Manufacturing AUTOMATION

Building the business case for industrial Ethernet: Aberdeen Group

April 26, 2011
By Nuris Ismail and Matthew Littlefield

Manufacturing is an industry with complex operations, where the success of any organization lies in producing high quality products at lower costs at the right time. This requires companies to enable real-time visibility into operations at the plant floor and executive levels to make intelligent decisions.

The Aberdeen Group, in collaboration with Manufacturing AUTOMATION, surveyed more than 150 executives to understand how industry leaders are taking advantage of industrial networking to enable real-time visibility into data to optimize production, maintenance and safety. Below are highlights from the survey.

Business context  
Faced with internal pressure to improve visibility into manufacturing data and external demands to reduce the cost of operations, manufacturers are looking towards adopting the latest networking capabilities as a means to achieve both goals. To overcome these pressures, some industrial companies began migrating to industrial Ethernet technology to connect their plant assets, manufacturing systems and business systems. In doing so, they have been able to enable greater visibility and control into their operations, increase productivity, reduce costs and integrate real-time data from the manufacturing floor to the front office.

Recent Aberdeen research revealed that 69 percent of the Best-in-Class are using industrial Ethernet protocols for communication between industrial control systems and their components. For the first time, Aberdeen is seeing a significant push in the marketplace to view industrial Ethernet more as a “must have” rather than a “nice to have” feature on the plant floor. This seamless communication between physical assets, control systems and software systems provides manufactures with better visibility into reasons for and frequency of safety, production, maintenance and quality events.

To better understand how the most successful companies are implementing the latest industrial networking capabilities, Aberdeen used four Key Performance Indicators (KPI) to distinguish the performance between the Best-in-Class (top 20 percent performers) from Industry Average and Laggard Organizations (middle 50 percent and bottom 30 percent, respectively).

Table 1: Top performers earn Best-in-Class status

Source: Aberdeen Group, September 2010

Best-in-Class companies are able to directly impact the cost of manufacturing operations by reducing the total cost of ownership by five percent. At the same time, they are also optimizing their industrial network with a 99.97 percent uptime rate. These metrics not only provide a basis for measuring internal network performance, but also serve to ensure that manufacturing operations are optimized (89 percent OEE rate) while still keeping shareholders satisfied by overachieving their operating margin goals by 26 percent. This means that these industry leaders are not only able to optimize their industrial networks, but are also able to gain a competitive edge in the marketplace by gaining higher operational efficiencies and corporate performance.

Differentiating capabilities
Best-in-Class companies are differentiating themselves in two major ways from an organizational and technology capabilities perspective. First, Best-in-Class companies understand that an effective organizational structure is key for improving industrial networks (Figure 1). Historically, in an attempt to keep corporate IT at arms length, control and automation engineers developed their own IT infrastructure and skills. They did this to avoid implementing corporate IT network guidelines, which they perceived would only interfere with the design of the industrial network. However, what they failed to understand was that corporate IT brings unique skill sets that can be leveraged to reduce installation and operating costs of the control system.

Figure 1: Organizational structure

Source: Aberdeen Group, April 2011

Best-in-Class companies overcome this cultural barrier by forming cross-functional teams and building the expertise to manage network access, availability and performance. In addition, having cross-functional teams focused on improving the network architecture ensures that there is a balanced approach and any new initiative is not pulled too far in any one direction. Having cross-functional teams also makes it more likely to gain acceptance of industrial Ethernet on the shop floor because such initiatives inevitably involve change regarding process and technology, which can only be effective with buy-in from IT and manufacturing first.

To enable a real change in the culture, and bring together IT and manufacturing to work towards a common goal, an organization needs to have a long-term vision of improving the industrial network and, therefore, needs to appoint an executive sponsor to effectively execute this vision. It is extremely difficult to implement changes in strategy, processes and collaboration without the buy-in and support of true budget and authority holders.

From a technological perspective, Best-in-Class companies understand the importance of designing their industrial network to ensure determinism, reliability and speed in the transmission of data.  Within our survey, respondents were asked whether their network architectures were (Figure 2):
* Fully industrial Ethernet architecture, which means that these companies use entirely industrial Ethernet for communication between industrial control system components.
* Mixed-mode architecture of fieldbus and industrial Ethernet for communication between industrial control system components, where the number of nodes of fieldbuses has been minimized for optimal performance.
* Mixed-mode architecture of fieldbus and industrial Ethernet for communication between industrial control system components, where there is no strategy to minimize the number of nodes for fieldbuses.
* Mixed-mode architecture of fieldbus and industrial Ethernet for communication between industrial control system components, where industrial Ethernet and fieldbuses are not connected.

Figure 2: Industrial network architecture

Source: Aberdeen Group, April 2011

Based on this analysis, we uncovered some interesting trends within the industry. First, it is apparent that when it comes to the different kinds of network architectures, there is a mixed bag as to what manufacturers are more likely to implement. For the most part, many manufacturers have a mix of industrial Ethernet and fieldbus as the basis of their plant network. The difference is whether or not there is integration between these two networks, or if these networks are disconnected and isolated systems. The Best-in-Class have taken advantage of the latest technology and are more likely than their competitors to implement a fully industrial Ethernet architecture. In addition, if they were to have an industrial network with both fieldbuses and industrial Ethernet, they were more likely to have a strategy to minimize the number of fiedlbus nodes for optimal use. One of the many advantages of implementing industrial Ethernet is that it provides the ability to achieve connectivity between plant and business systems. This connectivity enables real-time visibility to critical information and enables collaboration across the value chain. This helps to ensure consistent quality and performance across global operations, and reduce the cost of design, deployment and support of distributed manufacturing and IT systems.

In conclusion, network performance must be able to match the real-time nature of the plant floor, which can help manufactures gain critical insight into manufacturing performance. Indeed, navigating these many choices and alternatives in the context of a huge installed base of disparate and aging control systems is complex. Nevertheless, the opportunity exists now more than ever to overcome the historic isolation of the control platform from the enterprise. Moving forward, it is time for manufacturers to visualize the real-time enterprise and take steps to lay the real-time network foundation that they need to support it.

To gain better understanding into how the Best-in-Class are implementing these business and technology capabilities, contact the authors at the e-mail addresses below for a complimentary copy of the report.  

Nuris Ismail is a senior research associate with the Aberdeen Group. She can be reached at Matthew Littlefield is a senior research analyst with the Aberdeen Group. He can be reached at

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