Evolution of the control system integration industry
The system integration (SI) industry as we know it today is about 30 years old. It began as companies changed the structure of their internal engineering departments as the nature of plant automation changed in the early 1980s. Our industry grew out of a complex mix of evolving technologies, major economic pressures, and changing business practices. It was a time when many individuals changed roles and jobs on a large scale, and many of those structural changes are still with us.
But to understand what was happening at that time in so many engineering departments, we need to go back another 10 or 15 years to the early 1970s. Up until that time, some of the most important skills for automation professionals were the ability to cut, bend, and fit pneumatic tubing; to wire relays and timers; and to manually tune local control loops. That changed quickly as early DCS and PLC systems emerged on the market.
As companies installed new electronic systems in the 1970s, the initial process typically was to use their internal engineering and automation professionals to perform all the work in-house. If they needed help with the workload or with certain technical details, most would get assistance from the automation supplier that provided the equipment. Major players like Allen-Bradley, Bailey, and Fisher were able to send a few consultants and technicians temporarily when called upon, often without charge. Some equipment distributors, rep organizations, and local business partners also realized they could add value to a project by providing basic automation services. Some of the early visionaries included Don H. Munger Company (St. Louis) and Puffer Sweiven (Houston).
Of course, automation at that time was very primitive. A 1975-era DCS was cumbersome, rudimentary, and inflexible. PLCs used single point I/O, did not communicate with other devices, and couldn’t even do analog. The number of field devices in a process plant was much smaller because there were far fewer types of instruments and actuators. Many categories of instruments that are commonplace now simply didn’t exist at that point, and diagnostic functions were strictly manual.
Riding the automation wave
That initial wave of automation went on into the early 1980s, and as projects were largely completed, manufacturers had to evaluate how they used their internal resources. The nature of most automation projects was temporary, so the thought of adding staff to support a specific project that might be finished in a few months or a year did not seem practical. Many engineers saw this as an opportunity and offered their services as contractors, helping with installations and performing automation support for the newly installed systems. Early on, this was largely on an hourly basis with contractors essentially acting as temp workers, but as the providers gained a higher level of sophistication and took on associates, some tasks began to be handled on a project basis.
The SI industry grew from these enterprising individuals, began to blossom, and gained momentum in the mid 1980s. By the late 1980s and early 1990s, there were many individuals and small firms entering the business. As manufacturers continued to deal with changing economic and competitive pressures, they found this new arrangement increasingly practical and embraced the approach, driving demand. More SI companies formed as engineers found there was money to be made under the new relationships. At this point most were still working on a time and materials basis, but that was beginning to change as well.
Evolving technologies drive industry changes
Moving into the 1990s, technologies were developing which required new and expanding skill sets from automation professionals. Both DCS- and PLC-based systems were gaining sophistication, and innovative mechanisms for networking and connectivity were beginning to emerge. While there was still much more to come, the direction of the industry was clear. Automation technology was becoming more versatile and flexible, but also much more technically complex, creating an ever greater need for highly skilled automation professionals.
With new SI companies forming and offering increasingly sophisticated services, manufacturers were able to keep their permanent staff small and turned to these outside sources as needed. As customers’ requirements for new skills emerged, integrators kept pace so they could add the greatest value and built their own profitability.
Closing the 1990s: It’s all about technology
While the control system integration business was firmly established by the mid-1990s, it was very fragmented because there were so many small start-up companies. Some managed to grow, but very few large players emerged.
An integrator’s ability to get business in the climate of the late 1990s depended on understanding the latest technologies. Many innovations were emerging at that time such as PC-based HMIs, digital fieldbus networks, and smart instruments. Perhaps the most significant new developments were in the controller realm as DCS platforms became easier to use and significantly less expensive, and as PLCs added solid analog control and other capabilities.
But like many technology waves, developments were uneven. HMI and controller programming software remained very hard to use, requiring specific and highly developed skills to execute all but the most basic tasks. Networks were proprietary, supporting little interconnectivity and effectively no interoperability. What communication there was required much more time and effort to make work, often requiring development of custom drivers just to allow an HMI to talk to a PLC.
As difficult as the technologies were to tame, users found the new capabilities compelling and wanted to implement them, so they turned to integrators to do the heavy lifting. Many of those projects were very challenging because the tools that simplify those tasks weren’t yet available. The integrator had to understand not only the process or machine to be controlled, but also the complex inner workings of the automation systems.
Many integrators still continued to function largely as hired help or working on a time-and-materials basis to implement new automation projects, but some were beginning to package their services to fulfill a specific scope of work. Gradually, customers began to break out of their traditional self-performing mind-set left over from earlier years as they found themselves turning outside for help far more frequently. Customers for the most part still hadn’t created the internal infrastructure required to go outside to an SI with an entire automation project.
This situation made it practical for small integrators to operate and even prosper on a modest scale. Those that worked with a handful of people didn’t need much in the way of project management or other internal infrastructure to provide the level of service demanded by their customers, but a new wave was building.
