Achieving Operational Excellence with Information Technology

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1 Achieving Operational Excellence with Information Technology by Lawrence B. Evans Chairman Aspen Technology, Inc. New Orleans Meeting of the AIChE March 31, AspenTech. All Rights Reserved.

2 Outline Process Industries Operational Excellence Modeling Driving Forces for Adoption 2003 AspenTech. All Rights Reserved. 3

3 The Process Industries Process industries are huge Annual turnover exceeds $6 trillion Products are commodities Manufacturers must continually improve profitability 2003 AspenTech. All Rights Reserved. 4

4 Process Manufacturing Is Unique Process Manufacturing Chemicals, Petroleum, Pharmaceuticals, etc. Products are produced in bulk form Processing steps cause chemical transformation Manufacturing plants are complex Discrete Manufacturing Automobiles, appliances, computers Products are shaped and assembled from discrete parts Manufacturing steps cause mechanical change Manufacturing plants are more straightforward 2003 AspenTech. All Rights Reserved. 5

5 Natural Materials Process Industries Bulk Materials Discrete Industries Finished Products Oil Polymers Packaged Goods Natural Gas Fuels Appliances Milk Food Products Automobiles Coffee Beans 2003 AspenTech. All Rights Reserved. 6

6 The Spectrum of Manufacturing Process Natural Materials Discrete Finished Packaged Products Crude Oil Refined Oil Packaged Lube Oil Lube Oil 2003 AspenTech. All Rights Reserved. 7

7 Enormous Economic Potential $300-$500 $500 Billion Annually Today True Potential TM 2003 AspenTech. All Rights Reserved. 8

8 Outline Process Industries Operational Excellence Modeling Driving Forces for Adoption 2003 AspenTech. All Rights Reserved. 9

9 Corporate Strategy Options Product Leadership Customer Intimacy Operational Excellence Source: The Discipline of Market Leaders, by Michael Treacy and Fred Wiersema 2003 AspenTech. All Rights Reserved. 10

10 Outline Process Industries Operational Excellence Modeling Driving Forces for Adoption 2003 AspenTech. All Rights Reserved. 11

11 Modeling Is the Critical Success Factor If you can t model your Process, you don t understand it. If you don t understand it, you can t improve it. And, if you can t improve it, you won t be competitive in the 21st century. - Jim Trainham, DuPont 2003 AspenTech. All Rights Reserved. 12

12 Models Predict Performance Additional Data Decisions Model Results 2003 AspenTech. All Rights Reserved. 13

13 Application of Models Application Model Decisions Additional Data Process Design Engineering Calculation Sizing & Operating Conditions Updated Cost Data and Design Constraints Production Planning Linear or Nonlinear Program Amounts of Product at Each Facility Prices and Availability of Raw Material Advanced Process Control Empirical Model from Plant Tests Adjustments in Manipulated Variable On-Line Measurements from Plant 2003 AspenTech. All Rights Reserved. 14

14 Outline Process Industries Operational Excellence Modeling Driving Forces for Adoption 2003 AspenTech. All Rights Reserved. 15

15 Adoption of Solutions Driven by: Growth in Information Technology Advances in Science and Technology Focus on Business Processes 2003 AspenTech. All Rights Reserved. 16

16 Relentless Increase in Computing Power Computing power per unit cost doubles every 18 months - Moore s Law Dr. Gordon E. Moore Chairman Emeritus Intel Corporation 2003 AspenTech. All Rights Reserved. 17

17 Changes in Computing Environment Mainframe Computers Mini Computers PCs & Client Server Internet AspenTech. All Rights Reserved. 18

18 Advances in Science and Technology Base Molecular Thermodynamics Chemical Kinetics Computational Fluid Dynamics Theory of Process Measurements and Control Neural Nets Numerical Algorithms 2003 AspenTech. All Rights Reserved. 19

19 Focus on Integrated Business Processes Microsoft Office Suite SAP Integrated Software AspenTech Plantelligence Re-engineering of Business Processes 2003 AspenTech. All Rights Reserved. 20

20 Technology Push Computing Power Technical Developments Business Problems Solutions Improved Business Practices Business Results 2003 AspenTech. All Rights Reserved. 21

21 Business Requirements Pull Technology Advances IT Solutions Improved Business Practices Business Requirements 2003 AspenTech. All Rights Reserved. 22

22 Future Business Requirements Get diverse people to work together Collaborate outside the enterprise Use models to capture knowledge and make decisions Get the right information to the right people at the right time Provide real-time visibility into operations and options available 2003 AspenTech. All Rights Reserved. 23

23 Future Advances in Science and Technology Use the same consistent set of models throughout the life cycle of a Manufacturing Process Build technology base for sustainable development Modeling of biological systems 2003 AspenTech. All Rights Reserved. 24

24 The Future of Information Technology Moore s Law will continue to hold Use of the Internet will continue to grow Adoption of wireless technology will make applications more portable Real-time sensors will be everywhere 2003 AspenTech. All Rights Reserved. 25

25 Conclusion The past two decades have seen remarkable advances We have achieved the early adoption phase Challenge for the future is to drive adoption throughout the industry 2003 AspenTech. All Rights Reserved. 26

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