AVEVA White Paper - Interoperability A4:Layout 1

InteroperabilityAn AVEVA White Paper

Neil McPhaterMarketing Manager

AVEVA Solutions Ltd

Published April 2009

Interoperability - an AVEVA White Paper

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Introduction

1. Interoperability Today1a. Cost of inadequate Interoperability1b. Barriers to Interoperability

2. Macro-economic drivers of Interoperability

3. Business Value3a. Digital Convergence –

‘5 Steps to Value’3b. Potential Value from Interoperability

4 Market Context4a. Market Trends4b. Evidence for Digital Convergence today

5. Interoperability infrastructure5a. Engineering data standards and their

market adoption5b. Standards-based Interoperability Layer5c. Technology Platform5d. Interoperability Partners

6. Conclusion: ‘No Limits’ to value from Interoperability

References & Bibliography

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Contents

Introduction

This White Paper sets out to define and describe softwareinteroperability within the context of the Plant, Marine andBuilding & Construction industries today and in the future. Itidentifies a long-term business trend and demonstrates how thecross-functional team acts as its ‘agent of change’. It outlines abusiness model which defines both interoperability value derivedpragmatically today and the business mechanism for unlockingvalue tomorrow. Finally, this paper outlines the sort ofinteroperability infrastructure required to overcome thecomplexities of interoperability and disentangle the spaghetti ofstructured and unstructured data.

1. Interoperability Today

Interoperability is a term used increasingly in engineeringindustries to refer to the sharing and exchange of digitalinformation. Its definition, however, is rather vague. What iscertain is that information from different sources is very hard tointegrate despite the value of the sum being greater than that ofthe constituent parts - the description “information silos” is an aptanalogy. Creating a complete knowledge base from disparateengineering information can seem like knitting with spaghetti.

Wikipedia defines interoperability as “a property referring to theability of diverse systems and organisations to work together”. Morespecifically, interoperable computer systems “must defer to acommon information exchange reference model. The content of theinformation exchange requests are unambiguously defined: what issent is the same as what is understood”.

A separate definition (ref.1) defines interoperability from threeinterrelated viewpoints – technical, cultural, and working practices.From an information technology viewpoint, interoperability is ‘theability to manage and communicate electronic data amongcollaborating firms’. From an organisational culture viewpoint, it is‘the ability to implement and manage collaborative relationshipsamong members of cross-functional teams that enables integratedproject execution’. These views can be brought together at aworking practices level to define interoperability as ‘if all membersof a team can freely exchange data across different softwareproducts and platforms, every member of the team can betterintegrate the project delivery’.


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‘What is certain is thatinformation from different

sources is very hard tointegrate despite the value of

the sum being greater thanthat of the constituent parts -the description “information

silos” is an apt analogy...’

So interoperability is a desirable goal but, in spite of this and theadvances in IT capabilities, we find inadequate interoperabilityeverywhere. This is becoming a serious obstacle in the industry anda number of studies in the last five years have attempted to qualifythe issues and quantify the costs.

1a. Cost of inadequate Interoperability

A report from NIST (ref.2) refers to the US capital facilities industry.It estimates that “inadequate (software) interoperability” may cost$15.8 billion annually in America. This corresponds to 1-2% of theindustry’s entire annual revenue! Significantly, almost two thirds ofthese costs are borne by Owner Operators. Engineering Procurementand Construction contractors (EPCs) are also affected, but less so.ENR magazine (ref.1) believes the potential dollar losses are twiceas big as the NIST estimates. This view is reinforced by other recentreports (ref.3) (ref.4).

These reports suggest that the greatest pain is currently being feltin the Architecture Engineering Construction (AEC) industry, butmany problems are shared with the Plant industry.

1b. Barriers to Interoperability

There are many limitations or barriers to interoperability, but threeprincipal categories may be identified. Firstly, informationtechnology is a key limitation, arising from incompatibility acrosssoftware products. This involves a number of factors; primarily,incompatibility between the software product data models.Engineering data standards are intended to address this issue but,perversely, have also been part of the problem. In the 1990s the ISO10303 STEP international standard was hailed as the standard forintelligent engineering exchange. However, there was no reliablecompatibility between data models from different software producttypes.

A further hindrance to the use of standards to support exchangehas been the low acceptance within the market. A ‘technicallyexcellent’ data standard is worthless if it is not implementedsuccessfully by stakeholders like Owner Operators and EPCcontractors.

