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Product category: Process Control and Monitoring
News Release from: Frost and Sullivan
Edited by the Processingtalk Editorial Team on 04 April 2005

Frost 'Movers and Shakers' interview:
John Berra

John Berra, President of Emerson Process Management, in a candid interview with Frost and Sullivan, details the key ingredient to the success recipe that is Emerson Process Management

John Berra, President of Emerson Process Management, in a candid interview with Frost and Sullivan, details the key ingredient to the success recipe that is Emerson Process Management Speaking from Las Vegas where the annual sales meet was under way, John underlines the key challenges ahead, outlines a deeper strategy, and discusses growth areas in an incisive style

Sath Rao (Frost and Sullivan): You've just met your top performing sales guys, so how has this year been for Emerson Process Management? John Berra (Emerson Process Management): We had a record year in 2004, with all-time sales high of $3.7 billion.

We grew just under 10 percent worldwide.

For a company our size, that's a large number.

The total global marketplace isn't growing anywhere near 10 percent, so we believe we're gaining market share.

That's a great feeling.

We're not getting overly confident or complacent, but we're in a good position right now.

Sath Rao (Frost and Sullivan): What do you think is the key to this outstanding success? John Berra (Emerson Process Management): We've been following a strategy that works well for our customers, and therefore for us.

A lot of the work we've been doing has been aimed at solving some of the fundamental problems our customers face.

The world of automation has taken their ability to run their plants at peak performance only to a certain level.

They still face significant challenges, including lost capacity due to unplanned shutdowns, and an inability to truly understand what's going on in the process even with all the measurements they're making now.

Or consider control valves.

Every plant depends on them, but they're often an overlooked part of good automation.

There are a lot of plants out there with very sloppy valves, and the users don't always realize what it's costing them.

They put advanced control software on a piece of ancient history, and then wonder why the results aren't very good.

Our PlantWeb architecture changes all this.

It enables our customers to unlock the true potential in their plants and get as much out of plant assets as they can.

We've put together world-class products and systems in a standards-based digital architecture.

It uses the intelligence in digital field and valve instruments to see what's really going on in the equipment and process.

That information enables users to detect and even predict potential problems - so they can avoid an unplanned shutdown, and keep those valves and other equipment running at their best.

Finally, we've grown our organization into a complete solutions and services provider.

Most of our customers don't have the engineering staff they once had, so we provide the resources and expertise to help them put together the automation solution that's right for them and then get the most out of it.

The results are amazing.

Customer are able to lower maintenance cost, reduce energy consumption, run their plants closer to physical constraints, and get more out of their assets.

This basic approach appears to be working very well.

It's clearly the reason that customers come back to Emerson Process Management every time.

Sath Rao (Frost and Sullivan): We are actually working on several reports and we speak to a fair cross-section of end-users, the consistently message has been that your customers are extracting maximum value from investments made in the Emerson integrated solution.

Now in terms of challenges, given that people have always been postponing their investment in process upgrades, how does Emerson Process Management address this challenge? John Berra (Emerson Process Management): Every customer is different.

But it usually boils down to presenting a business case at the right level of the organization.

We show them the potential value, and how their investment can have a huge return.

It's only partially a technology discussion; it's more about bottom-line business results.

Sometimes customers have tried something and been burned (by some other supplier, of course).

Some magically wonderful package was heralded as the answer to everyone's prayers, but once it was installed all they could do was shut it off.

That leaves a certain amount of scepticism that any supplier -- including us -- can deliver the expected results.

What we do instead is dive into the customer's specific problems and find the best way to address them.

We call these performance optimisation studies.

They're especially useful in an existing plant.

Typically, the first thing we do is a "walkthrough" of the whole plant.

We look at work and material flows, the types of assets, how they control their plant, and the level of sophistication of their automation systems.

We then prepare a detailed report with specific step-by-step actions.

We can also help the customer prepare the business justification and monitor the results.

Often the best approach is to start small.

You gauge the results and build on the victories.

