well some indirect benefits.

Decreasing maintenance costs is a business case already big enough to get every CFO interested in edge computing and digitalization. This includes not only the industrial assets like rotating machines themselves, but also, and maybe above all, the processes that surround them. These processes, such as Maintenance and Operations or Asset Life Cycle Management, are seriously outdated and have fallen way behind similar processes in other industries where new technology has been used to disrupt old ways of doing things, for example vehicle fleet management or information technology, not to mention the consumer side where our entire lives rotate around various apps and platforms. According to Deloitte, poor maintenance strategies can reduce a plant’s overall productive capacity between 5 and 20%. Recent studies also show that unplanned downtime costs industrial manufacturers an estimated 50 B$ each year.

To see the impact of these new technologies, we can approach the benefits by looking simply at a Du Pont formula or the balance sheet and map the changes from moving to a remote condition monitoring system to the components of each formula. Naturally the impacted line items vary case by case, but at a high level some of these could include the following:

New sales and new business model opportunities from understanding how an asset is really being used, what condition it is in, when to offer service, training or other additional services and when consumables and/or parts that wear need attention – this translates into customer intimacy – having the tools to be truly close to the customer, in a true partnership. There are several examples of new revenue streams, ranging from new services, like training, to selling for example filters, not based on time but by how clogged they are.

Taking it one step further, by having this level of information, it is possible to introduce new business models, sell compressed air as a service, torque as a service and so on. These new business models are built on information, full transparency on the asset generating the service and both its cost- and revenue drivers. Not selling assets, but services, has implications on the balance sheet, cash flow and working capital to single out a few.

If the asset is maintained properly and not run to fault, how does this translate into financial numbers? In addition to the cost implications, outlined in the first part of this blog series, there are several direct areas of impact on the balance sheet. Longer asset life means less capital investments and higher ROA. It also means better resale or residual value. Longer asset life also translates into less interruption to the process as there are less installations of new assets. Higher utilization of assets and respectively higher uptime of the process are naturally the ultimate goal.

These are not just groundless promises. It is simple mathematics. The quality of the information, cost and results of implementing these systems can be easily quantified and verified. And have been, as mentioned in my previous blog on decreasing maintenance costs. The concept is straightforward and easy to understand. We can use our own healthcare as an analogy. Is it better for the body and mind as well as for the wallet to maintain a healthy body or to simply deal with it when sick, missing work and paying for expensive hospital time? With machine health, exactly the same principle of preventative maintenance applies. Only now, with edge-computing coupled with the cloud, the transparency has been taken to a totally new level at a radically lower cost.

From a financial perspective, choosing a condition monitoring system can be tricky – the solutions vary greatly in features and functions as well architecture. The more manual “components” the system and the process supporting it has, the more expensive it is. Using legacy components with less than optimal interfaces and firmware add cost and reduce scalability. The more interfaces there are, not only the more expensive it is, but the more expensive it will be to maintain, grow and add new functionality to. The more integrated it is from user interface (UI) to sensor, the better. Point-to-point systems, systems built around PLC’s and on-site fixed systems can deliver great local value, but they are not scalable – no economies of scale nor scope. The most agile systems can be commissioned in days and scale up without limits.

The new business models and architectures allow a fast and flexible way to implement new systems. When the data transfer relies on mobile technologies, there is no need to penetrate fire walls and integrate the system at the local level to the IT-infrastructure. The sensors can be often attached without stopping the process and due to the fully integrated architecture, commissioning is done in days. Standardized but agile solutions are scalable and can be used to monitor numerous types of assets simply by choosing the respective sensors accordingly.

The business model is simple. The smart units, edge-computing devices, have a unit price and the data transfer, user interface and analysis components are charged on a monthly subscription fee base. Naturally the entire system can be subscribed on a monthly fee as well, including hardware and the cloud offering. Easy to budget and easy to scale up.

Data collection with the intention to only process it further in the cloud will come back to haunt you. Sophisticated vibration monitoring tools, that are the basis for understanding machine health, generate giga bytes of data every day. Moving that amount of data around from numerous assets is prohibitively expensive but also unnecessary. Edge computing is a must here. Embedded algorithms that can be updated and modified from the cloud process the data at the edge, at the asset level, into smart data before transferring only a carefully chosen amount of smart data to the cloud. A scalable, fast-to-deploy, pay-as-you-grow architecture is key.

 

At the end of the day, it is the information you are interested in, not the infrastructure.

 

Below are some benefits from Part 1 as a refresher to think about, and to map back to the Balance Sheet and ROI calculations.

As a final thought, digitalization of assets with condition monitoring solutions is easy to pilot. A proof of concept, or POC, can easily demonstrate the financial impact of these new technologies. “Fire bullets, then cannonballs “, as Jim Collins put it. A worthwhile opportunity for all CFO’s to revamp the financials around industrial processes.

  1. Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
  2. Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
  3. Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
  4. Optimizing the performance and uptime of assets.
  5. Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
  6. Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
  7. Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
  8. Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
  9. Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
  10. Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
  11. Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

BLOG – Timo Tammisto

Part 1. – Decreasing Maintenance Costs

New technologies and tools such as digitalization open up radical and concrete new ways for industrial asset owners to totally revamp the financials around industrial assets. These new technologies give asset owners tools to affect both the balance sheet and the P&L with substantial benefits, be they OEM’s or Service and Maintenance Organizations.

In Part 1. of this blog series we will look at decreasing maintenance costs and in Part 2 take a look at a more holistic view.

Digitalization touches on financial elements on both sides of the Balance Sheet as well as both income- and cost sides on the P&L. The impact on the bottom line can be significant. Or, what would you say about payback times measured in the best case in days? Though we have witnessed these cases too at our portfolio company Distence, not all customer cases are that good, but I venture to say, under 12 months in most cases anyway.

We can look at the framework through a very basic but common example. Rotating machines, such as pumps, gears and motors are the basic components of many industrial processes. This is by no means a small asset category. There are an estimated 4 billion rotating machines in service globally with a market value of some €68 trillion. These processes be they energy production, oil and gas, food processing or any other, depend on these components to function. Should they fail, the process stops – and we all know, that is what really costs. In most cases there are tens if not hundreds of them in one single plant, so lots of potential failure points. In one case in Finland, one power plant that has some 20 units, pumps and motors, under constant online monitoring, prevented thanks to the monitoring and warning system the shutdown of the plant twice in one year, resulting in savings over €200.000. Now, if we take just the asset under scrutiny, a pump as an example, some 80-90% of the life cycle cost accumulate after the asset has been commissioned. Not only do these direct costs play a significant role in the LCC but as the life of these assets is very long, 20-30 years, any inefficiencies in any of the cost components compound. Maintenance, spare parts, downtime, energy etc. account for the bulk of the cost. The biggest component in maintenance is labor. Not only is labor expensive, the efficiency is low as well. How much of a workday goes to actual efficient maintenance work and how much into supporting processes? There is a lot that can be done.

On the cost side, some examples of reducing manual work significantly include

    • moving from on-site spot checks to online continuous metering and analysis
    • catching anomalies very early on with the help of 24/7 tools such as vibration measurement before they turn into   downtime for the process
    • optimizing spare parts inventories
    • eliminating driving time impacting both the carbon footprint as well as labor hours
    • turning scheduled maintenance to need based maintenance

Maintenance today is mostly manual, performed by service technicians on site or by crews driving from site to site – spot checks, manual vibration metering, juggling spare parts, troubleshooting. Most of the time of a technician goes into driving to sites, organizing spare parts – anything but the actual fault analysis.

…with modern tools we get another critical asset on our side

– TIME –

time to plan

According to a study by Distence, assuming that a maintenance engineer uses 30% of his or her time on knowledge-based analysis, leaving the other 70% to collecting samples and general tasks, and of all the monitored machines only 10% are found faulty and require action such as repair, we can deduce that only 4.8 hours (3%) of an engineer’s time is actually effective. This operation has not been disrupted for decades. The 80-90% portion of the life cycle cost can be reduced by 60% with new tools and the engineers effective time increased multifold respectively. Reliability of assets can be increased significantly by moving to online monitoring and predictive maintenance. Not only can we save on direct costs, but with modern tools we get another critical asset on our side – TIME – time to plan. Furthermore, we get knowledge, continuous flow of information, material to learn from, understanding of the customer or user of the asset and subsequently a longer asset life. The technician can focus on value adding tasks and leave the data collection to the system. AI, machine learning tools, algorithms process the data and offer deep analysis on the health of the machine automatically, and in the very near future even suggest solutions. All this at a comparable cost of a few visits from a maintenance crew to a site some 30km away.

