Customer DCS Selection Process – Understanding The Selection Process Extract

Customer DCS Selection Process – Understanding Your Customer Selection Process Extract

The choice of a distributed control system (DCS) for a process control customer is one of the most important ones it can make. First, it is expensive. Average cost for a DCS is $1.5 million. Expenses for the selection process alone can range from $200,000 for one project to $5 million for a corporate-wide implementation. Investments in large-scale projects can run as high as $40 million. The service costs over the lifetime of the DCS can run into multiples of the initial investment. Vendors typically will spend upwards of $50,000 to make a sale. Second, the selection process takes a long time and involves a lot of personnel. Selection alone can take nine months to three years, and the implementation can take another 12 to 24 months; as this decision involves a long-term investment. The average life expectancy of a DCS is 17 years. Also, the choice of a DCS will have profound effects on the efficiency, productivity and profitability of an operation. It’s a decision that companies can’t afford to get wrong. At the same time, employees tasked with making the decision about the firm’s next DCS are often at a disadvantage, because this investment only takes place every 10 to 17 years, most selection team members don’t have the knowledge needed to perform this analysis. Selecting a control system also is uncertain due to the subjective judgment of decision makers.

The main problems are:

1) the exact criteria for selection are not known;
2) the method for deciding is unknown;
3) there are multiple stakeholders, each with their own biases and preferences for particular suppliers; and
4) internal politics.

So, the choice of a DCS is not always straight forward, and the relationship between the business case, chosen solution and selection process isn’t always there. This disconnect will have growing consequences in the future. We need to help process users choose an automation solution in a more transparent manner. Studies have shown that the most important value proposition for end users, was not about having the “superior product”, but rather the best product for the best price. End users’ expectations on technology is also not about being on the “cutting edge” as approximately 70% of users regard themselves as industry followers, and approximately 58% will typically wait 12-18 months after the first product is released before considering it. A PLC based system previously offered a lower capital investment and from a functional point of view was “good enough”; with PLC’s and HMI software packages being integrated, the result looks like a DCS, but there is significant technical risk and added costs that are not immediately obvious. With the focus on production rates, yield, waste, safety and regulatory compliance coupled with the lower costs of a DCS; engineers, plant managers and maintenance managers are intensely looking at the trade-offs between a DCS and a PLC based control system architecture as they plan their future automation capital expenditures.

Multiple Phases of Selection

There are multiple phases in the DCS selection process.

The first is the trigger point. A Customer decides it needs a new system for any number of reasons. The primary business case and trigger point to start the process of buying a DCS for replacement and migration projects is external, e.g. the DCS supplier will no longer maintain the current system – the vendor ceases support, and replacement parts become unavailable.
A second reason for many customers is the need to reduce equipment maintenance and related expenses, or the desire for process improvements and increased production. So, it’s reasonable to say that migrations and replacements are more driven by fear of an obsolete system than by potentially improving capacity, gaining better control or other functional possibilities of a new system. However, when considering extending an existing system or choosing a DCS for a greenfield project, the main drivers are improving automation, availability of improved algorithms, ability to get business information to the workplace through real-time data to enable faster decision-making, and automatic start-up and shutdown routines. In these cases, an internal desire to improve automation is the driver. Once this trigger point is reached, a funnel effect begins to take place. The choices, determined by a variable group of people and a variable set of criteria, continuously narrow the options until one vendor remains. The first set of narrowing variables is corporate guidelines about preferred vendors, usually defined by the purchasing manager and an engineering consultant. The field of possible automation vendors is narrowed to between one and five vendors—often only one or two. Government or related organizations mostly follow government procurement rules, which often require choosing the lowest-cost or, in the best case, the most economically advantageous tender.

The second trigger point, the selection process begins again, and the long list is narrowed even more, using more specific criteria, until finally the decision makers arrive at one choice.
Before an organization starts the prioritization process, it should first define its business needs (function requirements) and its strategic outlook for how it wants to operate the plant in five to 10 years. Is it in the plan to outsource the system maintenance or not? (This has an influence on the priority for training or needed services). What about integration with other units? When these questions are answered, selection can begin.
Then we go to the long, short and final list phases, the thing to keep in mind about selection is that in a selection phase, there are actors with influence or power, and there are criteria with a certain weight factor or priorities. The results of this combination will be a shorter list of vendors in the next phase, where this process starts again, sometimes with other actors and a new set of criteria. The goal of our analysis was to define the core selection criteria and their priorities for the purchase of a DCS and to design a decision-making model, so the decision-making process for new systems was more balanced, more transparent, more consequent and faster.

The main actors during DCS-selection phases are the control engineer, purchasing manager, project manager, consultant, plant manager and maintenance manager. Other actors at the short list phase are engineering firms. The role of operators, who are the ultimate end users is often overlooked in the selection process.

Main criteria assessed by End Customers:
• Supplier vision
• Supplier’s ability to execute
• Supplier’s guarantee of the business case
• Functionality
• Interoperability
• Technology
• Implementation
• Documentation
• Training
• Service and support
• User experience and costs, including the initial costs, on-going expenses and exit costs.

The four most important criteria for end users are functionality, technology, service and support and business case guarantee. On average, the highest priority is given to initial costs when buying a system, and the lowest to exit costs. Exit costs (switching costs) don’t play a significant role in changing a DCS system. Lifecycle costs don’t play a major role; the longer the period, the lower the given priority by the customer.

At the long phase of the prioritization process; the business case guarantee, interoperability, ability to execute and exit cost are the most important criteria. Using a mathematical model, we can calculate the influence from every actor for every phase, in which zero is no influence and five is a veto on every aspect. The control engineer (2.31), consultant (1.68), project manager (1.49) purchasing manager (1.31) and plant owner (1.31) are the most influential actors. At the short phase, the functionality, technology, implementation process, user experience and vendor’s vision about automation are the most important criteria. User experience is the feedback the stakeholders will get from reference visits to other end user sites. The control engineer (2.34), consultant (1.88), purchasing manager (1.82), plant owner (1.75) and engineering firm (1.58) are the most influential actors. At the final phase, service and support initial cost, training, documentation and on-going cost are the most important criteria. The purchasing manager (2.41), plant owner (2.40), the control engineer (2.25), project manager (2.17) and plant manager 2.03) are the most influential actors.

It’s not that certain criterias are important only in a certain phase but, vendors who lack scoring on these criteria will not proceed to the next stage in the process. Between the various industry sectors is a remarkably wide variance in the weight factors for the initial costs. For greenfield projects, over 90% of all respondents find that they are only interested in the pure system price or the initial installation price when they select a DCS. Life-cycle costing (LCC) considerations play minimal role. The initial costs get the highest weight priority from the group’s consultant (often an internal engineering group) and an engineering company/engineering procurement contractor. Purchasing a DCS system is a balance between costs, returns and risks of migration and replacement projects. The Customers’ goal is to choose a supplier that offers the lowest risk in the long run and best added-value services during the DCS’s life cycle. By combining the lowest risk to the highest (satisfaction) score on the selection criteria, and by keeping the costs as low as possible, it’s likely to result in a recommendation for that particular supplier.

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