Engineering Intelligence - Special Edition - Winter/Spring 2018

R E V E R S E E N G I N E E R YO U R R I S K S

WINTER/SPRING 2018

Cost of Late Product Launches Cross the Generation Gap Open the Window to Innovation with Patents

IHS.COM

ENGINEERING LEADERS:

Addressing Your Major Challenges Measuring the High Cost of Over-Engineering

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Despite significant investments in Product Lifecycle (PLM), Enterprise Resource Planning (ERP) and other enterprise systems, manufacturers have yet to reap the benefits of knowledge management. Efforts to centralize, clean, and tag data have failed engineers, with many of them spending 40% or more of their time searching across decades-old, non-integrated enterprise systems to find the answer they seek.

Leading organizations across industries turn to IHS Markit to ensure that their Stop managing data & start finding delivery answers engineers achieve on-time, on-budget of complex, capital-intensive projects with Engineering Workbench by IHS Markit and new products.

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Winter/Spring 2018 | SPECIAL ISSUE

CONTENTS

FEATURE

Engineering Workbench™

05 Addressing

Engineering Leaders’ Major Challenges

EXECUTIVE FOCUS

07 What

are Late Product Launches Really Costing You?

Strategies to tackle five issues facing engineering executives.

10

by IHS Markit

Four tactics to avoid delays while maximizing revenue and market potential.

Your single point of access to the engineering ross the 10 Cinnovation, content and tools needed to advance Generation maximize productivity, and reduce risk Gap

18 Reverse

Engineer Your Risks

Q&A on strategies and tactics to avoid or mitigate engineering risks.

20 Measuring

the High Cost of OverEngineering

How to adopt a less is more approach to engineering and come out ahead on cost.

How engineering organizations are Leading organizations across industries turn to IHS Markit to ensure that their finding new ways to engineers achieve on-time, on-budget delivery of complex, capital-intensive projects bridge generational and new products. divides.

Engineering Workbench is an engineering intelligence solution that combines essential 04 EXECUTIVE Opendiscovery the technology MEMO information for the technical enterprise with cutting-edge knowledge Window to a powerful and content analytics. It solves the ‘information overload’ challenge by providing Solve the Data Innovation yet intuitive user interface that surfaces answers from the universe of technical knowledge Conundrum with Patents residing both inside and outside the organization.

Gain insight into how Beyond Information, Engineering Intelligence peers and competitors approach innovation, and strengthen your own product offerings.

COLUMN

14

20

IHS.COM

BEYOND INFORMATION, ENGINEERING INTELLIGENCE

For more information and insights on engineering and product design, subscribe to the Engineering Intelligence Info Hub to track new developments and anticipate future trends in engineering intelligence.

AVAILABLE NOW

Learn more at ihs.com/EWB or Customer Care at 1-800-IHS-CARE Visitcontact www.ihs.com/EI

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EXECUTIVE MEMO

By John R. Yuva, Editor jyuva@ACBusinessMedia.com

Solve the

DATA CONUNDRUM

E

ngineering organizations are sometimes tasked with what seems like the impossible. In the midst of new product development or designintensive projects, engineers grapple with a plethora of challenges that can derail project schedules and introduce process inefficiencies. Those obstacles account for lost revenue and market share. Yet, it’s a common issue that permeates throughout the engineering environment.

Consider that the average new product development project exceeds its schedule by 120 percent1 or that the project failure rate for engineering projects is 60 percent2. It’s statistics like these that keep engineers awake at night. In the race to develop the next cutting-edge, revenue-generating discovery, engineers represent ground zero. However, they often face the harsh reality of taking a silent bow for their innovations but are thrust into the spotlight when failure occurs.

Why not mitigate or avoid altogether, the risks that prevent projects from succeeding either during development or post launch? That’s the focus for this issue of Engineering Intelligence Review.

What poses the greatest threat to engineering organizations? According to Chad Hawkinson, senior vice president, engineering, product design and technology at IHS Markit, “In my meetings with engineering leaders across industries and around the world, I hear one thing over and over again: 4

Their engineers are drowning in a sea of information—massive information overload, 40 percent increase in information available to engineers on a year-over-year basis, and too much information for engineers to digest.”

Data is both a gift and a curse.

Within many companies, data lies in unstructured, disparate databases. And it’s data that engineers require to answer their most pressing questions and unlock innovation. Without access to or knowledge of critical organizational and industry information, it can lead to: ❯❯ Project failures due to unavailable data to solve problems ❯❯ Engineering change orders that stretch project timelines and budgets, impacting potential revenue ❯❯ Solving the same problem repeatedly without creating new, improved solutions ❯❯ Unknown internal or industry standards necessary for project optimization and cost reduction ❯❯ Investment in research that leads to previously patented solutions Data—how it’s organized, accessed, communicated and ultimately used—is a theme throughout most everything impacting engineering organizations. And outcomes can always be traced back to decisions made about data. As the oil that greases the engine of thought, data must be harnessed for innovative thinking and problem solving.