Secondly, organisational cultural boundaries can limitinteroperability. Such boundaries include geographical distance aswell as functional ones between different offices, sites, time-zones,divisions etc. They also include cultural inabilities to collaboratewith third parties.

Lastly, rigid working practices also create barriers tointeroperability if existing business processes are ‘cast in stone’.Any such organisation will have great difficulty in establishingflexible, cross-functional teams. One common impediment is thefailure to stipulate applicable data standards on commercialcontracts. This can be significant when close co-operation betweencontractors is necessary during the contract, or during projecthandover to the Owner/Operator, when a lot of valuableengineering intelligence can be lost.


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‘...it estimates that“inadequate (software)

interoperability” may cost$15.8 billion annually in

America. This corresponds to1-2% of the industry’s entire

annual revenue...’

2. Macro-economic drivers of Interoperability

To look into the future we must first understand what is drivingchanges in the global economy. There are three main macro-economic drivers. These are globalisation, digitalisation and theindustrialisation of emerging markets. In the last year these have,unfortunately, been joined by the economically and financiallydisruptive credit crunch.

Driven by continually reducing transportation and communicationscosts, globalisation is the extension of markets across the globe,driven by increased flows of capital, goods and services.Globalisation develops through the reconfiguration of supply andvalue chains, including outsourcing, and freedom of choice both inmarkets and at the ballot box.

Technology continues playing a full part. Digitalisation and theimplementation of information technology have been driven bydramatically falling telecommunication and computing costs. In hisrecent book “The world is flat” (ref.5), Thomas Friedman describesthe convergence of a number of flatteners to create a whole newdigital platform which is global, web-enabled. and supportsmultiple forms of interoperation and collaboration.

In synopsis, digital convergence is one of the most importantdrivers affecting the business environment today. Its key ‘agent ofchange’ is the IT-enabled networked team. Such teams can spanfunctions and organisations, facilitating changes in workingpractices that can deliver very high value. So how valuable can suchnetworks be?

In fact, the value of a network grows disproportionately with size.Historically, railway networks have demonstrated this, and theimportance of market-acceptable standards. A century and a halfago, only after common agreement on the standard gauge trackwere all the English railway Owner Operator companies able todeliver interoperable services on a single national network. As aresult, the railway market increased disproportionately. In today’sdigital world, examples includes mobile phones (based on the GSMstandard) and download music sales (based on MP3).

The UK rail network, 1960


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‘...the value of a networkgrows disproportionatelywith size... railway networkshave demonstrated this... acentury and a half ago, onlyafter common agreementon the standard gauge trackwere all the English railwaycompanies able to deliverinteroperable services on asingle national network...’

3. Business Value

Unlike the industrial economy and the railway network, in theinformation economy businesses, markets, and products andservices are interrelated (ref.6). This has two potential effects.Firstly, it opens up the possibility of collaborative advantage inaddition to competitive advantage. Secondly, new marketopportunities may be created as the value chain is reconfigured bydigital convergence.

The most important sources of value through “interrelatedness” arenetworks and operational compatibility. Significantly, the moreusers there are in a network the disproportionately greater becomesits potential value. Specific requirements for compatibility includestandards-based interoperability, collaborative skills (with theability to partner across functions, boundaries and organisations),and information content. IT-enabled, cross-functional networkedteams thus have considerable potential to reconfigure workingprocesses, remould organisations, and transform markets.

3a. Digital Convergence – “Five Steps to Value”

One particularly illuminating business model articulates digitalconvergence as adding value in five steps. It is called “IT-enabledBusiness Transformation” and is illustrated below. (For a fullexplanation see the original reference (ref.7). In general, thegreater the business transformation that takes place, the greaterthe business value that can accrue via the networked team. The“Five Steps” are:

However, business transformation is not an overnight process – it isa long strategic process.

3b. Potential Value from Interoperability

One absolute pre-requisite for value from cross-functionalnetworked teams is common engineering data standards. Giventhis, a number of key drivers emerge which can create value fromnetworks. These are shown graphically below.

Digital convergence is inexorably driving the global businessenvironment up through the interrelated steps. Importantly,network value increases as you climb the steps - initially internal tothe organisation (competitive advantage) then, later, external tothe organisation (collaborative advantage with partners). The valuesought by the Owner/Operator or EPC depends on their businessambition attenuated by their risk-reward strategy.

There are a number of specific qualifiers which determine networkvalue. The first is its number of users. As you climb the steps thenumber of network users increases. Remember that the value of anetwork increases disproportionately the greater the number ofusers.

