It's tough being a water company right now. Consumer and industrial demand is affecting availability, managing the obsolescence of complex, distributed assets is a challenge and the regulator is shifting the incentive model in favour of customer experience.

Given these imperatives, mastering strategic asset management and focusing investment on best whole-life cost is a central challenge. Asset decisions are affected by legacy, have longer-term implications and are driven by the highest of availability requirements. But these factors make it all the more remarkable that the sector has been slow to recognise new technology and to standardise.
In manufacturing, the best factories are “lean” and start with the basics like sorting and standardising. Factories are not entirely analogous to water sites, but there are a surprising number of technology parallels and lessons to be learnt from benchmarking. Manufacturing has better recognised that industrial technology capability has shifted dramatically in the past ten years and on the whole, exploited it across the enterprise. Examples include the introduction of software modelling and simulation tools, the deployment of consolidated automation platforms linked by standard industrial protocols and the implementation of manufacturing execution systems to aid real-time decision making. Monitoring is key to energy efficiency, and increasingly factories and industrial users are better understanding their energy use profiles by collecting information through communications-capable technology such as intelligent switchgear and linking this to centralised visualisation tools.
One of the issues the water industry faces in adopting technological best practice is its historical emphasis on low unit-cost procurement. Arguably, this has achieved the lowest prices for hardware, software and services, but I’d argue the sector achieves some of the lowest levels of value in return.
This is simply because off-the-shelf hardware and software capability has developed to the point that device configuration and diagnostics are now integrated and not bespoke. Communication and visualisation capability is unrecognisable from just a few years ago and much value can be derived from simplified, consolidated adoption of systems rather than components. The difficulty is that value is less tangible because it is tied up in easier interfacing to central systems, reduced training for engineers, reduced supplier costs and operational efficiencies through automatic site control – to name a few. Deployment, however, requires a clear technology vision and a system approach.
This has been more difficult to achieve in the UK than it has for our continental neighbours where, despite greater market fragmentation, greater standardisation has been achieved by copying and pasting available technology rather than turning to bespoke engineering.
I am encouraged that the regulator recognises the need to measure performance on the basis of totex (capex plus opex), which may enable water companies to take a longer-term view. The system approach must better aid long-term partnerships and find support through regulation to address the massive but less tangible extra costs of changing component suppliers, which are often attributed to the regulation process itself.
Further competition could affect the water industry, so performance and reporting will become key issues where technology and a clear approach to its deployment will be even more crucial factors in the future commercial success of water companies.
To achieve operational efficiency over the long term, there is a clear need to reduce the emphasis on pure capital cost and to increase focus on best practice process and technology deployment.
By identifying and benchmarking the benefits obtained by other industries that have adopted standardised, industrial technology investment strategies – and working with partners to access such benefits – my belief is that a number of the wide-ranging legacy and efficiency challenges facing the water sector can be addressed with increasing confidence and success in the future.
Brian Holliday is divisional director at Siemens Industry Automation

This article first appeared in Utility Week’s print edition of 13 January 2012.
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