1 - Center for New Product Development 2 - Hartman and Ashrafi

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Published by AC Business Media Inc. 201 N. Main Street, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com

www.SDCExec.com PRINT AND DIGITAL STAFF GROUP PUBLISHER Jolene Gulley ASSOCIATE PUBLISHER Judy Welp EDITORIAL DIRECTOR Lara L. Sowinski EDITOR John R. Yuva ASSISTANT EDITOR Amy Wunderlin CONTRIBUTING EDITOR Barry Hochfelder SENIOR PRODUCTION MANAGER Cindy Rusch ART DIRECTOR Kayla Brown AUDIENCE DEVELOPMENT DIRECTOR Wendy Chady AUDIENCE DEVELOPMENT MANAGER Angela Kelty ADVERTISING SALES (800) 538-5544 JOLENE GULLEY, jgulley@ACBusinessMedia.com EDITORIAL ADVISORY BOARD LORA CECERE, Founder and CEO, Supply Chain Insights TIM FEEMSTER, President, Foremost Quality Logistics JOHN M. HILL, Director, St. Onge Company, and Board of Governors, Material Handling Industry of America RORY KING, Analytic and Big Data Advisor, SAS Institute KAREN MASTER, Vice President of Communications, SAP Ariba WILLIAM L. MICHELS, CEO, Aripart Consulting JULIE MURPHREE, Founding Editor, Supply & Demand Chain Executive ANDREW K. REESE, Senior Portfolio Marketing Manager, IHS, and Former Editor, Supply & Demand Chain Executive BOB RUDZKI, President, Greybeard Advisors CHRIS SAWCHUK, Global Managing Director and Procurement Advisory Practice Leader, The Hackett Group RAJ SHARMA, CEO, Censeo Consulting Group KATE VITASEK, Founder, Supply Chain Visions CIRCULATION & SUBSCRIPTIONS P.O. Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (847) 291-4816 Email: circ.sdcexec@omeda.com LIST RENTAL Elizabeth Jackson, Merit Direct LLC (847) 492-1350, ext. 18, Fax: (847) 492-0085 Email: ejackson@meritdirect.com REPRINT SERVICES JOLENE GULLEY, jgulley@ACBusinessMedia.com AC BUSINESS MEDIA INC. CHAIRMAN Anil Narang PRESIDENT AND CEO Carl Wistreich CFO JoAnn Breuchel DIGITAL OPERATIONS MANAGER Nick Raether DIGITAL SALES MANAGER Monique Terrazas Published and copyrighted 2017 by AC Business Media Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher.

Supply & Demand Chain Executive [ISSN 1548-3142 (print) and ISSN 1948-5654 (online)] is published five times a year: March, May, June, September and December by AC Business Media Inc., 201 N. Main Street, Fort Atkinson, WI 53538. POSTMASTER: Please send all changes of address to Supply & Demand Chain Executive, P.O. Box 3605, Northbrook, IL 60065-3605. Printed in the USA. SUBSCRIPTION POLICY: Individual subscriptions are available without charge in the United States, Canada and Mexico to qualified individuals. Publisher reserves right to reject nonqualified subscribers. One-year subscription to nonqualified individuals: U.S., $30; Canada and Mexico, $50; and $75 for all other countries (payable in U.S. funds, drawn from U.S. bank). Single copies available (prepaid only) for $10 each. Return undeliverable Canadian addresses to: Supply & Demand Chain Executive, P.O. Box 25542, London, ON N6C 6B2.

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Winter/Spring 2018 | Special Edition

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EXECUTIVE INTERVIEW

By Andy Reese

Addressing Engineering Leaders’

MAJOR CHALLENGES Chad Hawkinson is senior vice president, engineering, product design and technology at IHS Markit. In this interview, he speaks about the major issues facing engineering executives and pathways to addressing those challenges.

Q

What are the five major challenges of engineering leaders?

Over the course of the year, I meet with many engineering leaders around the world, across multiple industries, and I keep hearing the same five things over and over again.

First, revenue. How do I hit my revenue plan? How do I get my projects done on time to ensure that my company is able to hit our revenue plans?

Second, organizational capabilities. With many folks retiring, how do I replace them? How do I get the new workforce trained and up to speed? How do I make sure we’re not forgetting the best practices and knowledge we’ve learned over the years and ensure they’re being reused? And how do I bring new employees up to speed most effectively?

Third, innovation. How do I stay ahead of my competition? How do I get the right products into the market at the right time? How do I get closer to my customers to truly understand

their requirements and what they need? Technology is changing rapidly.

How do I incorporate that technology most effectively into my operations or into my product mix?

Fourth, risk. There are more and more regulations out there that I have to comply with. How am I ensuring I’m doing that in a scalable, repeatable way? Cybersecurity and other challenges impact both my products as well as my operations. How do I keep my products secure? And how do I comply with increasing customer requirements, because more and more customers are adding requirements to adhere to certain criteria they have in their processes?