The second value qualifier is the number of sources of engineeringcontent; that is, data from design software products as well aslifecycle information sources. It is also clear that, as with networkusers, the greater the number of sources of engineering contentthat can be integrated, the greater the potential to deliver value.

Finally, the third qualifier of business value from the network is thenumber of boundaries spanned by the networked team. Asmentioned above, this can include the number of geographical sitesspanned, functions crossed, organisations covered.


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Exploit Single Product

Exploit Integrated Products

Exploit Value Chain

Reconfigure Value Chain

Transform Market

LOWLOW

HIGH

HIGHPotential Business Value

Leve

l of B

usin

ess

Tran

sfor

mat

ion

External toOrganisation

Internal toOrganisation

IT-enabled Business TransformationEngineering Value Chain


Exploit Integrated Products

Exploit Value Chain

Reconfigure Value Chain

Transform Market

LOWLOW

HIGH

HIGHPotential Business Value

Leve

l of B

usin

ess

Tran

sfor

mat

ion

External toOrganisation

Internal toOrganisation

IT-enabled Business TransformationEngineering Value Chain


Data Standards

Added-valueNetwork

4. Market Context

The Gartner Report (ref.3) cited previously surveyed the businessenvironment of the “AEC market” for market trends worldwide.Gartner defined this market as comprising four sub-markets:Architecture, Plant design, Civil applications (including Buildingdesign) and Facilities management. The key market trendsidentified are as follows:

4a. Market Trends

For all AEC markets the following trends exist:

� In general, Owner Operators will exert increasing influence overtheir chosen markets as they have the biggest stake in their owncomplex engineering projects, buildings and operating assets.

� Globalisation of both Plant and AEC projects is driving thedevelopment of software to overcome geographical barriers tointeroperability.

� Interoperability with the ever-increasing quantities of bothstructured and unstructured legacy data demands open access.

For the Plant design market the following trends exist:

� A lifecycle approach to information management must be anintegral part of any software vendor’s product set. Open access tothe widest possible range of information sources is key.

� Data integration between Owner Operators and EPC companieswill become an increasingly important issue and will include arequirement for two-way data interchange from the outset.

For the Architecture and Building Design market the followingtrends exist:

� The Building Information Model (BIM) is now beginning to have asubstantial business impact across this complete value chain.

� The software vendors who will be most successful are those thatsupply integrated solutions across the complete lifecycle. Thesesolutions will attract new types of customers thereby increasingthe market

Another way to look at digital convergence is to consider the marketdiagrammatically, as illustrated below. Until quite recently themarkets for Plant, Marine, and Architecture and Building designwere relatively discrete, with little overlap. However, this ischanging.


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Converged software markets forPlant, Marine & Building design in engineering

and business ‘domains’

Mechanical Equipment

ISO 15926market (Plant)

BIM market(Buildings)

Increasing movetowards industrydata standards -

away fromproprietary formats

Increasing moveto software

products withdata models

Increasing need formanaging large volumes

of data on globalengineering projects

MarineDesign

SoftwareMarket

PlantDesign

SoftwareMarket

BuildingDesign

SoftwareMarket

‘As-built’ models (scans, photos, terrain, maps)

TODAY TOMORROW

FUTURE

Digital Convergence and Markets

As well as the three markets mentioned previously, the businessenvironment also includes mechanical design and the ‘as-built’engineering domain. A recent report (ref.8) considers the overlapbetween mechanical CAD and plant layout tools for Power Plantdesign, and how to get the best value respectively from mechanicaland plant software products. Separately, site surveying for ‘as-built’surveys has recently received a considerable boost with theintroduction of high-bandwidth laser scanning, dramaticallyreducing the costs and increasing the precision of ‘as-built’ datacapture.

There are also a number of long-term trends (shown in the diagramas downward-pointing arrows.) First, there is the move away fromproprietary data standards towards market-acceptableinternational standards. Second is the move towards data-modelledsoftware products with a high level of engineering intelligence. Thisreflects a move away from 2D CAD draughting with its very muchlower level of engineering intelligence. Thirdly, there is the need toprocess and manage ever-increasing quantities of data.

4b. Evidence for Digital Convergence today

So much for the business theory! But what is the evidence tosupport it in today’s information-intensive engineering businesses?There are many examples of digital convergence today. Theseinclude:

1. In the Plant market, ‘handover’ is the intersection between anasset’s design & construction phase and its subsequentoperation. Digital handover is proven to have high potential forreplacing existing paper-intensive processes with improvedautomation in the population of Operations systems and tools.