Cutting costs by rolling out new ways of condition monitoring is easy and fast with new cloud-based solutions that are integrated closely with edge computing smart terminals and sensors and are purpose built. New solutions can be commissioned in days – that’s how close the CFO’s dream is from coming true.

Here are some benefits to think about and to map back to the P&L

1.     Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
2.     Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
3.     Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
4.     Utilization. Optimizing the performance and uptime of assets.
5.     Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
6.     Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
7.     Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
8.     Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
9.     Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
10.  Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
11.  Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

In the next blog, I will discuss a somewhat more holistic view and benefits that go beyond cost cutting.

The author is an investor and Board Member at Distence Oy

Distence and SKS have evidence the industrial IoT is moving from hype to action. Distence’s Condence product helps industrial machine builders and operation and maintenance organizations digitalize their products and services. SKS is  a well recognized innovative solution provider among these industrial players. Together, with this partnership, Distence and SKS believe to be able to serve the market better, offer new disruptive value to the market, and increase the attractiveness of both companies.

Creating a competitive offering
The challenge of transforming from machine builder to industrial IoT provider is great. The modern way of tackling this challenge is to partner up with the best players on the market. Combining the best players is at the core of the partnership with SKS and Distence. SKS is an established player on the market with in-depth know-how on industrial automation and existing machinery. Distence has more than 15 years of experience from connected machines and Industrial IoT. Together these strengths can be extremely beneficial for Finnish machine builders.

Global market and global challenges
The global market today demands global scalability. This can now be achieved with easy access to cutting edge productized technology and without lengthy and costly R&D projects. Distence Condence technology is already in use worldwide. Taking the standard Condence platform and “start-up kit” from SKS, it is incredibly fast to get to the market and start benefitting from smart data and 24/7 visibility to assets globally.

“We believe that SKS will be a great partner for us and by combining our complementing areas of expertise, we can bring new tools to our end customers to gain radically longer asset life and better efficiency. SKS has an excellent understanding of the market and applications. Distence is delighted to partner up with SKS.” Says Janne-Pekka Karttunen, CEO, Distence Oy

”Condition monitoring, telemetry and remote diagnostics is not only increasingly helping machine builders and their customers, but it is also a necessity for staying ahead in the market. For us, Distence is the perfect partner with their proven and best in class Condence platform. When combined with our long expertise in providing products and solutions to machine builders, we can now help our customers to succeed in their smart data plans as well.” Notes Jussi Sirpoma, Managing director, SKS Control Oy

Read more about SKS Control Oy

Root cause failure analysis was performed on paper machine rolls, resulting in an find that in almost 90% of the cases, the root cause of the failure was actually water that had gotten inside the roll.

The water inside the roll will over time lead to corrosion or reduce grease lubrication properties which will damage the bearings and eventually cause a failure.

How does the water get inside the roll? In many cases as a result of unintentional behavior or mistakes from the users. The users might not add sealing grease or uses high-pressure washer to the roll ends. Water can also merely condense as the process is changed.

After introducing the Smartbow application (Powered by Condence), users are now notified on potentially dangerous use or practices, making them visible, and thus preventive actions can be taken.

As a result, Rolls are more reliable, last longer, and if plants return these to the manufacturer before failure, they can be reused.

With monitoring, and as a result, avoiding moisture issues, there is evidence of extending the lifetime of rolls from 40% up to 200%. Naturally, the wide range is due to the environment of the installation. In all cases, however, the solution changes the return of investment significantly.

Without a proper monitoring solution, a plant is risking an unexpected failure and unplanned downtime, that might lead to repair times as long as a full shift and losses from lost production in the range of €250.000 – €350.000; not to forget the cost of a spare roll, that should be available on-site just in case.

After installing Smartbow, it is easier to manage the lifetime use and remaining lifetime. As a result, it is now possible to refurbish the rolls, as they are still functional at the time of replacement. Once these are returned to the original manufacturer, only wear-parts need to be changed at a cost of only 30% compared to a fully new one. This leads also to an estimated 70% lower carbon footprint in the 2nd round of use.

·       200% extension to lifetime
·       Reuse saves 70% of costs and reduces the carbon footprint
·       €300k savings from unplanned downtime

Read more: https://finbow.fi/en/roll-innovations

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People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things. Steve Jobs – Apple Worldwide Developers’ Conference, 1997

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We are attending SLUSH and would love to meet you if you are attending. Please contact us so we can set up a meeting or use the Matchmaking tool on the SLUSH site.

Janne-Pekka.Karttunen, CEO
tel: +358 40 093 8267
janne-pekka.karttunen@distence.fi

OR

Timo Tammisto, Board Member
tel: +358 40 8383473
timo.tammisto@miston.fi

BLOG – Timo Tammisto

Continuing from where we finished in the first part, Decreasing Maintenance Costs, of this blog series on “Why should CFO’s in industrial companies be all over edge computing?”, in this part 2, I want to look at the benefits more from a holistic view by including both some balance sheet line items as well some indirect benefits.

Decreasing maintenance costs is a business case already big enough to get every CFO interested in edge computing and digitalization. This includes not only the industrial assets like rotating machines themselves, but also, and maybe above all, the processes that surround them. These processes, such as Maintenance and Operations or Asset Life Cycle Management, are seriously outdated and have fallen way behind similar processes in other industries where new technology has been used to disrupt old ways of doing things, for example vehicle fleet management or information technology, not to mention the consumer side where our entire lives rotate around various apps and platforms. According to Deloitte, poor maintenance strategies can reduce a plant’s overall productive capacity between 5 and 20%. Recent studies also show that unplanned downtime costs industrial manufacturers an estimated 50 B$ each year.

To see the impact of these new technologies, we can approach the benefits by looking simply at a Du Pont formula or the balance sheet and map the changes from moving to a remote condition monitoring system to the components of each formula. Naturally the impacted line items vary case by case, but at a high level some of these could include the following:

New sales and new business model opportunities from understanding how an asset is really being used, what condition it is in, when to offer service, training or other additional services and when consumables and/or parts that wear need attention – this translates into customer intimacy – having the tools to be truly close to the customer, in a true partnership. There are several examples of new revenue streams, ranging from new services, like training, to selling for example filters, not based on time but by how clogged they are.

Taking it one step further, by having this level of information, it is possible to introduce new business models, sell compressed air as a service, torque as a service and so on. These new business models are built on information, full transparency on the asset generating the service and both its cost- and revenue drivers. Not selling assets, but services, has implications on the balance sheet, cash flow and working capital to single out a few.

If the asset is maintained properly and not run to fault, how does this translate into financial numbers? In addition to the cost implications, outlined in the first part of this blog series, there are several direct areas of impact on the balance sheet. Longer asset life means less capital investments and higher ROA. It also means better resale or residual value. Longer asset life also translates into less interruption to the process as there are less installations of new assets. Higher utilization of assets and respectively higher uptime of the process are naturally the ultimate goal.

These are not just groundless promises. It is simple mathematics. The quality of the information, cost and results of implementing these systems can be easily quantified and verified. And have been, as mentioned in my previous blog on decreasing maintenance costs. The concept is straightforward and easy to understand. We can use our own healthcare as an analogy. Is it better for the body and mind as well as for the wallet to maintain a healthy body or to simply deal with it when sick, missing work and paying for expensive hospital time? With machine health, exactly the same principle of preventative maintenance applies. Only now, with edge-computing coupled with the cloud, the transparency has been taken to a totally new level at a radically lower cost.

From a financial perspective, choosing a condition monitoring system can be tricky – the solutions vary greatly in features and functions as well architecture. The more manual “components” the system and the process supporting it has, the more expensive it is. Using legacy components with less than optimal interfaces and firmware add cost and reduce scalability. The more interfaces there are, not only the more expensive it is, but the more expensive it will be to maintain, grow and add new functionality to. The more integrated it is from user interface (UI) to sensor, the better. Point-to-point systems, systems built around PLC’s and on-site fixed systems can deliver great local value, but they are not scalable – no economies of scale nor scope. The most agile systems can be commissioned in days and scale up without limits.

The new business models and architectures allow a fast and flexible way to implement new systems. When the data transfer relies on mobile technologies, there is no need to penetrate fire walls and integrate the system at the local level to the IT-infrastructure. The sensors can be often attached without stopping the process and due to the fully integrated architecture, commissioning is done in days. Standardized but agile solutions are scalable and can be used to monitor numerous types of assets simply by choosing the respective sensors accordingly.

The business model is simple. The smart units, edge-computing devices, have a unit price and the data transfer, user interface and analysis components are charged on a monthly subscription fee base. Naturally the entire system can be subscribed on a monthly fee as well, including hardware and the cloud offering. Easy to budget and easy to scale up.