Finally, cost. How do I ensure that I am able to do more with less, because my investment tends to go down, not up? How do I do more? How do I improve the margins on my product to ensure that I’m staying competitive in the marketplace?

So those are the five challenges I hear throughout the world when I talk to an engineering leader.

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Q

What is the information overload challenge… and opportunity?

In my meetings with engineering leaders across industries and around the world, I hear one thing over and over again: Their engineers are drowning in a sea of information— massive information overload, 40 percent increase in information available to engineers on a year-overyear basis, and too much information for engineers to digest. But, at the same time, these engineering leaders know that those companies that are best able to harness that information are going to be the ones that win the marketplace.

The challenge they have is that it’s really hard to do. We talked about lots of information. These are demographic changes, with estimates in some industries, such as aerospace & defense and oil & gas, where 50 percent of their engineers are eligible for retirement and taking significant information with them. There was actually a recent study in the oil &

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EXECUTIVE INTERVIEW

gas industry that said there’s about $60 billion in wasted expense attributable just to the Big Crew Change alone and all that information walking out those doors.

Plus, there’s a big problem with stovepiping of information or siloing of information, where one division doesn’t share information with another.

The European Patent Office says that about a third of all R&D expense is just wasted duplicating what’s already been done before. So think about that: A third of all engineering work is just wasted doing what’s already been done before.

Companies don’t know that a problem has already been solved in some other part of the business or in some other company, and so they do it all over again.

Massive opportunities for companies to better harness that information overload and to cut their costs if they’re able to do that successfully.

difficult. Gaining access to it, and even knowing where an answer lives—are all very difficult.

The Engineering Workbench solves that by providing one place to go, one single site to go for all the information an engineer needs—both outside your company and inside your company. So, in that way, we provide engineers simplified access to the information they need and help them distill it so that they can extract the answers to get their jobs done effectively.

So engineers are spending 30 percent to 50 percent of their time searching for information. With the Engineering Workbench, it’s down to 5 percent to 10 percent—a massive productivity savings from the Engineering Workbench. In fact, a medical devices company conducted a study. It did one control group and said, “Hey, let’s do these tasks the way we’ve always done them. And now let’s take the same tasks and use the Engineering Workbench to help us solve them.”

They found a 25 percent difference in engineering productivity between those two populations. And that’s all available through simplified access to engineering information in a way that’s never been done before.

So, quite simply, Engineering Workbench is one of the ways you can dramatically improve the productivity of your engineering organization by solving the information overload problem.

“ENGINEERS ARE SPENDING

30-50% OF THEIR TIME SEARCHING FOR INFORMATION.

WITH THE ENGINEERING WORKBENCH IT’S DOWN TO 5-10%.”

Q

How can companies solve the information overload challenge?

Quite simply, the Engineering Workbench solves the information overload challenge for engineers.

If you think about an engineer, his or her job is to solve problems. And, on average, to solve a problem, an engineer needs access to information that lives in 13 different databases. Some of those databases are inside the company, and some of them are outside the company. Finding that information is 6

Engineering Workbench from IHS Markit Engineering Workbench is a breakthrough engineering intelligence solution for accelerating technical research, problem solving and innovation by providing engineers with unified access to internal and external technical knowledge, paired with analytical tools tailored to their workflows.

With a modern, intuitive interface and next-generation search technology, Engineering Workbench allows engineers to easily find the essential information they need in standards, applied technical reference like handbooks and manuals, and other third-party technical content from vetted, trusted sources.

Organizations also use Engineering Workbench to connect their engineers to internal knowledge from disparate, unstructured sources, such as shared drives, corporate intranets, PLM systems and more—ensuring engineers leverage prior research and past projects.

Analytical and problem-solving tools—such as root cause analysis, semantic searching, and technology and patent trend analysis—overlay this integrated content, allowing engineers to quickly extract precise answers from voluminous data so they solve problems faster and better to deliver greater competitive advantage.

For more information about Engineering Workbench, visit ihs.com/ewb

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{ PRODUCT LAUNCH COSTS}

EXECUTIVE FOCUS

By Rebecca Henry

What Are Late Product Launches REALLY

COSTING YOU? New product introductions risk lost revenue and market share without processes to effectively collaborate and share information

E

ngineering organizations are under relentless pressure to speed lifecycle times, while also reducing development costs. Given the tremendous effort and resources that a new product launch requires, product launch delays can cost an organization a significant percentage of its return on investment.

Companies in engineered-product industries face especially complex and costly product-development challenges.

Chief among these challenges is the need to reduce time to market and get products launched ahead of competitors.

In return, companies gain from: ❯❯ Increased Sales and Better Profit Margins. The earlier the product reaches the market, relative to the competition, the longer the lifespan of that product. ❯❯ Lower Development Costs.

Streamlined processes, limited iterations, and reduced slack free up financial and operating resources for other value-adding activities. ❯❯ Larger Market Share. An earlyto-market product is less likely to face initial competition. A quick introduction also allows more time for companies to build market share before their products become commodities.