Many times the improvements are part of a long-term cycle, where we do some things in a pilot basis, the customers like it, and the programme grows from there.

We're well down this path now, with a lot of momentum, and we're finding some of that inherent scepticism can be overcome rather quickly.

We've been blessed with many customers who have documented their successes.

Sath Rao (Frost and Sullivan): When we look at the competitive landscape clearly Emerson Process Management is the most evolved in the performance solutions space.

Competitors are trying to play catch-up.

What do you think are the differentiators for Emerson Process Management? John Berra (Emerson Process Management): First, our world-class products.

They reflect our long history of technical innovation and market leadership.

To put it simply, people like our products, and we can provide virtually anything they need.

Second, our people.

We get consistently high marks from customers on responsiveness, integrity, follow-through, meeting commitments, being there for them.

When we do make a mistake, we own up to it and we fix it.

Superior customer service is the best way I know to maintain a relationship.

I'm amazed when I see how customers complain about some of our competition.

Third, our stability and commitment.

The management of Emerson Process Management is not a merry-go-round.

The people that you met 2-3 years ago are the same ones you talk to today.

Our employees and our customers know they can count on consistent leadership and a consistent message.

Add our PlantWeb architecture to all that, and you have a formula for success - and a clear differentiation.

We will always do everything we can to maintain that lead.

Sath Rao (Frost and Sullivan): When you talked about challenges, in terms of a long sales cycle and the ability to deliver value at the investor level, clearly Emerson Process Management seems to know the secret.

You did allude to some of the secrets to this successful recipe is terms of solution suites, and new product developments.

Could you mention some of the new product initiatives? John Berra (Emerson Process Management): We're proud of the several new product introductions we've had in the last year.

Let me give you some examples.

Our Rosemount pressure and differential pressure products are world leaders.

We've reinvented this category with the introduction of the 3051S transmitter.

It's another step-change in scalable, highly accurate, differential pressure devices.

We also introduced the Rosemount 848T, which connects multiple temperature inputs on a Foundation fieldbus H1 segment.

By using it as form of multiplexer, we can provide a very cost effective temperature monitoring system.

We're even selling it in applications where customers aren't using a fieldbus for anything else.

We introduce several new Micro Motion products every year.

For example, we've added next-generation diagnostics to a new version of our Coriolis flowmeters.

New products are advancing our Coriolis offering from the standpoint of ease of installation, applicability to certain fluids, and other capabilities.

On the DeltaV system side, we've introduced the DeltaV SIS system as part of our total-loop "smart SIS" offering.

We've moved into the safety world, which is an important next step for us in applying our PlantWeb architecture.

Many of our customers use separate safety systems that don't have anything like the predictive intelligence of PlantWeb.

If you look at all the benefits PlantWeb offers in process control, we should be able to deliver even more value in a safety system where it's so important to know that every piece of equipment is ready to work when you need it.

The beauty of this smart SIS is that it's an independent, standalone safety system, but it's based on the DeltaV platform and therefore at the engineering-console level you use the same configuration processes and the same database.

Typically the basic process control system and the safety instrumented system only come together at the server level, and people are constantly trying to bridge information between safety and control.

On the valve side of the business, we've added in-service diagnostics to our Fieldvue intelligent valve controller.

For some of the diagnostics we had in the past, we had to put the loop in manual and stroke the valve back and forth to learn something.

We figured out a way to eliminate that requirement, because customers don't want to put loops in manual and play around with the valves.

We do the same deep level of diagnostics that we did off-line in the past, but now we can do it online, with the valve still in service.

One reason we can come up with all these innovations is our strong financial performance.

Emerson puts its business-segment numbers, including ours, out there for everyone to see.

As a result, we're probably the most "visible" process automation company.

We don't have product lines that would not be considered automation, and we don't combine process automation business results with things like building controls.

Our numbers are process automation, 100%.

Sath Rao (Frost and Sullivan): Are there any specific business segments you believe that spring out in terms of exceptional performance over the last year? John Berra (Emerson Process Management): Let me answer that question in terms of industries and world areas.