Data collection with the intention to only process it further in the cloud will come back to haunt you. Sophisticated vibration monitoring tools, that are the basis for understanding machine health, generate giga bytes of data every day. Moving that amount of data around from numerous assets is prohibitively expensive but also unnecessary. Edge computing is a must here. Embedded algorithms that can be updated and modified from the cloud process the data at the edge, at the asset level, into smart data before transferring only a carefully chosen amount of smart data to the cloud. A scalable, fast-to-deploy, pay-as-you-grow architecture is key.

 

At the end of the day, it is the information you are interested in, not the infrastructure.

 

Below are some benefits from Part 1 as a refresher to think about, and to map back to the Balance Sheet and ROI calculations.

As a final thought, digitalization of assets with condition monitoring solutions is easy to pilot. A proof of concept, or POC, can easily demonstrate the financial impact of these new technologies. “Fire bullets, then cannonballs “, as Jim Collins put it. A worthwhile opportunity for all CFO’s to revamp the financials around industrial processes.

  1. Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
  2. Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
  3. Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
  4. Optimizing the performance and uptime of assets.
  5. Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
  6. Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
  7. Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
  8. Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
  9. Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
  10. Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
  11. Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

BLOG – Timo Tammisto

Part 1. – Decreasing Maintenance Costs

New technologies and tools such as digitalization open up radical and concrete new ways for industrial asset owners to totally revamp the financials around industrial assets. These new technologies give asset owners tools to affect both the balance sheet and the P&L with substantial benefits, be they OEM’s or Service and Maintenance Organizations.

In Part 1. of this blog series we will look at decreasing maintenance costs and in Part 2 take a look at a more holistic view.

Digitalization touches on financial elements on both sides of the Balance Sheet as well as both income- and cost sides on the P&L. The impact on the bottom line can be significant. Or, what would you say about payback times measured in the best case in days? Though we have witnessed these cases too at our portfolio company Distence, not all customer cases are that good, but I venture to say, under 12 months in most cases anyway.

We can look at the framework through a very basic but common example. Rotating machines, such as pumps, gears and motors are the basic components of many industrial processes. This is by no means a small asset category. There are an estimated 4 billion rotating machines in service globally with a market value of some €68 trillion. These processes be they energy production, oil and gas, food processing or any other, depend on these components to function. Should they fail, the process stops – and we all know, that is what really costs. In most cases there are tens if not hundreds of them in one single plant, so lots of potential failure points. In one case in Finland, one power plant that has some 20 units, pumps and motors, under constant online monitoring, prevented thanks to the monitoring and warning system the shutdown of the plant twice in one year, resulting in savings over €200.000. Now, if we take just the asset under scrutiny, a pump as an example, some 80-90% of the life cycle cost accumulate after the asset has been commissioned. Not only do these direct costs play a significant role in the LCC but as the life of these assets is very long, 20-30 years, any inefficiencies in any of the cost components compound. Maintenance, spare parts, downtime, energy etc. account for the bulk of the cost. The biggest component in maintenance is labor. Not only is labor expensive, the efficiency is low as well. How much of a workday goes to actual efficient maintenance work and how much into supporting processes? There is a lot that can be done.

On the cost side, some examples of reducing manual work significantly include

    • moving from on-site spot checks to online continuous metering and analysis
    • catching anomalies very early on with the help of 24/7 tools such as vibration measurement before they turn into   downtime for the process
    • optimizing spare parts inventories
    • eliminating driving time impacting both the carbon footprint as well as labor hours
    • turning scheduled maintenance to need based maintenance

Maintenance today is mostly manual, performed by service technicians on site or by crews driving from site to site – spot checks, manual vibration metering, juggling spare parts, troubleshooting. Most of the time of a technician goes into driving to sites, organizing spare parts – anything but the actual fault analysis.

…with modern tools we get another critical asset on our side

– TIME –

time to plan

According to a study by Distence, assuming that a maintenance engineer uses 30% of his or her time on knowledge-based analysis, leaving the other 70% to collecting samples and general tasks, and of all the monitored machines only 10% are found faulty and require action such as repair, we can deduce that only 4.8 hours (3%) of an engineer’s time is actually effective. This operation has not been disrupted for decades. The 80-90% portion of the life cycle cost can be reduced by 60% with new tools and the engineers effective time increased multifold respectively. Reliability of assets can be increased significantly by moving to online monitoring and predictive maintenance. Not only can we save on direct costs, but with modern tools we get another critical asset on our side – TIME – time to plan. Furthermore, we get knowledge, continuous flow of information, material to learn from, understanding of the customer or user of the asset and subsequently a longer asset life. The technician can focus on value adding tasks and leave the data collection to the system. AI, machine learning tools, algorithms process the data and offer deep analysis on the health of the machine automatically, and in the very near future even suggest solutions. All this at a comparable cost of a few visits from a maintenance crew to a site some 30km away.

Cutting costs by rolling out new ways of condition monitoring is easy and fast with new cloud-based solutions that are integrated closely with edge computing smart terminals and sensors and are purpose built. New solutions can be commissioned in days – that’s how close the CFO’s dream is from coming true.

Here are some benefits to think about and to map back to the P&L

1.     Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
2.     Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
3.     Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
4.     Utilization. Optimizing the performance and uptime of assets.
5.     Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
6.     Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
7.     Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
8.     Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
9.     Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
10.  Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
11.  Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

In the next blog, I will discuss a somewhat more holistic view and benefits that go beyond cost cutting.

The author is an investor and Board Member at Distence Oy

Distence and SKS have evidence the industrial IoT is moving from hype to action. Distence’s Condence product helps industrial machine builders and operation and maintenance organizations digitalize their products and services. SKS is  a well recognized innovative solution provider among these industrial players. Together, with this partnership, Distence and SKS believe to be able to serve the market better, offer new disruptive value to the market, and increase the attractiveness of both companies.

Creating a competitive offering
The challenge of transforming from machine builder to industrial IoT provider is great. The modern way of tackling this challenge is to partner up with the best players on the market. Combining the best players is at the core of the partnership with SKS and Distence. SKS is an established player on the market with in-depth know-how on industrial automation and existing machinery. Distence has more than 15 years of experience from connected machines and Industrial IoT. Together these strengths can be extremely beneficial for Finnish machine builders.

Global market and global challenges
The global market today demands global scalability. This can now be achieved with easy access to cutting edge productized technology and without lengthy and costly R&D projects. Distence Condence technology is already in use worldwide. Taking the standard Condence platform and “start-up kit” from SKS, it is incredibly fast to get to the market and start benefitting from smart data and 24/7 visibility to assets globally.

“We believe that SKS will be a great partner for us and by combining our complementing areas of expertise, we can bring new tools to our end customers to gain radically longer asset life and better efficiency. SKS has an excellent understanding of the market and applications. Distence is delighted to partner up with SKS.” Says Janne-Pekka Karttunen, CEO, Distence Oy

”Condition monitoring, telemetry and remote diagnostics is not only increasingly helping machine builders and their customers, but it is also a necessity for staying ahead in the market. For us, Distence is the perfect partner with their proven and best in class Condence platform. When combined with our long expertise in providing products and solutions to machine builders, we can now help our customers to succeed in their smart data plans as well.” Notes Jussi Sirpoma, Managing director, SKS Control Oy

Read more about SKS Control Oy

Root cause failure analysis was performed on paper machine rolls, resulting in an find that in almost 90% of the cases, the root cause of the failure was actually water that had gotten inside the roll.

The water inside the roll will over time lead to corrosion or reduce grease lubrication properties which will damage the bearings and eventually cause a failure.

How does the water get inside the roll? In many cases as a result of unintentional behavior or mistakes from the users. The users might not add sealing grease or uses high-pressure washer to the roll ends. Water can also merely condense as the process is changed.

After introducing the Smartbow application (Powered by Condence), users are now notified on potentially dangerous use or practices, making them visible, and thus preventive actions can be taken.

As a result, Rolls are more reliable, last longer, and if plants return these to the manufacturer before failure, they can be reused.

With monitoring, and as a result, avoiding moisture issues, there is evidence of extending the lifetime of rolls from 40% up to 200%. Naturally, the wide range is due to the environment of the installation. In all cases, however, the solution changes the return of investment significantly.

Without a proper monitoring solution, a plant is risking an unexpected failure and unplanned downtime, that might lead to repair times as long as a full shift and losses from lost production in the range of €250.000 – €350.000; not to forget the cost of a spare roll, that should be available on-site just in case.