Globalization brings major changes
With the turn of the century, expectations started changing quickly. Economies of scale were realized when more manufacturers consolidated and spread operations around the world, driving changes in all areas. Those global customers wanted global suppliers to implement uniform platforms wherever the location, forcing integrators to make a major decision.
Many small-scale integrators thought it best to continue working as they always had, but larger customers wanted larger integrators capable of taking on project management functions anywhere in the world. Some of the more ambitious SI companies drove organic growth combined with acquisitions to meet the challenge.
But as integrators got bigger, so did the need for more sophisticated internal systems and infrastructure. The jump from a mom-and-pop operation to a major service provider meant creating mechanisms and methods to manage and execute large projects, sometimes simultaneously across multiple plants located around the world.
Some integrators developed practices and procedures for more consistent internal processes, certifications, and professional project management. The Control Systems Integrators Association (CSIA), which had formed in 1994, provided assistance in this area as many integrators realized they could all benefit by joining together and supporting an industry organization.
With the help of CSIA and its more active members, the SI industry has raised the bar on performance. There are still opportunities for small- and medium-size integrators, but the nature of projects they perform has changed, and the global nature of so many automation initiatives demands the kinds of services only available from larger organizations.
Integrators develop economies of scale
Just as large customers have enjoyed economies of scale, so have integrators. Most SIs built themselves up over time, self-financed by the founders and experiencing organic growth one project at a time by reinvesting profits. Others wanted to drive growth faster and sought out venture capital, but those situations were relatively rare and the results were mixed. Some of the large automation suppliers have built internal system integration groups organically or through acquisition, but they tend to specialize in their own specific hardware and software.
Some integrators learned hard realities of the business world in the process, and more suffered from getting too much business rather than too little. Because new projects require significant initial investment, with payment from customers often lagging expenditures until project completion, many outgrew their balance sheet and their ability to finance the business. Others found the price for a project might be fixed, but costs weren’t and had to be closely monitored and controlled using sophisticated project management systems.
Must bigger mean more complex?
The technology component of the integration business is still critical, but just as important in many cases is the ability to manage and execute projects. Having the right people on staff with the requisite soft skills is critical, as large projects grow exponentially in terms of project management complexity.
Maverick Technologies, like many other companies in this industry, has had to mature as an organization and a business. We’ve had to develop business infrastructure by creating or adding to departments such as accounting, human resources, and IT-along with many other areas not specifically related to project execution.
Some companies want to keep a family atmosphere and find the prospect of such growth a threat to that sensibility. Some individuals who left big companies to create or join a small integration firm did so to escape what they considered big company bureaucracy, preferring the agility and camaraderie of a small group of engineers doing what they do best. Administering an HR department is not part of their vision, so in spite of the risks they want to remain as small boutique integrators serving a few clients and doing a nice job.
But there is an alternative, one which we have avidly pursued over the past decade, along with other like-minded control system integrators. It is possible to maintain a small company, family atmosphere, even through significant growth. Although feasible, it’s not easy, and it requires a major commitment from all our people.
Another path ahead
Based on our experience at Maverick, we believe the keys to success over the long term are developing the resources to do multi-plant and global projects, and providing a wider range of services to our customers with a higher level of efficiency. New services include high-level business consulting, our 24×7 support center, and extensive customer training. Larger customers want more things from system integrators, and this is the driver for our growth.
We’re over 30% more efficient now than we were even five years ago when working on a given project. There are multiple reasons: We’ve gotten better, and work smarter. The engineering tools available to us have improved, and we’re making extensive use of internal infrastructure to share project and technical information. Additionally, through aggressive workforce development, we’ve been able to build more productive and efficient teams.
Projects no longer have a clear beginning and end as they did in times past, and this places much greater demands on the integrator. Customers don’t want the integrator to finish a project and leave. When a project has resulted in a significant improvement for the plant, the customer wants that improvement to be maintained and developed further over its lifecycle, perhaps over decades. To address this need, an integrator must make closed-loop business propositions-maintaining the automation systems to preserve and hopefully add to the initial gains. This argues for larger integrators as they typically have more resource depth and staying power.
As one of the leaders of the system integration industry, we are responding to these needs and stand ready to provide support for projects big and small, both local and global. We are part of a young and vital industry, and there is much more to come as we look forward to an exciting future.
Paul Galeski is CEO of Maverick Technologies.
- The SI industry as we know it now is about 30 years old.
- It began largely from individual engineers taking project jobs to help with automation projects.
- Along with the needs of customers, the industry has evolved and will continue to remain flexible to take on new roles.
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ONLINE extra video
The online version of this article includes a video where two Maverick Technologies executives discuss challenges facing integrators and their customers going forward. Paul Galeski (left), CEO, and Bill Stewart, VP of operations, offer their thoughts on changing personnel demographics, aging technologies, and more.