We have a lot going on in upstream oil and gas applications around the world.

One example is the west-east pipeline in China.

There's also a lot of LNG business in the Middle East, and we believe that North America has to build more receiving and re-gasification terminals for LNG.

We've had exceptional business in LNG tankers and FPSOs (Floating Production, Storage, and Off-loading vessels).

FPSOs are huge ships that serve as both a tanker a full processing plant - which gives us the opportunity to provide products and solutions everywhere, from radar level gauges in the tanks to a DeltaV system with valves and instruments.

We have a group specifically to coordinate our capabilities in the marine industry, and it's been a exceptional growth area for us.

We think the next few years look very good for that business.

Another industry going well for us is electric power.

We're proud that the Westinghouse Process Control organization joined us in 1999.

They're now called Power and Water Solutions, but the rich tradition and history of Westinghouse is still in our roots.

We're building on that tradition by infusing some of the same technologies used in DeltaV - including Foundation fieldbus -- into the Ovation platform.

As a result, we now offer a complete PlantWeb solution for power, water, and wastewater industries.

It's a great growth area.

North America has a lot of coal-fired plants scheduled in the next few years.

China is building power plants as fast as they can.

Eastern Europe is building power plants.

And very soon, we believe, the former Soviet Union will add more plants to support their rising standard of living.

A third industry is life sciences.

We're a major supplier for the pharmaceutical and biotechnology industry.

For example, we're the chosen supplier for the Wyeth Enbrel project outside of Dublin.

It's a huge project, with virtually all Emerson automation.

We've also had great growth with other leaders like Merck and Pfizer.

And we're honored that Biogen was so happy with the results we've given them that they featured our automation in their annual report.

Looking at things geographically, China and India are major growth areas, but we're also are big believers in the growth potential of Eastern Europe and the former Soviet Union.

We just completed an acquisition in Russia, a company called Metran.

It's the largest pressure and temperature supplier in the former Soviet Union, and it reminds me of the earlier days of Rosemount.

They have great engineers, a distributed infrastructure, and people who believe in technology and customer service.

Having them in our organization greatly enhances our ability to support and ultimately do some local work in Russia, similar to what we did in China.

I'm not predicting that growth in Russia is going be as hot as China, but the underlying prospects for the future look pretty good.

Oil and gas, refining, and power are the big opportunities.

But eventually we're going to see more in pharmaceuticals, water and wastewater, and food and beverages as well.

One other growth area is the Middle East.

There is lot of work going on in Qatar right now, and major projects in former Soviet Union locations like Kazakhstan.

We are very well positioned there as well.

And, of course, North America and Western Europe are still very important.

Business in those regions involves fewer green-field projects but more modernisations and upgrades.

Sath Rao (Frost and Sullivan): You did mention China in your talk, we recently covered that market and Emerson Process Management is clearly the leader in that market.

Some of the long-term strategies envisaged 5 years ago have really started bearing fruits and has propelled Emerson Process Management to a market leadership position.

What do you think was fundamental to the success there for Emerson Process Management? John Berra (Emerson Process Management): The real growth has come in the last 4 or 5 years, but the groundwork was laid a long time ago.

This is a long-term commitment, and we've been as patient and determined as the people who built the Great Wall.

I first went there in 1978, when you had to have special passports.

We started with technology seminars that led to some technology transfers in the late 70s.

Those in turn led to a joint venture that now has become a wholly owned activity of Emerson Process Management.

Now we have 900 people there, in six manufacturing facilities and in sales offices all over the country - even as far away as Urumqi.

We do about $300 million of business on a destination basis in China.

Our strategies there have been very similar to the strategies we followed in other parts of the world: to develop and put in place a team that customers can count on.

Our China organization is not a bunch of expats.

It's Chinese.

Local manufacturing and engineering capability is also important to our strategy.

An example is the BP Secco project, which has 23,000 Foundation fieldbus devices connected to 10 DeltaV systems.

We've completely managed, engineered, assembled, and staged the project in China, and manufactured many of the products there.