2. The emergence of BIM as an international engineering datastandard. A recent article in The Economist (ref.9) stated that“Aircraft and cars are designed using elaborate digital models.Now the same idea is being applied to Buildings”. It alsoobserved that very complex new buildings, such as theGuggenheim Museum in Bilbao and the Walt Disney Concert Hallin Los Angeles “might not have been possible to build at allwithout the help of BIM”.

3. The overlap between the Plant and Marine markets is bestexemplified by Floating Production Storage & Offloading (FPSO)vessels; offshore Oil & Gas production facilities that extractunderwater petroleum reserves. They are, in effect, moored oiltankers with oil and gas processing facilities designed into theirstructures.

4. Last year Bentley Systems Inc and Autodesk Inc surprised themarket by announcing (ref.10) that they had agreed tocollaborate to support interoperability between their softwareproducts.


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‘...site surveying has recently received a considerable boost with theintroduction of high-bandwidth laser scanning, dramatically reducingthe costs and increasing the precision of ‘as-built’ data capture...’

5. Interoperability Infrastructure

So what sort of infrastructure is needed to deliver value onengineering projects and operating assets today withoutcompromising the future potential of interoperability? Certainly itmust overcome the barriers to interoperability described above, butit must also include appropriate data standards, an InteroperabilityLayer, a robust and flexible Technology Platform, and supportinginteroperability partners.

5a. Engineering data standards and their market adoption

After recognising the shortcomings of the ISO 10303 STEP standard,in the mid/late 1990s the Norwegian POSC CAESAR Association(PCA), with able assistance from the Dutch SPI-NL consortium setabout rectifying the non-compatibility issues. Building on thefoundations of STEP they established and developed ISO 15926 forthe Offshore Oil & Gas industry. This has now achieved the status ofan international standard.

Over the last few years, in the process plant industry, FIATECH hasbrought fresh American vigour to accelerate the deployment of ISO15926 (ref.11) and ensure its wider acceptability. This American-European double act is speeding up the adoption of market-acceptable standards.

As PCA’s efforts over the last decade have shown, the developmentand successful implementation of such data standards andmethodologies as ISO 15926 and BIM takes time and effort. Theextent of the Norwegian ambitions is exemplified by their offshorevision of the future that is aiming towards a digital infrastructureand information platform to enable unmanned operation, from ashore-based control centre, of heavily instrumented Oil & Gasproduction platform facilities in the North Sea and Barents Sea.

Market adoption by industry stakeholders also does not happenovernight. Engineers are justifiably cautious about adopting newpractices. This is strikingly illustrated in the Figure below (ref.12)which envisages that market adoption of BIM by structuralengineers will not reach a tipping point until after the year 2015!

5b. Standards-based Interoperability Layer

Within its widest context a standards-based Interoperability Layershould act like a multi-lane highway bridge between the externalbusiness environment and a Technology Platform. On this Platform,information is harnessed with consistency and full accessibility.

While it is important to have a clear vision for the future, it is vitalto get value from appropriate engineering data standards today.This demands a pragmatic approach to exploiting workablestandards right now while continuing to drive the development andacceptance of industry-wide data standards.

This leads to the need for a pragmatic, standards-basedInteroperability Layer. It must be able to deal with the spaghetti-like complication of today’s business environment and bring orderout of the chaos of heterogeneous information on topical industryproject and operating assets right now. It must also be able to beextended and stretched to meet future demands for improvingexisting standards or introducing new ones.

The diagram below illustrates a sub-set of an Interoperability Layer– in this instance an ‘as-designed’ domain sub-set. It supportsappropriate engineering and commercial data standards indifferent markets – Marine, Mechanical, Plant, Building &Construction.


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‘...a standards-basedInteroperability Layer should actlike a multi-lane highway bridgebetween the external businessenvironment and a TechnologyPlatform...

2000 2010 2020 2030Year

10080604020

0

Perc

enta

ge o

f ind

ustr

y

Structural Engineer projects BIM adoptionby structural engineering industry

8%

5c. Technology Platform

The Technology Platform must be easily and quickly implementable,and provide a number of basic capabilities across all engineeringdomains and related business functions. As outlined above, thePlatform must be able to support an extensible InteroperabilityLayer which is based on a number of engineering data standards. Itmust also be able not only to manage vast amounts of information,including documents, but also to share and exchange thisinformation with a high degree of integrity and no loss ofengineering intelligence.

The Platform must also be able to support networked teams as theyadapt their business practices and workflows to exploit emergingbusiness opportunities.