❯❯ Greater Market Responsiveness.

Companies that bring products to market faster can react more quickly to competitors’ moves or market shifts with their own product innovations, while also besting competition by gaining first-mover advantage.

SELLING AT PEAK

Singhal. “The effect of the delay is Surprisingly, research hasn’t really negative regardless of when it occurred attempted to estimate the economic in the product development process or consequences of postponed product the time of year of the announcement.” launches, according to Vinod Singhal, And yet, the average new product departmental editor for Production development project exceeds its and Operations schedule by The average new product development 120 percent, Management at project exceeds its schedule by Georgia Institute according to of Technology, and the Center for Kevin Hendricks, New Product operations Development.

— Center for New Product Development management Reasons for professor at Wilfrid Laurier University. delayed product launches include: In “The Effect of Product Introduction ❯❯ Poor management of the Delays on Operating Performance,” development process they analyzed the financial performance ❯❯ Frequent design changes of over 450 publicly traded companies, ❯❯ Lack of coordination among across industries, that experienced different functional areas product launch delays over a 16-year ❯❯ Resource shortages period.

The impact of launch delays depends “We find that product introduction upon industry-specific levels of delays have a statistically significant competition. In competitive markets, negative effect on profitability,” says for example, the end point is fixed by

120%

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PRODUCT LAUNCH COSTS

others. As a result, any delay directly reduces your time in market, effectively narrowing the window of time a product sells at peak. The upfront sunk costs (ideation, development, marketing, and launch), along with the cost of capital, decrease the net present value represented by the product over time.

market reaction to product introduction delays is actually quite rational given the impact of delays on profitability.”

Management consulting firm OakStone Partners estimates that a product delay can cost a company upwards of 15 to 35 percent of the Net Present Value (i.e., the difference

health of a company, but net cash flow provides a better indicator of the value a product provides to the company.

Net cash flow not only factors in the revenue generated by selling the product, but also the sunk costs of developing and manufacturing the product.

Figure 1: TYPICAL PRODUCT LIFECYCLE

IMPACT ON REVENUES AND PROFITABILITY

Benefit from longer sales life

Benefit from longer market share

SALES VOLUME

Product introduction delays can negatively impact revenues—from reducing the window of opportunity to generate revenues to causing the product to become obsolete faster, note Singhal and Hendricks. In fact, over the lifecycle of a particular product, everything from higher development expenditures to postponed revenue realization to revenue penalties can all dramatically impact profitability.

“In a competitive industry, customers may not be willing to wait, choosing to buy a competitor’s product instead,” Singhal says. If your product launch is delayed by six months, that’s six months for your competitor to grab market share and woo your customers, and less overall revenue for you to pursue when you finally do go to market. For example, in the electronics industry, a late product introduction (9-12 months beyond target) can cost 50 percent of a product’s anticipated revenues.

IMPACT ON SHAREHOLDER VALUE Shareholders care about timeto-market. In fact, product delay announcements decreased average shareholder value by about 12 percent, according to Singhal and Hendricks.

“Our results suggest that negative stock 8

Early

Late

Time

PRODUCT INTRODUCTION

between the present value of the future cash flows from an investment and the amount of investment or “NPV”), depending on whether it involves a monopolistic product or a competitive product (competing with other companies to deliver similar products or serve the same markets).

When customer interests wane and market share is lost, revenue penalties prevail.

MEASURING PRODUCT LAUNCH TIME IMPACT: Net Cash Flow vs. Product Revenue Overall product revenue might be a good measure for the financial

Figure 1 (above) shows these values over time for a typical product lifecycle. Early in the product’s life, it costs organizations money to conceive, develop, market and launch the product; revenues then follow. At some point, market saturation occurs, sales plateau and then begin to decline, and eventually the product is taken off the market. From this point, there are more sunk costs for the company associated with ‘end-of-lifing’ the product— ongoing support costs, disposing of components that are no longer needed, raw materials, surplus machinery, and removing the product from the company’s business systems.