After installing Smartbow, it is easier to manage the lifetime use and remaining lifetime. As a result, it is now possible to refurbish the rolls, as they are still functional at the time of replacement. Once these are returned to the original manufacturer, only wear-parts need to be changed at a cost of only 30% compared to a fully new one. This leads also to an estimated 70% lower carbon footprint in the 2nd round of use.

·       200% extension to lifetime
·       Reuse saves 70% of costs and reduces the carbon footprint
·       €300k savings from unplanned downtime

Read more: https://finbow.fi/en/roll-innovations

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People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things. Steve Jobs – Apple Worldwide Developers’ Conference, 1997

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We are attending SLUSH and would love to meet you if you are attending. Please contact us so we can set up a meeting or use the Matchmaking tool on the SLUSH site.

Janne-Pekka.Karttunen, CEO
tel: +358 40 093 8267
janne-pekka.karttunen@distence.fi

OR

Timo Tammisto, Board Member
tel: +358 40 8383473
timo.tammisto@miston.fi

BLOG – Timo Tammisto

Continuing from where we finished in the first part, Decreasing Maintenance Costs, of this blog series on “Why should CFO’s in industrial companies be all over edge computing?”, in this part 2, I want to look at the benefits more from a holistic view by including both some balance sheet line items as well some indirect benefits.

Decreasing maintenance costs is a business case already big enough to get every CFO interested in edge computing and digitalization. This includes not only the industrial assets like rotating machines themselves, but also, and maybe above all, the processes that surround them. These processes, such as Maintenance and Operations or Asset Life Cycle Management, are seriously outdated and have fallen way behind similar processes in other industries where new technology has been used to disrupt old ways of doing things, for example vehicle fleet management or information technology, not to mention the consumer side where our entire lives rotate around various apps and platforms. According to Deloitte, poor maintenance strategies can reduce a plant’s overall productive capacity between 5 and 20%. Recent studies also show that unplanned downtime costs industrial manufacturers an estimated 50 B$ each year.

To see the impact of these new technologies, we can approach the benefits by looking simply at a Du Pont formula or the balance sheet and map the changes from moving to a remote condition monitoring system to the components of each formula. Naturally the impacted line items vary case by case, but at a high level some of these could include the following:

New sales and new business model opportunities from understanding how an asset is really being used, what condition it is in, when to offer service, training or other additional services and when consumables and/or parts that wear need attention – this translates into customer intimacy – having the tools to be truly close to the customer, in a true partnership. There are several examples of new revenue streams, ranging from new services, like training, to selling for example filters, not based on time but by how clogged they are.

Taking it one step further, by having this level of information, it is possible to introduce new business models, sell compressed air as a service, torque as a service and so on. These new business models are built on information, full transparency on the asset generating the service and both its cost- and revenue drivers. Not selling assets, but services, has implications on the balance sheet, cash flow and working capital to single out a few.

If the asset is maintained properly and not run to fault, how does this translate into financial numbers? In addition to the cost implications, outlined in the first part of this blog series, there are several direct areas of impact on the balance sheet. Longer asset life means less capital investments and higher ROA. It also means better resale or residual value. Longer asset life also translates into less interruption to the process as there are less installations of new assets. Higher utilization of assets and respectively higher uptime of the process are naturally the ultimate goal.

These are not just groundless promises. It is simple mathematics. The quality of the information, cost and results of implementing these systems can be easily quantified and verified. And have been, as mentioned in my previous blog on decreasing maintenance costs. The concept is straightforward and easy to understand. We can use our own healthcare as an analogy. Is it better for the body and mind as well as for the wallet to maintain a healthy body or to simply deal with it when sick, missing work and paying for expensive hospital time? With machine health, exactly the same principle of preventative maintenance applies. Only now, with edge-computing coupled with the cloud, the transparency has been taken to a totally new level at a radically lower cost.

From a financial perspective, choosing a condition monitoring system can be tricky – the solutions vary greatly in features and functions as well architecture. The more manual “components” the system and the process supporting it has, the more expensive it is. Using legacy components with less than optimal interfaces and firmware add cost and reduce scalability. The more interfaces there are, not only the more expensive it is, but the more expensive it will be to maintain, grow and add new functionality to. The more integrated it is from user interface (UI) to sensor, the better. Point-to-point systems, systems built around PLC’s and on-site fixed systems can deliver great local value, but they are not scalable – no economies of scale nor scope. The most agile systems can be commissioned in days and scale up without limits.

The new business models and architectures allow a fast and flexible way to implement new systems. When the data transfer relies on mobile technologies, there is no need to penetrate fire walls and integrate the system at the local level to the IT-infrastructure. The sensors can be often attached without stopping the process and due to the fully integrated architecture, commissioning is done in days. Standardized but agile solutions are scalable and can be used to monitor numerous types of assets simply by choosing the respective sensors accordingly.

The business model is simple. The smart units, edge-computing devices, have a unit price and the data transfer, user interface and analysis components are charged on a monthly subscription fee base. Naturally the entire system can be subscribed on a monthly fee as well, including hardware and the cloud offering. Easy to budget and easy to scale up.

Data collection with the intention to only process it further in the cloud will come back to haunt you. Sophisticated vibration monitoring tools, that are the basis for understanding machine health, generate giga bytes of data every day. Moving that amount of data around from numerous assets is prohibitively expensive but also unnecessary. Edge computing is a must here. Embedded algorithms that can be updated and modified from the cloud process the data at the edge, at the asset level, into smart data before transferring only a carefully chosen amount of smart data to the cloud. A scalable, fast-to-deploy, pay-as-you-grow architecture is key.

 

At the end of the day, it is the information you are interested in, not the infrastructure.

 

Below are some benefits from Part 1 as a refresher to think about, and to map back to the Balance Sheet and ROI calculations.

As a final thought, digitalization of assets with condition monitoring solutions is easy to pilot. A proof of concept, or POC, can easily demonstrate the financial impact of these new technologies. “Fire bullets, then cannonballs “, as Jim Collins put it. A worthwhile opportunity for all CFO’s to revamp the financials around industrial processes.

  1. Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
  2. Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
  3. Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
  4. Optimizing the performance and uptime of assets.
  5. Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
  6. Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
  7. Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
  8. Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
  9. Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
  10. Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
  11. Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

BLOG – Timo Tammisto

Part 1. – Decreasing Maintenance Costs

New technologies and tools such as digitalization open up radical and concrete new ways for industrial asset owners to totally revamp the financials around industrial assets. These new technologies give asset owners tools to affect both the balance sheet and the P&L with substantial benefits, be they OEM’s or Service and Maintenance Organizations.

In Part 1. of this blog series we will look at decreasing maintenance costs and in Part 2 take a look at a more holistic view.

Digitalization touches on financial elements on both sides of the Balance Sheet as well as both income- and cost sides on the P&L. The impact on the bottom line can be significant. Or, what would you say about payback times measured in the best case in days? Though we have witnessed these cases too at our portfolio company Distence, not all customer cases are that good, but I venture to say, under 12 months in most cases anyway.

We can look at the framework through a very basic but common example. Rotating machines, such as pumps, gears and motors are the basic components of many industrial processes. This is by no means a small asset category. There are an estimated 4 billion rotating machines in service globally with a market value of some €68 trillion. These processes be they energy production, oil and gas, food processing or any other, depend on these components to function. Should they fail, the process stops – and we all know, that is what really costs. In most cases there are tens if not hundreds of them in one single plant, so lots of potential failure points. In one case in Finland, one power plant that has some 20 units, pumps and motors, under constant online monitoring, prevented thanks to the monitoring and warning system the shutdown of the plant twice in one year, resulting in savings over €200.000. Now, if we take just the asset under scrutiny, a pump as an example, some 80-90% of the life cycle cost accumulate after the asset has been commissioned. Not only do these direct costs play a significant role in the LCC but as the life of these assets is very long, 20-30 years, any inefficiencies in any of the cost components compound. Maintenance, spare parts, downtime, energy etc. account for the bulk of the cost. The biggest component in maintenance is labor. Not only is labor expensive, the efficiency is low as well. How much of a workday goes to actual efficient maintenance work and how much into supporting processes? There is a lot that can be done.

On the cost side, some examples of reducing manual work significantly include

    • moving from on-site spot checks to online continuous metering and analysis
    • catching anomalies very early on with the help of 24/7 tools such as vibration measurement before they turn into   downtime for the process
    • optimizing spare parts inventories
    • eliminating driving time impacting both the carbon footprint as well as labor hours
    • turning scheduled maintenance to need based maintenance

Maintenance today is mostly manual, performed by service technicians on site or by crews driving from site to site – spot checks, manual vibration metering, juggling spare parts, troubleshooting. Most of the time of a technician goes into driving to sites, organizing spare parts – anything but the actual fault analysis.