The Platform must be tightly integrated with the Internet and theWorld Wide Web to take full advantage of the “Flat World” envisagedby Thomas Friedman. This will include sophisticated levels of accessto support the work processes of networked project teams, fleets ofoperating assets, organisations and business units.

The Platform must be able to support the development of newsoftware products which can take advantage of the Platform’scapability.

Finally, the Platform must be able to incorporate third-partyinformation technology which strengthens the Platform and adds toits capability and not solve just the Platform providers owninteroperability issues. This is described in paragraph 5d. opposite,under information technology partners.

5d. Interoperability Partners

There are a number of types of Interoperability Partners. Theseinclude partnerships for providing information technology, forintegrating engineering content, and for business implementationon engineering projects and operating assets.

Information technology partners bring specific technologies intothe Technology Platform, increasing its integrated capabilities andits potential to deliver more value. Such technologies might includedatabase manipulation, document management, engineering datatranslation and workflow management.

Engineering content integration partners are those with specialistcompetencies in particular software products and/or informationsources. Relating to the Interoperability Layer diagram below, suchpartners are likely to include those who support such engineeringand commercial content as:

� ships’ hull structure� mechanical equipment� electrical and instrumentation� 3D piping� P&ID schematics� 3D steel structures� ‘as-built’ models

Business implementation partners supply extra resources to scaleup interoperability implementations on customers’ engineeringprojects or operating assets. Each customer, whether OwnerOperator or EPC contractor, will have his own specific requirements.The value delivered might be at enterprise level or at the level of anindividual asset or engineering project.


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Interoperability Layer

HullStructure

MechanicalEquipment

E&I 3DPiping

P&IDSchematics

3D SteelStructure

ERP,EDMS,

DBs, etc

DCS,real-time,

etc

6. Conclusion: ‘No Limits’ to value from Interoperability

Digital convergence is a long-term business trend which isinexorably changing the business environment. However digitalconvergence is as much about the journey as the destination. ForOwner/Operator and EPC contractor alike, this journey offers thepotential to overcome software incompatibility and progressivelyclimb the “Steps to Value”.

Substantial value is already being gained in the Plant, Marine andBuilding Design markets by the pragmatic use of appropriatestandards. Wider usage of cross-functional teams and the changingof working practices are taking greater advantage of thecollaborative power of computer networks. Extensibleinteroperability infrastructure appropriate to your business needscan deliver value both now and in the future. This technical choicecan be reinforced by a contractual one to prescribe appropriate data standards, such as ISO 15926 and BIM, on planned contractsfor both engineering projects and asset operations.

Your interoperability aim should be “No Limits” to:

� functions crossed� numbers of users in networked teams� sources of engineering content� organisations covered� global operation� volumes of data managed, both structured and unstructured� engineering and commercial domains spanned

Your objective should be to start disentangling the spaghetti ofinteroperability right now and strive to reach the next value “Step”ahead your competitors.


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References & Bibliography1. The McGraw Hill ENR Technology for Construction report on Interoperability in 2007.2. National Institute for Standards & Technology (NIST) 2004 report, “Cost analysis of inadequate interoperability in the US capital facilities industry”.3. Gartner Report, “Market Trends: Full Speed Ahead for the Worldwide AEC market”, Sharon Tan, October 2006.4. ISO 15926 Research Report, Business Advantage. “The Impact of Open Standards”, Sue Hannay, January 2009.5. Friedman T L, “The world is flat”, Penguin, 2005.6. Scott-Morton M S, “The Corporation of the 1990s – Information technology and Organisational Transformation”, New York, Oxford University Press, 1991.7. Venkatraman N, “IT-Enabled Business Transformation”, Sloan Management Review/Winter 1994.8. Cambashi Limited report M2850, “Using mechanical CAD and plant layout tools for power plant design”, 2008.9. Economist, “From blueprint to database”, June 2008.10. ENR 8 July 2009. “Bentley and Autodesk Agree to Exchange keys to sharing of data”.11. Joint IDS/ADI Project. See respective websites of FIATECH and POSC CAESAR Association.12. BIM uptake curve – source: Structural Engineer.

‘...yourobjective

should be tostart disentangling

the spaghetti of interoperabilityright now and strive to reach the

next value “Step” ahead yourcompetitors....

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AVEVA believes the information in this publication is correct as of its publication date. As part of continued product development, such information is subject to change without prior notice and isrelated to the current software release. AVEVA is not responsible for any inadvertent errors. All product names mentioned are the trademarks of their respective holders.

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AVEVA White Paper - Interoperability A4:Layout 1