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Experts estimate that

40%

rework accounts for up to important to work journal articles, product and with a manufacturer company literature, that’s experienced social media, with similar products of total project costs. blogs, and forums and has been exposed all serve as critical information to what works (and what doesn’t). sources. But rushed for time Another crucial consideration is and overwhelmed by too much working with a factory that has data, product designers are often existing equipment and knowforced to proceed without a how with a specific category comprehensive understanding of products. of the competitive landscape. ❯❯ Enable knowledge reuse to make Emerging competitors, better decisions, faster. Product blocking IPs, or advances in development is experience-driven. new technologies are easily Companies should maximize overlooked. Most organizations reuse of the solutions they develop performing competitive and the lessons they learn. All intelligence today are crying too often, this knowledge and out for better integration of expertise is buried in enterprise information from the vast sea of systems or siloed in parts of the content available to them. Arm business and undiscoverable engineers with tools to keep by engineers. Experts estimate them ahead of the competition; that rework accounts for up to build product roadmaps and 40 percent of total project costs. strategies with insight into Efforts to centralize data in competitive activities, technology content management systems fail breakthroughs, patent awards, and traditional enterprise search market shifts, and more. is insufficient for engineers, ❯❯ Reduce the number of product scientists or researchers who MAXIMIZING MARKET changes. Identifying and want answers to their questions— POTENTIAL not a list of links to mostly Experts estimate as much as The key to maximizing market irrelevant documents. potential lies in launching your Engineering requires technical products on time and within the proficiency and precise communication, expected quality and cost. To combined with the ability for global of all costs in engineered products add minimize delays, you’ll need to: product development teams to no value for the product or customer. ❯❯ Understand customer communicate, collaborate, and connect requirements. Experts addressing potential gaps with colleagues, experts, information, estimate as much as 25 percent early in the design phase and insights on-demand and regardless to 45 percent of all costs in exponentially improves product of language or location. When these engineered products add no value launch timelines. Initial designs elements align and support the for the product or customer. It’s are influenced by optimal new product development process, critical to ensure new products performance and not usually for companies can improve their time-touniquely or more cost-effectively manufacturing efficiency and market and compete more effectively address unmet needs in current cost. As design requirements within their own industries. markets and/or in new or evolve throughout the product G. Stalk and T. Hout, Competing Against Time, Simon & Schuster adjacent markets. development process, this can ❯❯ Understand the competitive throw a wrench into the project landscape. Patents, websites, timeline. For this reason, it’s Once a product is launched and reaches maturation, revenue plateaus and drops off. The product launch point signifies the point at which a company starts to make money on the product. Should the launch date be delayed, the upfront development, marketing, and launch costs continue, thus negatively impacting cash flow and reducing the amount of money the company makes off a product over time.

The question is, can your organization lead the market losing 15 percent to 35 percent or more of NPV? Or, can you lead the market realizing only 65 percent to 85 percent of your product’s value? And, how will the delay impact company growth?

What would it mean to your organization to accelerate time to market by a week? Or a month, or more? What will be the impact on the maximum sales if your product is three months late to market? How about six months? Will late entry adversely affect market share? These are all important questions to ask yourself as you formulate a solid go-to-market strategy.

25-45%

1

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{ GENERATION GAP}

By Andy Reese

CROSS THE

GENERATION GAP

Challenged to integrate and engage with Millennials, engineering organizations are finding new ways to bridge generational divides

10

M

ore than 30 years ago, when Carl Selinger was a junior engineer at the beginning of his 31-year career at The Port Authority of New York and New Jersey, he accompanied a delegation of transportation officials from Southeast Asia to dinner. Unsure of how to behave during the meal, he asked his senior colleague who was managing the delegation what he should do. “He told me, ‘Watch them, and do what they do.’ And it worked!” says Selinger. cohort in the workforce, surpassing Selinger, the author of bestBaby Boomers and Gen Xers, selling book Stuff You Don’t Learn in according to the Pew Research Engineering School (Wiley-IEEE Press, Center. With an average of 10,000 2004), harkens back to those early Baby Boomers currently turning 65 days of his career as he every day, Millennials will reflects on how today’s account for greater than 50 engineering leaders need percent of the workforce to think about engaging by 2020, Pew notes. with the MillennialThose numbers add up generation professionals to significant challenges increasingly filling and competitive risks for the ranks of their engineering organizations. organizations. “It goes Consider: Between back to the individual the Baby Boomers and and helping that person Millennials, the smaller develop soft skills—or Generation X graduated what someone who fewer engineers than reviewed my book their parents’ cohort. As Author Carl Selinger called ‘life skills.’” a result, organizations Photo Credit: John Livsey that struggled to hire BIG GENERATION, BIG Gen X engineers—and that therefore CHALLENGES FOR ENGINEERING continue to rely on greying Boomers— Millennials—those born roughly must now ensure that they are between 1980 and 1995—now attracting Millennials onto their teams constitute the largest generational or risk a serious shortage of qualified

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GENERATION GAP

company,” says Boettger, who also is editor for the IEEE PCS Professional Engineering Communication Series published by Wiley. “Millennials have different expectations: They want to be seen as being on the same level as their more senior colleagues—not necessarily from a pay perspective, but from a value perspective.”