This local capability is one of the things that has positioned us for the great growth we're seeing.

I've seen our business in China grow tremendously since I first went there 28 years ago, and I am really proud of our Chinese organization.

We're looking at continued exceptional growth there and believe that we are better positioned in China than any of our competitors.

Sath Rao (Frost and Sullivan): What role do newer technologies like fieldbus play in your business in China? John Berra (Emerson Process Management): The people we deal with in China are well educated, dynamic, and driven to accomplish everything they can.

Their attitude is "Our mission is to make world class facilities here.

We don't want your previous-generation technology; we want very best and latest you have." I see more willingness to take advantage of technical innovation in China than in other parts of the world.

There's a burning desire to have the very best.

Earlier I mentioned the business value we can provide through predictive diagnostics.

But the Chinese aren't pursuing this to save labour costs.

If and when their plants move beyond supplying the internal market to also pursue export business, they want to world-class on an export scale as well.

They're totally receptive to technology.

For example, virtually all the major new projects in China specify Foundation fieldbus.

If you're going to bid on a job, you bid a fieldbus solution.

I see more of that in China than anywhere else.

We've helped to push that, as have some of our competitors.

But there's no question that receptivity to the technology is as good as you could find anywhere -- and that plays to our strength.

Sath Rao (Frost and Sullivan): That's a very key observation and perhaps gels in with some of the other strategies.

Has the thought of low level of Intellectual Property protection ever crossed your mind there? John Berra (Emerson Process Management): Yes.

No matter where we are, we take every step we can to protect our true technology kernels.

The downside of being overly concerned is the risk of losing business.

I'm comfortable that we've taken the right steps in a balanced approach to protecting our intellectual property.

There are indigenous suppliers in valves, regulators, and a few measurement products, as well as one or two system suppliers.

We're also seeing the emergence of some engineering solutions providers.

These suppliers obviously see the same growth potential we do, and sometimes we face them as competitors on smaller projects and a few of the power projects.

Of course, our standard global competitors are in this market, too.

Sath Rao (Frost and Sullivan): In the case of valves, has local manufacturing in terms of castings being sourced locally been of particular advantage to Emerson Process Managements global strategy? John Berra (Emerson Process Management): Some of our plants in China make product not only for the local market but for export.

That's been an advantage for us.

But in the valve business you have a constant tension between manufacturing cost and shipping cost.

Unlike some of our electronics-based products, which can be put on an airplane and sent anywhere at relatively low cost, valves are heavy and big.

Air freight is very expensive, and ocean freight increases inventory transit and response times to customers.

As a result, we have a valve manufacturing strategy that covers all three major geographic areas.

We manufacture in North America, in Asia, and in Europe.

Some castings and components used in our European factories may come from our Asia factories, but the big, heavy final product gets assembled, tested, calibrated, and shipped from closer to its end destination.

Sath Rao (Frost and Sullivan): When you look at Eastern European growth, growth in China and India, do you see clear differentiators in these three markets in terms of the nature of growth or the intrinsic strategy you need to adopt for these three growth regions? John Berra (Emerson Process Management): In certain ways we approach every market the same way.

You have to be there.

You have to make the investments to put a local organization together.

And you have to establish customer relationships.

That's what we're doing in Romania, for example, where we now have a 10-person office in Bucharest.

Certain things are unique to the location.

There are codes and approval differences on products, for example.

Your value message may also change.

For example, the value message of saving labour cost is less powerful in China than in other areas.

But the value message of being able to run the plant at world-class level rings true everywhere in the world.

In fact, our PlantWeb message rings true no matter where you are, and whether you are talking about an existing facility or a brand new one.

We also try very hard to have local management.

My impression is that some of our global competitors are very "headquarters-centric." It's almost like their country manager goes into work every morning and reads the emails from headquarters that tell him what to do.

That's not how we run our company.

Certainly we have standards we need to follow, and we communicate well, but you don't want to look like you're an American company that just happens to be doing business in this country.

You want to look like you are a global company whose business includes that country.