…with modern tools we get another critical asset on our side

– TIME –

time to plan

According to a study by Distence, assuming that a maintenance engineer uses 30% of his or her time on knowledge-based analysis, leaving the other 70% to collecting samples and general tasks, and of all the monitored machines only 10% are found faulty and require action such as repair, we can deduce that only 4.8 hours (3%) of an engineer’s time is actually effective. This operation has not been disrupted for decades. The 80-90% portion of the life cycle cost can be reduced by 60% with new tools and the engineers effective time increased multifold respectively. Reliability of assets can be increased significantly by moving to online monitoring and predictive maintenance. Not only can we save on direct costs, but with modern tools we get another critical asset on our side – TIME – time to plan. Furthermore, we get knowledge, continuous flow of information, material to learn from, understanding of the customer or user of the asset and subsequently a longer asset life. The technician can focus on value adding tasks and leave the data collection to the system. AI, machine learning tools, algorithms process the data and offer deep analysis on the health of the machine automatically, and in the very near future even suggest solutions. All this at a comparable cost of a few visits from a maintenance crew to a site some 30km away.

Cutting costs by rolling out new ways of condition monitoring is easy and fast with new cloud-based solutions that are integrated closely with edge computing smart terminals and sensors and are purpose built. New solutions can be commissioned in days – that’s how close the CFO’s dream is from coming true.

Here are some benefits to think about and to map back to the P&L

1.     Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
2.     Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
3.     Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
4.     Utilization. Optimizing the performance and uptime of assets.
5.     Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
6.     Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
7.     Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
8.     Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
9.     Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
10.  Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
11.  Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

In the next blog, I will discuss a somewhat more holistic view and benefits that go beyond cost cutting.

The author is an investor and Board Member at Distence Oy

Distence and SKS have evidence the industrial IoT is moving from hype to action. Distence’s Condence product helps industrial machine builders and operation and maintenance organizations digitalize their products and services. SKS is  a well recognized innovative solution provider among these industrial players. Together, with this partnership, Distence and SKS believe to be able to serve the market better, offer new disruptive value to the market, and increase the attractiveness of both companies.

Creating a competitive offering
The challenge of transforming from machine builder to industrial IoT provider is great. The modern way of tackling this challenge is to partner up with the best players on the market. Combining the best players is at the core of the partnership with SKS and Distence. SKS is an established player on the market with in-depth know-how on industrial automation and existing machinery. Distence has more than 15 years of experience from connected machines and Industrial IoT. Together these strengths can be extremely beneficial for Finnish machine builders.

Global market and global challenges
The global market today demands global scalability. This can now be achieved with easy access to cutting edge productized technology and without lengthy and costly R&D projects. Distence Condence technology is already in use worldwide. Taking the standard Condence platform and “start-up kit” from SKS, it is incredibly fast to get to the market and start benefitting from smart data and 24/7 visibility to assets globally.

“We believe that SKS will be a great partner for us and by combining our complementing areas of expertise, we can bring new tools to our end customers to gain radically longer asset life and better efficiency. SKS has an excellent understanding of the market and applications. Distence is delighted to partner up with SKS.” Says Janne-Pekka Karttunen, CEO, Distence Oy

”Condition monitoring, telemetry and remote diagnostics is not only increasingly helping machine builders and their customers, but it is also a necessity for staying ahead in the market. For us, Distence is the perfect partner with their proven and best in class Condence platform. When combined with our long expertise in providing products and solutions to machine builders, we can now help our customers to succeed in their smart data plans as well.” Notes Jussi Sirpoma, Managing director, SKS Control Oy

Read more about SKS Control Oy

Root cause failure analysis was performed on paper machine rolls, resulting in an find that in almost 90% of the cases, the root cause of the failure was actually water that had gotten inside the roll.

The water inside the roll will over time lead to corrosion or reduce grease lubrication properties which will damage the bearings and eventually cause a failure.

How does the water get inside the roll? In many cases as a result of unintentional behavior or mistakes from the users. The users might not add sealing grease or uses high-pressure washer to the roll ends. Water can also merely condense as the process is changed.

After introducing the Smartbow application (Powered by Condence), users are now notified on potentially dangerous use or practices, making them visible, and thus preventive actions can be taken.

As a result, Rolls are more reliable, last longer, and if plants return these to the manufacturer before failure, they can be reused.

With monitoring, and as a result, avoiding moisture issues, there is evidence of extending the lifetime of rolls from 40% up to 200%. Naturally, the wide range is due to the environment of the installation. In all cases, however, the solution changes the return of investment significantly.

Without a proper monitoring solution, a plant is risking an unexpected failure and unplanned downtime, that might lead to repair times as long as a full shift and losses from lost production in the range of €250.000 – €350.000; not to forget the cost of a spare roll, that should be available on-site just in case.

After installing Smartbow, it is easier to manage the lifetime use and remaining lifetime. As a result, it is now possible to refurbish the rolls, as they are still functional at the time of replacement. Once these are returned to the original manufacturer, only wear-parts need to be changed at a cost of only 30% compared to a fully new one. This leads also to an estimated 70% lower carbon footprint in the 2nd round of use.

·       200% extension to lifetime
·       Reuse saves 70% of costs and reduces the carbon footprint
·       €300k savings from unplanned downtime

Read more: https://finbow.fi/en/roll-innovations

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Single line blockquote:

Stay hungry. Stay foolish.

Multi line blockquote with a cite reference:

People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things. Steve Jobs – Apple Worldwide Developers’ Conference, 1997

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1 Infinite Loop
Cupertino, CA 95014
United States

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The abbreviation srsly stands for “seriously”.

Acronym Tag (deprecated in HTML5)

The acronym ftw stands for “for the win”.

Big Tag (deprecated in HTML5)

These tests are a big deal, but this tag is no longer supported in HTML5.

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“Code is poetry.” —Automattic

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You will learn later on in these tests that word-wrap: break-word; will be your best friend.

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The emphasize tag should italicize text.

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This tag should denote inserted text.

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This tag styles large blocks of code.

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	margin: 0 0 5px;
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Still sticking with science and Isaac Newton’s E = MC2, which should lift the 2 up.

We are attending SLUSH and would love to meet you if you are attending. Please contact us so we can set up a meeting or use the Matchmaking tool on the SLUSH site.

Janne-Pekka.Karttunen, CEO
tel: +358 40 093 8267
janne-pekka.karttunen@distence.fi

OR

Timo Tammisto, Board Member
tel: +358 40 8383473
timo.tammisto@miston.fi

BLOG – Timo Tammisto

Continuing from where we finished in the first part, Decreasing Maintenance Costs, of this blog series on “Why should CFO’s in industrial companies be all over edge computing?”, in this part 2, I want to look at the benefits more from a holistic view by including both some balance sheet line items as well some indirect benefits.

Decreasing maintenance costs is a business case already big enough to get every CFO interested in edge computing and digitalization. This includes not only the industrial assets like rotating machines themselves, but also, and maybe above all, the processes that surround them. These processes, such as Maintenance and Operations or Asset Life Cycle Management, are seriously outdated and have fallen way behind similar processes in other industries where new technology has been used to disrupt old ways of doing things, for example vehicle fleet management or information technology, not to mention the consumer side where our entire lives rotate around various apps and platforms. According to Deloitte, poor maintenance strategies can reduce a plant’s overall productive capacity between 5 and 20%. Recent studies also show that unplanned downtime costs industrial manufacturers an estimated 50 B$ each year.

To see the impact of these new technologies, we can approach the benefits by looking simply at a Du Pont formula or the balance sheet and map the changes from moving to a remote condition monitoring system to the components of each formula. Naturally the impacted line items vary case by case, but at a high level some of these could include the following:

New sales and new business model opportunities from understanding how an asset is really being used, what condition it is in, when to offer service, training or other additional services and when consumables and/or parts that wear need attention – this translates into customer intimacy – having the tools to be truly close to the customer, in a true partnership. There are several examples of new revenue streams, ranging from new services, like training, to selling for example filters, not based on time but by how clogged they are.

Taking it one step further, by having this level of information, it is possible to introduce new business models, sell compressed air as a service, torque as a service and so on. These new business models are built on information, full transparency on the asset generating the service and both its cost- and revenue drivers. Not selling assets, but services, has implications on the balance sheet, cash flow and working capital to single out a few.