These inter-generational differences set up a potential conflict between, on the one hand, Baby Boomers and Gen Xers, who might feel that Millennials should naturally follow the same path they did—“grinding it out” for years before earning recognition—and Millennials, who might be more inclined to simply go elsewhere in search of an environment that provides more rapid—if not instantaneous— gratification. “job-hoppers” —engaged so they don’t Whether Millennials actually are any leave the organization after only a few more inclined to “job hop” than prior years. Let’s start by looking at these generations is the subject of debate two challenges. among social scientists. A recent Pew Research article by Richard Fry, for INTEGRATION & ENGAGEMENT example, suggests, “Among the collegeRaise the issue of Millennials educated, Millennials have longer track with a senior engineering leader, records with their employers than and inevitably the term Generation X workers “entitled” comes up. That’s did in 2000 when they perhaps not surprising, as were the same age as today’s senior engineers today’s Millennials.” naturally view Millennials Nevertheless, the through the lens of their perception persists that own experience, says Millennials are less loyal Dr. Ryan Boettger, to a given employer than associate professor past cohorts. Fred Filler, Dr. Ryan Boettger, of technical a product manager in the University of North Texas communication at the Engineering & Product University of North Texas.

Design Business at IHS Markit, points “When Baby Boomers were coming out that Millennials are often viewed into the workforce, they were told as not being as “performance-driven” not to expect anything until they as prior generations. “They are seen as reached age 40 in terms of promotion more ‘experience-driven.’ They might or advancement. You kept your migrate frequently between jobs, not head down and you stuck with the because they feel like they’re stuck in

engineers, as well as a catastrophic brain drain as the Baby Boomers retire out of the workforce.

Demographic trends, however, present a further challenge for engineering leaders: Millennials are more numerous than Gen Xers, but as a group, they are not producing any higher percentage of STEM (Science, Technology, Engineering, Math) graduates than their generational predecessors, according to government data. A recent report from ABET, the group that accredits college and university engineering programs, points to a shortage of about 1 million STEM graduates over the next decade.

These trends put a premium on an engineering organization’s ability not only to recruit fresh talent, but also on its ability to integrate Millennials —often labeled as “entitled”—into existing engineering teams, hierarchies and processes. In addition, engineering leaders must ensure they are keeping these young recruits—perceived as

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a nowhere job or they’re looking to get more money or a better title. They simply have a ‘carpe diem’ attitude,” says Filler.

APPRENTICESHIP APPROACH In response, Boettger sees some organizations adopting a mentorship-type model as a tool for intergenerational integration and engagement—not a formal, one-onone mentor model, but a more organic, team-based model that would be very common in a project-based setting at an engineering firm. Different team members, across different generations, come together around a common goal, but work on their own set of defined tasks that, in the case of Millennials, makes them feel like they’re a valued contributor to the success of the overall project.

“It becomes like an apprenticeship model,” says Boettger. “It’s the perfect work environment for Millennials because it’s spontaneous and it’s continually evolving. That gives Millennials something they need, which is going to help with their retention, but it also gives them the structure that they require.”

In addition, this project-based approach provides Millennials with exposure to other generations and opportunities for learning at the same time—the opportunity to “do what they do,” as Selinger says, the chance to assimilate both technical knowledge and soft skills from their more senior colleagues.

Boettger also suggests engineering firms think about ways to throw their young engineers out of their comfort zone. For example, have them go on a site visit to a different firm, and then have them write a site report. Send them to a conference where they can sit and listen to experts, and then have them write a trip report.

“It’s not all about accommodating 12

Millennials,” Boettger says. “It’s also about giving them the skill sets they need to be productive, including the ability to convey complex data and information in a way that is understandable to their target audience.”

Filler says that encouraging cross-generational interaction and communication in these ways ultimately provides opportunities for both senior engineers and the organization as a whole to benefit from the fresh perspectives that Millennials bring to the table. “Engineering leaders should recognize that—unlike generations before them—Millennials aren’t as tied to the status quo and may be more adept at thinking about perennial problems in nontraditional ways and creating innovative solutions,” says Filler.

“DIGITAL NATIVES,” DIGITAL DANGERS

messages and tweets, if not simply an emoticon, to express their point. At the same time, Millennials’ early exposure to technology has created expectations that these “digital natives” would automatically know how to process and analyze data. “That’s a fallacy because basic human cognition doesn’t change,” says Boettger. “Just because you’re surrounded and consumed by

“IN SOME WAYS, THE SOPHISTICATION OF THE TECHNOLOGY HAS TAKEN THE GUESSWORK OUT OF THE INFORMATION, AND PEOPLE WILL JUST ACCEPT THE INFORMATION UNCRITICALLY.” — BOETTGER

Regarding the contrasting attitudes of Baby Boomers and Millennials on the use and usefulness of technology, Selinger describes a conversation with a senior engineering leader that he mentors. She was resisting using Twitter as a communication tool to coordinate among a group of younger engineers that she was leading on a business trip, Selinger relates. “I told her, ‘Twitter is free. If they want to communicate that way, get a Twitter account and see how it works.’ When she got back, I asked her how it went, and she said it was fine.”

Millennials are, indeed, the generation that grew up alongside the internet and at the epicenter of the explosion in mobile computing and communications. Where Baby Boomers typed memos, and Gen Xers sent emails, Millennials favor text

information doesn’t mean that you know how to use it.”

Filler says that, in a sense, the instantaneous nature of the internet— “Just Google it!” —has created two potential issues for engineering organizations. First, the expectation that we can have the answer to any question at our fingertips with a few keystrokes.