I know "global" is an overworked word, but our management process really works that way.

Sure, we've got some expats here and there, but in general our philosophy is to have local management and to give them the power to make decisions.

We're not force-fitting some kind of cookie-cutter solution that works in Houston but it won't work in Moscow.

Sath Rao (Frost and Sullivan): I've one last question in terms of vision of what needs to be accomplished for Emerson Process Management to maintain its leadership position going forward in the next 5-6 years time frame.

What do you think is very critical? John Berra (Emerson Process Management): I want to return to couple of things that I mentioned earlier - specifically, the ways we are extending the PlantWeb architecture into new areas.

The first area is safety.

We're already well under way in this area, and have launched our "smart SIS" that provides the predictive intelligence of PlantWeb in a complete-loop safety solution - not just the logic solver, but also the sensors and valves.

We're also extending PlantWeb intelligence to plant rotating equipment with our Machinery Health transmitter and asset optimisation software.

You connect temperature and vibration sensors on the rotating equipment to a highly intelligent box - our transmitter -- and it performs diagnostics that in the past would be handled by a PC programme doing vibration analysis and showing you all this on a spectral analysis.

We've taken all that black-magic mystery and turned it into something that's easy to use but incredibly powerful in what it can do for you.

It's like the lights on your dashboard that warn you something needs attention, but with detailed analysis of what's wrong and guidance on what to do about it.

The third area where we are extending PlantWeb is outside the plant.

We do a lot of business in the oil and gas industry, where many of the instruments and valves are far from any central plant.

All those remote devices could benefit from the diagnostics PlantWeb offers - maybe even more than inside the plant because, when something goes wrong, you have a long way to go to make a service call.

We found we can extend PlantWeb architecture with a device that we are the world leader on, the Remote Operations Controller.

Some people call it a remote terminal unit or RTU, and it's often solar-powered.

It collects information from the field and sends it back by a number of technologies, such as cell phone or wireless.

Now you'll be able to have the unit send diagnostic information back to asset-management software.

Basically, we're extending PlantWeb predictive intelligence out to the oil fields and pipelines.

Those are some of the exciting things we're doing to extend and broaden the value PlantWeb creates for our customers.

We're also working on the services we offer.

We continue to build up our Main Automation Contractor (MAC) capability.

You'll also hear it called Main Instrument Vendor, or MIV.

The idea is that the customer involves an automation supplier from the beginning of the project.

You work together to do a front end engineering design study, and then roll it forward to the actual project implementation.

One of the classic examples of this is the Shell Deer Park project that we just completed.

This is a very large refinery that, when we started, had various vintages of automation -- from pneumatic, to electronic guide interlock, to some of the earlier versions of DCS products.

The scope of the project was to completely modernize and upgrade all the automation to Foundation fieldbus and the PlantWeb architecture, but with no shutdowns -- a complete hot cutover.

It was the most incredibly challenging project I've ever seen.

We were the main automation contractors, working side-by-side with the Shell team from the very beginning.

We had our guys in the trailers, supervising the installation.

We had hundreds of hours of engineering, and hundreds of safe hours in the plant.

We achieved a complete hot cutover without a single shutdown or a single safety incident.

To me that is the highest standard of excellence in project execution.

We're also investing in people to do asset optimization.

This is not a project work; this is actually going into a plant and doing the walkthrough that I talked about earlier.

We study what our customers are doing and how they are doing it to see how they could improve the operation of the plant, and we give them step-by-step suggestions on how to make it happen.

We're finding a great need for this service.

Customers have responded well, and we're extending our organization to meet their needs.

Sath Rao (Frost and Sullivan): Increasingly in the end-user surveys we've been conducting, (we recently worked on Distributed Control System report, the China report and the India report), Emerson has been scoring consistently on customer support and application expertise, on the ability of PlantWeb architecture and DeltaV system to offer an integrated solution and clearly Emerson Process Management deserves the top most position in the process control world.

We thank you for your time and wish Emerson Process Management the very best for the future.

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