If the asset is maintained properly and not run to fault, how does this translate into financial numbers? In addition to the cost implications, outlined in the first part of this blog series, there are several direct areas of impact on the balance sheet. Longer asset life means less capital investments and higher ROA. It also means better resale or residual value. Longer asset life also translates into less interruption to the process as there are less installations of new assets. Higher utilization of assets and respectively higher uptime of the process are naturally the ultimate goal.

These are not just groundless promises. It is simple mathematics. The quality of the information, cost and results of implementing these systems can be easily quantified and verified. And have been, as mentioned in my previous blog on decreasing maintenance costs. The concept is straightforward and easy to understand. We can use our own healthcare as an analogy. Is it better for the body and mind as well as for the wallet to maintain a healthy body or to simply deal with it when sick, missing work and paying for expensive hospital time? With machine health, exactly the same principle of preventative maintenance applies. Only now, with edge-computing coupled with the cloud, the transparency has been taken to a totally new level at a radically lower cost.

From a financial perspective, choosing a condition monitoring system can be tricky – the solutions vary greatly in features and functions as well architecture. The more manual “components” the system and the process supporting it has, the more expensive it is. Using legacy components with less than optimal interfaces and firmware add cost and reduce scalability. The more interfaces there are, not only the more expensive it is, but the more expensive it will be to maintain, grow and add new functionality to. The more integrated it is from user interface (UI) to sensor, the better. Point-to-point systems, systems built around PLC’s and on-site fixed systems can deliver great local value, but they are not scalable – no economies of scale nor scope. The most agile systems can be commissioned in days and scale up without limits.

The new business models and architectures allow a fast and flexible way to implement new systems. When the data transfer relies on mobile technologies, there is no need to penetrate fire walls and integrate the system at the local level to the IT-infrastructure. The sensors can be often attached without stopping the process and due to the fully integrated architecture, commissioning is done in days. Standardized but agile solutions are scalable and can be used to monitor numerous types of assets simply by choosing the respective sensors accordingly.

The business model is simple. The smart units, edge-computing devices, have a unit price and the data transfer, user interface and analysis components are charged on a monthly subscription fee base. Naturally the entire system can be subscribed on a monthly fee as well, including hardware and the cloud offering. Easy to budget and easy to scale up.

Data collection with the intention to only process it further in the cloud will come back to haunt you. Sophisticated vibration monitoring tools, that are the basis for understanding machine health, generate giga bytes of data every day. Moving that amount of data around from numerous assets is prohibitively expensive but also unnecessary. Edge computing is a must here. Embedded algorithms that can be updated and modified from the cloud process the data at the edge, at the asset level, into smart data before transferring only a carefully chosen amount of smart data to the cloud. A scalable, fast-to-deploy, pay-as-you-grow architecture is key.

 

At the end of the day, it is the information you are interested in, not the infrastructure.

 

Below are some benefits from Part 1 as a refresher to think about, and to map back to the Balance Sheet and ROI calculations.

As a final thought, digitalization of assets with condition monitoring solutions is easy to pilot. A proof of concept, or POC, can easily demonstrate the financial impact of these new technologies. “Fire bullets, then cannonballs “, as Jim Collins put it. A worthwhile opportunity for all CFO’s to revamp the financials around industrial processes.

  1. Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
  2. Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
  3. Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
  4. Optimizing the performance and uptime of assets.
  5. Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
  6. Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
  7. Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
  8. Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
  9. Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
  10. Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
  11. Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

BLOG – Timo Tammisto

Part 1. – Decreasing Maintenance Costs

New technologies and tools such as digitalization open up radical and concrete new ways for industrial asset owners to totally revamp the financials around industrial assets. These new technologies give asset owners tools to affect both the balance sheet and the P&L with substantial benefits, be they OEM’s or Service and Maintenance Organizations.

In Part 1. of this blog series we will look at decreasing maintenance costs and in Part 2 take a look at a more holistic view.

Digitalization touches on financial elements on both sides of the Balance Sheet as well as both income- and cost sides on the P&L. The impact on the bottom line can be significant. Or, what would you say about payback times measured in the best case in days? Though we have witnessed these cases too at our portfolio company Distence, not all customer cases are that good, but I venture to say, under 12 months in most cases anyway.

We can look at the framework through a very basic but common example. Rotating machines, such as pumps, gears and motors are the basic components of many industrial processes. This is by no means a small asset category. There are an estimated 4 billion rotating machines in service globally with a market value of some €68 trillion. These processes be they energy production, oil and gas, food processing or any other, depend on these components to function. Should they fail, the process stops – and we all know, that is what really costs. In most cases there are tens if not hundreds of them in one single plant, so lots of potential failure points. In one case in Finland, one power plant that has some 20 units, pumps and motors, under constant online monitoring, prevented thanks to the monitoring and warning system the shutdown of the plant twice in one year, resulting in savings over €200.000. Now, if we take just the asset under scrutiny, a pump as an example, some 80-90% of the life cycle cost accumulate after the asset has been commissioned. Not only do these direct costs play a significant role in the LCC but as the life of these assets is very long, 20-30 years, any inefficiencies in any of the cost components compound. Maintenance, spare parts, downtime, energy etc. account for the bulk of the cost. The biggest component in maintenance is labor. Not only is labor expensive, the efficiency is low as well. How much of a workday goes to actual efficient maintenance work and how much into supporting processes? There is a lot that can be done.

On the cost side, some examples of reducing manual work significantly include

    • moving from on-site spot checks to online continuous metering and analysis
    • catching anomalies very early on with the help of 24/7 tools such as vibration measurement before they turn into   downtime for the process
    • optimizing spare parts inventories
    • eliminating driving time impacting both the carbon footprint as well as labor hours
    • turning scheduled maintenance to need based maintenance

Maintenance today is mostly manual, performed by service technicians on site or by crews driving from site to site – spot checks, manual vibration metering, juggling spare parts, troubleshooting. Most of the time of a technician goes into driving to sites, organizing spare parts – anything but the actual fault analysis.

…with modern tools we get another critical asset on our side

– TIME –

time to plan

According to a study by Distence, assuming that a maintenance engineer uses 30% of his or her time on knowledge-based analysis, leaving the other 70% to collecting samples and general tasks, and of all the monitored machines only 10% are found faulty and require action such as repair, we can deduce that only 4.8 hours (3%) of an engineer’s time is actually effective. This operation has not been disrupted for decades. The 80-90% portion of the life cycle cost can be reduced by 60% with new tools and the engineers effective time increased multifold respectively. Reliability of assets can be increased significantly by moving to online monitoring and predictive maintenance. Not only can we save on direct costs, but with modern tools we get another critical asset on our side – TIME – time to plan. Furthermore, we get knowledge, continuous flow of information, material to learn from, understanding of the customer or user of the asset and subsequently a longer asset life. The technician can focus on value adding tasks and leave the data collection to the system. AI, machine learning tools, algorithms process the data and offer deep analysis on the health of the machine automatically, and in the very near future even suggest solutions. All this at a comparable cost of a few visits from a maintenance crew to a site some 30km away.

Cutting costs by rolling out new ways of condition monitoring is easy and fast with new cloud-based solutions that are integrated closely with edge computing smart terminals and sensors and are purpose built. New solutions can be commissioned in days – that’s how close the CFO’s dream is from coming true.

Here are some benefits to think about and to map back to the P&L

1.     Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
2.     Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
3.     Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
4.     Utilization. Optimizing the performance and uptime of assets.
5.     Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
6.     Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
7.     Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
8.     Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
9.     Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
10.  Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
11.  Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

In the next blog, I will discuss a somewhat more holistic view and benefits that go beyond cost cutting.

The author is an investor and Board Member at Distence Oy

Distence and SKS have evidence the industrial IoT is moving from hype to action. Distence’s Condence product helps industrial machine builders and operation and maintenance organizations digitalize their products and services. SKS is  a well recognized innovative solution provider among these industrial players. Together, with this partnership, Distence and SKS believe to be able to serve the market better, offer new disruptive value to the market, and increase the attractiveness of both companies.

Creating a competitive offering
The challenge of transforming from machine builder to industrial IoT provider is great. The modern way of tackling this challenge is to partner up with the best players on the market. Combining the best players is at the core of the partnership with SKS and Distence. SKS is an established player on the market with in-depth know-how on industrial automation and existing machinery. Distence has more than 15 years of experience from connected machines and Industrial IoT. Together these strengths can be extremely beneficial for Finnish machine builders.

Global market and global challenges
The global market today demands global scalability. This can now be achieved with easy access to cutting edge productized technology and without lengthy and costly R&D projects. Distence Condence technology is already in use worldwide. Taking the standard Condence platform and “start-up kit” from SKS, it is incredibly fast to get to the market and start benefitting from smart data and 24/7 visibility to assets globally.