And second, the expectation that we can find the best answer at the top of our search results list, regardless of the source of the information.

On the first issue, Filler says, “Millennials are not necessarily going to sit down with an engineering book and read it cover to cover. They’re going to read enough to get an answer or solve a problem, and then come back to it when they need to.” It’s not only a function of the technology

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they’ve been exposed to, Filler adds.

It’s also a function of how they are learning in college. “With a lot of the texts going electronic, professors can be much more prescriptive about reading specific sections in specific chapters.”

The second issue, of perhaps greater concern to engineering organizations, is the degree to which Millennials accept information at face value.

“Millennials do consume a lot more information, but they’re not necessarily as cautious in terms of vetting that information,” Boettger says. “For an engineer, in particular, that becomes an issue because there is a lot of information out there that is not necessarily accurate and correct.”

It’s not that Millennials don’t have critical thinking skills, Boettger is quick to add. “The problem is that the technology has become so intuitive, information just gets spit out at you.

In some ways, the sophistication of the technology has taken the guesswork out of the information, and people will just accept the information uncritically.”

Jill Hawthorne, associate director for international business development at the publisher Wiley, warns of the dangers of “satisficing” when Millennials are searching for information. “The immediacy of online communication and gaming tends to make Millennials impatient, even by their own reckoning,” Hawthorne writes on the Wiley Exchanges blog.

“High technical engagement can be accompanied by a willingness to accept ‘good enough’ information drawn from a limited range of sources. ‘Satisficing’ denotes the tendency to feel satisfied with their research when a sufficient answer is reached, eschewing an exhaustive search of all sources.”

technology on the job in the same way they incorporate smartphones, tablets and apps into their personal lives. In addition to finding ways to incorporate tools like Twitter, as Selinger described, technologies that enable instantaneous collaboration, like video conferencing or instant messaging chat groups, play to Millennials’ strength—the ability to come together to resolve a problem quickly, and then disperse.

Fred Filler, with IHS Markit, also points to a new generation of engineering intelligence solutions that bring together technical reference such as standards, handbooks and manuals, journal articles, and other authoritative content from vetted sources—all wrapped in a Millennial-friendly interface. A simplified interface masks powerful content analytics and semantic search technology that work behind the scenes to deliver the best answer to a query at the top of the search results list. For Millennials unaccustomed to looking past the first or second page of search results, this kind of solution ensures that they get the information they need quickly— before they’re inclined to “satisfice.”

This same kind of solution can be extended to encompass structured

BUILD THE BRIDGE For his part, Selinger takes the long view of the engineering profession’s intergenerational challenges. Over his 31-year professional career at the Port Authority, as well as the three decades he spent teaching at Cooper Union, SUNY Maritime and other institutions, he says he has seen senior engineers long struggle with managing and communicating effectively with younger engineers entering the corporate world. “‘Engineering management,’ in my opinion, is an oxymoron, because we’re typically not trained as managers—we’re just good engineers,” he says.

Moreover, Selinger adds that generational change is just one of many issues that engineering leaders have to consider as they think about how to keep their teams operating efficiently, collaborating and engaged. Issues related to gender, age, and diversity, for example—let alone technological advances— continue to impact how engineering is done today versus decades past.

“Sometimes you just want to go back to your cubicle and design the bridge,” he says in conclusion. “It can be very difficult to deal with all these issues—but you have to deal with them to get the job done.”

A SIMPLIFIED INTERFACE MASKS POWERFUL CONTENT ANALYTICS AND SEMANTIC SEARCH TECHNOLOGY THAT WORK BEHIND THE SCENES TO DELIVER THE BEST ANSWER TO A QUERY AT THE TOP OF THE SEARCH RESULTS LIST.

CROSS THE DIGITAL DIVIDE Engineering organizations have begun to put in place solutions that meet Millennials’ need to engage with

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and unstructured corporate data, too, according to Filler. This ensures that engineers truly have a single source to go to for all their internal and external technical content. It also promotes the reuse of institutional knowledge embedded in the disparate enterprise systems that engineering organizations have already put in place—so all the tribal know-how of the Baby Boomers continues to drive value into the future.

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{ PATENTS}

By John R. Yuva

Open the Window to INNOVATION WITH PATENTS Improve and enhance your innovation process by incorporating patent intelligence into your decision-making

H

ow does the process of innovation occur within your company?

What are the sources of innovative ideas—internal business units, supply partners, a combination of both? Innovation can derive from anywhere, even from patents that are already protecting new technologies and processes. Patents are significant to engineers during new product development because of the insights, problem solving and decision-making that are documented within patent applications. And with the World Intellectual Property Organization (WIPO) citing 233,000 global patent applications filed in 2016, engineers have a window into how other companies approach innovation that can strengthen their own product offerings.

When companies file a patent application with WIPO or the United States Patent and Trademark Office (USPTO), they’re establishing a limited monopoly protection on a practice.

