When the time comes to update assets and related processes, the path forward can be daunting; however, systems integration makes it easier. By extending the life of pre-existing assets through retrofitting digital technology to legacy systems, companies can meet short- and long- term goals related to cost, efficiency and sustainability.
Overhauling the Factory: The Cost of New Technology
When it comes to updating industrial infrastructure, cost is usually the first and biggest obstacle to moving forward. These price obstacles are present in both hardware and software, which means multi-faceted digital operations face upgrade expenses at all stages of the process.
The newest technologies, at the edges of high-volume adoption, generally have much higher price tags. Moreover, specialization and custom work on top of novelty further increase expenses. This latter aspect also affects commoditized technology outside of the early adoption phase, but to a smaller degree due to familiarity with alternate configurations. Even with standard commoditized products, large-scale investments often present amounts that exceed budgets.
Apart from physical asset investments, adjusting a proven system introduces other expenses. Implementing new hardware or software rarely comes without hiccups. These issues may lead to downtime, reducing production and therefore revenue, or require new labor overhead. As well, new technology introduces a new learning curve for employees who may be overwhelmed at skill shifts. These employees will require training, which can seem daunting for HR teams.
Finally, the adage “if it ain’t broke, don’t fix it” speaks to the risk-avoidant parts of business. The idea that everything falls apart once someone starts meddling is pervasive. It can seem that as soon as investments are made into new technology, the risks of obsolescence or system interruption creep in. Risks of increased support rise too as integration becomes difficult when updates outpace legacy systems.
These costs evaluations frequently occur in industries where technology hasn’t been rapidly evolving, considering the slow-down of revolutionary technology impacts since the 1980s. Areas with these relevant issues include energy – both renewable and oil & gas – as well as logistics, some transportation and manufacturing. Initially, change in these fields was incremental but, with the quickly evolving digital advancements in hardware and software, it has begun arriving in tidal waves. Evaluations now happen in millions of dollars and across multiple parts of the supply chain, from materials to production to distribution.
The Cost of Legacy Technology
However, as expensive as new technology investments are, failing to meet demand opens the door for greater costs: losing to competition. When legacy technology simply cannot keep up, competitors with technological superiority can capture the market. Unfortunately, catching back up is not always quick, if feasible. The time spent lagging or “making do” is time other companies spend continuing to grow, increasing the distance between them and less advanced firms.
These technology wars are not always won with big moves, though. It can feel like that as the Amazon Effect pushes down on industries such as manufacturing and logistics. New companies in this setting, that don’t have older systems to overcome, are taking advantage of increased demand and disrupting consumer patterns. As result, an industrial “keeping up with the Joneses” mindset may settle in on legacy players in these markets. However, these new companies, like Amazon, often debut with one key change and progress over time as they build out their technology investments.
Moreover, is well-known that the cost of aging systems can exact a steep toll on reluctant or oblivious enterprises. These tolls are not product-based exclusively, i.e. factory floors slower to manufacture parts than digitized systems. They can also be human-based: inefficient labor results in high costs or highly-paid experts with the legacy knowledge have an upper hand in negotiations. This latter effect is pertinent to maintenance, an essential part of asset management and reducing costs.
Retrofitting Legacy Systems
Replacement, even in parts, is not the answer to updating systems. Systems integration, where new technology adapts older hardware or software to meet current expectations, is how industrial spaces can digitally transform without the costs.
In part two of our Systems Integration blog, we’ll examine how retrofitting legacy systems diminishes costs via sustainability and efficiency. We’ll also outline three key technologies that are bringing aging systems back into their prime and up to Industry 4.0 speed.