“We believe that SKS will be a great partner for us and by combining our complementing areas of expertise, we can bring new tools to our end customers to gain radically longer asset life and better efficiency. SKS has an excellent understanding of the market and applications. Distence is delighted to partner up with SKS.” Says Janne-Pekka Karttunen, CEO, Distence Oy

”Condition monitoring, telemetry and remote diagnostics is not only increasingly helping machine builders and their customers, but it is also a necessity for staying ahead in the market. For us, Distence is the perfect partner with their proven and best in class Condence platform. When combined with our long expertise in providing products and solutions to machine builders, we can now help our customers to succeed in their smart data plans as well.” Notes Jussi Sirpoma, Managing director, SKS Control Oy

Read more about SKS Control Oy

Root cause failure analysis was performed on paper machine rolls, resulting in an find that in almost 90% of the cases, the root cause of the failure was actually water that had gotten inside the roll.

The water inside the roll will over time lead to corrosion or reduce grease lubrication properties which will damage the bearings and eventually cause a failure.

How does the water get inside the roll? In many cases as a result of unintentional behavior or mistakes from the users. The users might not add sealing grease or uses high-pressure washer to the roll ends. Water can also merely condense as the process is changed.

After introducing the Smartbow application (Powered by Condence), users are now notified on potentially dangerous use or practices, making them visible, and thus preventive actions can be taken.

As a result, Rolls are more reliable, last longer, and if plants return these to the manufacturer before failure, they can be reused.

With monitoring, and as a result, avoiding moisture issues, there is evidence of extending the lifetime of rolls from 40% up to 200%. Naturally, the wide range is due to the environment of the installation. In all cases, however, the solution changes the return of investment significantly.

Without a proper monitoring solution, a plant is risking an unexpected failure and unplanned downtime, that might lead to repair times as long as a full shift and losses from lost production in the range of €250.000 – €350.000; not to forget the cost of a spare roll, that should be available on-site just in case.

After installing Smartbow, it is easier to manage the lifetime use and remaining lifetime. As a result, it is now possible to refurbish the rolls, as they are still functional at the time of replacement. Once these are returned to the original manufacturer, only wear-parts need to be changed at a cost of only 30% compared to a fully new one. This leads also to an estimated 70% lower carbon footprint in the 2nd round of use.

·       200% extension to lifetime
·       Reuse saves 70% of costs and reduces the carbon footprint
·       €300k savings from unplanned downtime

Read more: https://finbow.fi/en/roll-innovations

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People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things. Steve Jobs – Apple Worldwide Developers’ Conference, 1997

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We are attending SLUSH and would love to meet you if you are attending. Please contact us so we can set up a meeting or use the Matchmaking tool on the SLUSH site.

Janne-Pekka.Karttunen, CEO
tel: +358 40 093 8267
janne-pekka.karttunen@distence.fi

OR

Timo Tammisto, Board Member
tel: +358 40 8383473
timo.tammisto@miston.fi

BLOG – Timo Tammisto

Continuing from where we finished in the first part, Decreasing Maintenance Costs, of this blog series on “Why should CFO’s in industrial companies be all over edge computing?”, in this part 2, I want to look at the benefits more from a holistic view by including both some balance sheet line items as well some indirect benefits.

Decreasing maintenance costs is a business case already big enough to get every CFO interested in edge computing and digitalization. This includes not only the industrial assets like rotating machines themselves, but also, and maybe above all, the processes that surround them. These processes, such as Maintenance and Operations or Asset Life Cycle Management, are seriously outdated and have fallen way behind similar processes in other industries where new technology has been used to disrupt old ways of doing things, for example vehicle fleet management or information technology, not to mention the consumer side where our entire lives rotate around various apps and platforms. According to Deloitte, poor maintenance strategies can reduce a plant’s overall productive capacity between 5 and 20%. Recent studies also show that unplanned downtime costs industrial manufacturers an estimated 50 B$ each year.

To see the impact of these new technologies, we can approach the benefits by looking simply at a Du Pont formula or the balance sheet and map the changes from moving to a remote condition monitoring system to the components of each formula. Naturally the impacted line items vary case by case, but at a high level some of these could include the following:

New sales and new business model opportunities from understanding how an asset is really being used, what condition it is in, when to offer service, training or other additional services and when consumables and/or parts that wear need attention – this translates into customer intimacy – having the tools to be truly close to the customer, in a true partnership. There are several examples of new revenue streams, ranging from new services, like training, to selling for example filters, not based on time but by how clogged they are.

Taking it one step further, by having this level of information, it is possible to introduce new business models, sell compressed air as a service, torque as a service and so on. These new business models are built on information, full transparency on the asset generating the service and both its cost- and revenue drivers. Not selling assets, but services, has implications on the balance sheet, cash flow and working capital to single out a few.

If the asset is maintained properly and not run to fault, how does this translate into financial numbers? In addition to the cost implications, outlined in the first part of this blog series, there are several direct areas of impact on the balance sheet. Longer asset life means less capital investments and higher ROA. It also means better resale or residual value. Longer asset life also translates into less interruption to the process as there are less installations of new assets. Higher utilization of assets and respectively higher uptime of the process are naturally the ultimate goal.

These are not just groundless promises. It is simple mathematics. The quality of the information, cost and results of implementing these systems can be easily quantified and verified. And have been, as mentioned in my previous blog on decreasing maintenance costs. The concept is straightforward and easy to understand. We can use our own healthcare as an analogy. Is it better for the body and mind as well as for the wallet to maintain a healthy body or to simply deal with it when sick, missing work and paying for expensive hospital time? With machine health, exactly the same principle of preventative maintenance applies. Only now, with edge-computing coupled with the cloud, the transparency has been taken to a totally new level at a radically lower cost.

From a financial perspective, choosing a condition monitoring system can be tricky – the solutions vary greatly in features and functions as well architecture. The more manual “components” the system and the process supporting it has, the more expensive it is. Using legacy components with less than optimal interfaces and firmware add cost and reduce scalability. The more interfaces there are, not only the more expensive it is, but the more expensive it will be to maintain, grow and add new functionality to. The more integrated it is from user interface (UI) to sensor, the better. Point-to-point systems, systems built around PLC’s and on-site fixed systems can deliver great local value, but they are not scalable – no economies of scale nor scope. The most agile systems can be commissioned in days and scale up without limits.

The new business models and architectures allow a fast and flexible way to implement new systems. When the data transfer relies on mobile technologies, there is no need to penetrate fire walls and integrate the system at the local level to the IT-infrastructure. The sensors can be often attached without stopping the process and due to the fully integrated architecture, commissioning is done in days. Standardized but agile solutions are scalable and can be used to monitor numerous types of assets simply by choosing the respective sensors accordingly.

The business model is simple. The smart units, edge-computing devices, have a unit price and the data transfer, user interface and analysis components are charged on a monthly subscription fee base. Naturally the entire system can be subscribed on a monthly fee as well, including hardware and the cloud offering. Easy to budget and easy to scale up.

Data collection with the intention to only process it further in the cloud will come back to haunt you. Sophisticated vibration monitoring tools, that are the basis for understanding machine health, generate giga bytes of data every day. Moving that amount of data around from numerous assets is prohibitively expensive but also unnecessary. Edge computing is a must here. Embedded algorithms that can be updated and modified from the cloud process the data at the edge, at the asset level, into smart data before transferring only a carefully chosen amount of smart data to the cloud. A scalable, fast-to-deploy, pay-as-you-grow architecture is key.

 

At the end of the day, it is the information you are interested in, not the infrastructure.

 

Below are some benefits from Part 1 as a refresher to think about, and to map back to the Balance Sheet and ROI calculations.

As a final thought, digitalization of assets with condition monitoring solutions is easy to pilot. A proof of concept, or POC, can easily demonstrate the financial impact of these new technologies. “Fire bullets, then cannonballs “, as Jim Collins put it. A worthwhile opportunity for all CFO’s to revamp the financials around industrial processes.

  1. Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
  2. Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
  3. Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
  4. Optimizing the performance and uptime of assets.
  5. Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
  6. Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
  7. Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
  8. Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
  9. Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
  10. Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
  11. Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

BLOG – Timo Tammisto

Part 1. – Decreasing Maintenance Costs

New technologies and tools such as digitalization open up radical and concrete new ways for industrial asset owners to totally revamp the financials around industrial assets. These new technologies give asset owners tools to affect both the balance sheet and the P&L with substantial benefits, be they OEM’s or Service and Maintenance Organizations.

In Part 1. of this blog series we will look at decreasing maintenance costs and in Part 2 take a look at a more holistic view.

Digitalization touches on financial elements on both sides of the Balance Sheet as well as both income- and cost sides on the P&L. The impact on the bottom line can be significant. Or, what would you say about payback times measured in the best case in days? Though we have witnessed these cases too at our portfolio company Distence, not all customer cases are that good, but I venture to say, under 12 months in most cases anyway.

We can look at the framework through a very basic but common example. Rotating machines, such as pumps, gears and motors are the basic components of many industrial processes. This is by no means a small asset category. There are an estimated 4 billion rotating machines in service globally with a market value of some €68 trillion. These processes be they energy production, oil and gas, food processing or any other, depend on these components to function. Should they fail, the process stops – and we all know, that is what really costs. In most cases there are tens if not hundreds of them in one single plant, so lots of potential failure points. In one case in Finland, one power plant that has some 20 units, pumps and motors, under constant online monitoring, prevented thanks to the monitoring and warning system the shutdown of the plant twice in one year, resulting in savings over €200.000. Now, if we take just the asset under scrutiny, a pump as an example, some 80-90% of the life cycle cost accumulate after the asset has been commissioned. Not only do these direct costs play a significant role in the LCC but as the life of these assets is very long, 20-30 years, any inefficiencies in any of the cost components compound. Maintenance, spare parts, downtime, energy etc. account for the bulk of the cost. The biggest component in maintenance is labor. Not only is labor expensive, the efficiency is low as well. How much of a workday goes to actual efficient maintenance work and how much into supporting processes? There is a lot that can be done.

On the cost side, some examples of reducing manual work significantly include

    • moving from on-site spot checks to online continuous metering and analysis
    • catching anomalies very early on with the help of 24/7 tools such as vibration measurement before they turn into   downtime for the process
    • optimizing spare parts inventories
    • eliminating driving time impacting both the carbon footprint as well as labor hours
    • turning scheduled maintenance to need based maintenance

Maintenance today is mostly manual, performed by service technicians on site or by crews driving from site to site – spot checks, manual vibration metering, juggling spare parts, troubleshooting. Most of the time of a technician goes into driving to sites, organizing spare parts – anything but the actual fault analysis.

…with modern tools we get another critical asset on our side

– TIME –

time to plan

According to a study by Distence, assuming that a maintenance engineer uses 30% of his or her time on knowledge-based analysis, leaving the other 70% to collecting samples and general tasks, and of all the monitored machines only 10% are found faulty and require action such as repair, we can deduce that only 4.8 hours (3%) of an engineer’s time is actually effective. This operation has not been disrupted for decades. The 80-90% portion of the life cycle cost can be reduced by 60% with new tools and the engineers effective time increased multifold respectively. Reliability of assets can be increased significantly by moving to online monitoring and predictive maintenance. Not only can we save on direct costs, but with modern tools we get another critical asset on our side – TIME – time to plan. Furthermore, we get knowledge, continuous flow of information, material to learn from, understanding of the customer or user of the asset and subsequently a longer asset life. The technician can focus on value adding tasks and leave the data collection to the system. AI, machine learning tools, algorithms process the data and offer deep analysis on the health of the machine automatically, and in the very near future even suggest solutions. All this at a comparable cost of a few visits from a maintenance crew to a site some 30km away.

Cutting costs by rolling out new ways of condition monitoring is easy and fast with new cloud-based solutions that are integrated closely with edge computing smart terminals and sensors and are purpose built. New solutions can be commissioned in days – that’s how close the CFO’s dream is from coming true.

Here are some benefits to think about and to map back to the P&L

1.     Transparency. Establishing an 24/7 “umbilical cord” to assets. A source of information to facilitate design and innovation both in technology and business modeling.
2.     Continuous Improvement. Through direct access to the assets, how they perform and how they are being used, continuous adjustments are possible.
3.     Asset Management. Managing the life cycle of each asset. Knowing what you own and what shape it is in. Extending the life.
4.     Utilization. Optimizing the performance and uptime of assets.
5.     Maintenance. Enabling the evolution from reactive to preventive to predictive maintenance. Reducing direct labor, driving times of mobile crews, simplifying logistics, knowing what spare parts are needed etc.
6.     Safety and Training. By learning from how the machines are used, serviced and handled, the operator can benefit from focusing training on the relevant areas in order to increase productivity, safety and the life span of the machines.
7.     Performance. Thanks to continuous and comparable data – relevant key performance indicators can be built for each asset and process.
8.     Modernization. Turning “dumb” machines into intelligent by retrofitting them with intelligent devices.
9.     Customer centric design. By understanding how the asset is really used in the customers environment, the R&D organization can better design products from the customer perspective.
10.  Data availability. Today the data is trapped in the head of the service engineers or their laptops. Modern tools and the architectures they are built with, make data available for everyone in the organization to benefit from, from O&M to sales to finance.
11.  Sustainability and Circularity. Understand the carbon footprint, emissions, energy use and life of an asset.

In the next blog, I will discuss a somewhat more holistic view and benefits that go beyond cost cutting.

The author is an investor and Board Member at Distence Oy

Distence and SKS have evidence the industrial IoT is moving from hype to action. Distence’s Condence product helps industrial machine builders and operation and maintenance organizations digitalize their products and services. SKS is  a well recognized innovative solution provider among these industrial players. Together, with this partnership, Distence and SKS believe to be able to serve the market better, offer new disruptive value to the market, and increase the attractiveness of both companies.

Creating a competitive offering
The challenge of transforming from machine builder to industrial IoT provider is great. The modern way of tackling this challenge is to partner up with the best players on the market. Combining the best players is at the core of the partnership with SKS and Distence. SKS is an established player on the market with in-depth know-how on industrial automation and existing machinery. Distence has more than 15 years of experience from connected machines and Industrial IoT. Together these strengths can be extremely beneficial for Finnish machine builders.

Global market and global challenges
The global market today demands global scalability. This can now be achieved with easy access to cutting edge productized technology and without lengthy and costly R&D projects. Distence Condence technology is already in use worldwide. Taking the standard Condence platform and “start-up kit” from SKS, it is incredibly fast to get to the market and start benefitting from smart data and 24/7 visibility to assets globally.

“We believe that SKS will be a great partner for us and by combining our complementing areas of expertise, we can bring new tools to our end customers to gain radically longer asset life and better efficiency. SKS has an excellent understanding of the market and applications. Distence is delighted to partner up with SKS.” Says Janne-Pekka Karttunen, CEO, Distence Oy

”Condition monitoring, telemetry and remote diagnostics is not only increasingly helping machine builders and their customers, but it is also a necessity for staying ahead in the market. For us, Distence is the perfect partner with their proven and best in class Condence platform. When combined with our long expertise in providing products and solutions to machine builders, we can now help our customers to succeed in their smart data plans as well.” Notes Jussi Sirpoma, Managing director, SKS Control Oy

Read more about SKS Control Oy

Root cause failure analysis was performed on paper machine rolls, resulting in an find that in almost 90% of the cases, the root cause of the failure was actually water that had gotten inside the roll.

The water inside the roll will over time lead to corrosion or reduce grease lubrication properties which will damage the bearings and eventually cause a failure.

How does the water get inside the roll? In many cases as a result of unintentional behavior or mistakes from the users. The users might not add sealing grease or uses high-pressure washer to the roll ends. Water can also merely condense as the process is changed.

After introducing the Smartbow application (Powered by Condence), users are now notified on potentially dangerous use or practices, making them visible, and thus preventive actions can be taken.

As a result, Rolls are more reliable, last longer, and if plants return these to the manufacturer before failure, they can be reused.

With monitoring, and as a result, avoiding moisture issues, there is evidence of extending the lifetime of rolls from 40% up to 200%. Naturally, the wide range is due to the environment of the installation. In all cases, however, the solution changes the return of investment significantly.

Without a proper monitoring solution, a plant is risking an unexpected failure and unplanned downtime, that might lead to repair times as long as a full shift and losses from lost production in the range of €250.000 – €350.000; not to forget the cost of a spare roll, that should be available on-site just in case.

After installing Smartbow, it is easier to manage the lifetime use and remaining lifetime. As a result, it is now possible to refurbish the rolls, as they are still functional at the time of replacement. Once these are returned to the original manufacturer, only wear-parts need to be changed at a cost of only 30% compared to a fully new one. This leads also to an estimated 70% lower carbon footprint in the 2nd round of use.

·       200% extension to lifetime
·       Reuse saves 70% of costs and reduces the carbon footprint
·       €300k savings from unplanned downtime

Read more: https://finbow.fi/en/roll-innovations

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