Once granted, those protections are generally upheld for 20 years prior to entering the public domain. It’s a clear competitive advantage for companies that file a patent before the competition, locking in innovation and owning that process.

Jim Belfiore, managing director, client innovation services for IHS Markit, says despite patent protections on a specific invention, engineers can attain valuable insights and significant detail from patents that open doors to new innovative solutions and processes. Engineers and their companies can leverage and protect

AVOID THE DATA ABYSS to Optimize Engineering Efficiencies Companies today are inundated with immense amounts of data. It was once thought inconceivable that data would eclipse gigabytes of storage capacity.

Yet, many enterprises operate with over 50 terabytes of data in their systems.

Much of this data is scattered across the company and siloed in any number of knowledge bases—most of which have been forgotten about (or are not even known to exist) by current employees.

and digging through mounds of unstructured, disparate data trying to find answers to their questions. Often, engineers tasked with solving a problem will first try to locate individuals internally with the knowledge to address those questions, which consumes a large amount of time. And, what happens when those experienced engineers retire or otherwise exit the business?

For engineering organizations that require answers to questions during new product development, such large data volumes are posing significant challenges to the very knowledge-intensive tasks involved in innovation and problem solving. The result is data flows that are unstructured with little sense of order. This leads to knowledge reuse that can prevent engineers from finding answers to the most pressing questions critical to the innovation pipeline.

“Our clients tell us that nearly 40 percent of their engineers’ time is consumed by searching for answers scattered on hard drives, shared drives and enterprise systems, because many companies lack an effective federated or enterprise search solution. And if the data is centralized, engineers are unable to locate it among the layers of information,” says Raney. “Unless the information is quickly searchable, the decision is to reinvent the wheel again—despite knowing that the problem was previously solved, possibly multiple times.”

Kevin Raney, consulting associate director for IHS Markit, says engineers are unable to be engineers because the majority of their time is spent researching

How does this affect enterprise innovation and new product development?

Raney says there’s less pressure for originality in innovation and more

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PATENT INNOVATION

those discoveries within their own patent applications. “Patents not only describe the protected practice, but also the problem being solved,” says Belfiore. “The description of the problem and its constraints can be as or more important than the technology or methodology protected by the patent.”

As engineers dissect patents, they can uncover emerging trends, new classes of demand and untapped markets for innovation. Those shifts may not be evident within just a particular product or technology, but entire industries as well. Patent intelligence can truly be the impetus that spurs innovative thinking and problem solving.

❯❯ Abstract: A concise description about the technology, its criticality and reason for being protected. ❯❯ Title: Short but insightful about the focus of the patent. For example, “Process and method for removing oil spills from oceans using a vacuum apparatus.” ❯❯ Claims: Technical specifications about the protected technology.

Claims offer insights as to why a protected technology is better able to perform a function than anything before it. ❯❯ Detailed description: This is often a detailed narrative on how the technology functions, critical design constraints, why previous versions were unsuccessful and how this technology solves those setbacks. A summary of the technology’s evolution in the marketplace may also exist. This section often requires significant input from the engineer and designer due to the technical nature of the information. ❯❯ Background summary: Contextual description about the

DISSECTING PATENTS FOR INNOVATION When analyzing patents, engineers can approach them from an individual or group perspective. Both approaches can glean critical information and provide an evolutionary context.

Individual patent. An individual patent includes several narrative sections that form a factual story. Consider the patent breakdown for a new technology:

emphasis on time to market. Develop an idea, design a working prototype and launch it into the market before the competition. With time of the essence, it’s imperative to surface relevant concepts and answers quickly—freeing engineers and other technical workers to deliver creative customer solutions and explore new markets and technologies.

importance of this patent to the marketplace and why the current market conditions are ideal for this technology. Also, what historically has been a constraint for related technologies and why?

With a solution to those prior constraints, the patent application should be accepted, granted and issued as a limited monopoly.

When examining individual patents, both the detailed description and background summary sections often provide the most insightful data. Understanding the evolution of a technology or process is critical to ensure the engineering team is not focused on an outdated solution.

The patent also serves as a holistic view into the parameters an engineer should qualify and quantify within his or her own patents. For example, details about prior versions and current market conditions should be known and documented by the engineering team before submitting its patent application.

Grouping patents. Belfiore says grouping patents is both an art and a science because you can group them by

need to know where the data is indexed, but with solutions like Engineering Workbench, we can read through your content with natural language processing,” says Raney. “There is growing interest in semantic technologies and machine learning that do the heavy lifting of sorting through the unstructured data to find answers to engineering questions.”

” … REDUCE THE TIME

That’s a difficult proposition when volumes of unstructured, REQUIRED TO MINE THOSE Raney worked with a client that submits large proposals for aging and current data populate system databases. The ANSWERS BY AS MUCH AS government contracts. The client was bidding on a contract aging data is losing value, while current data consumes and required technical information to justify its costs. With the system without a means to analyze and organize the only 30 days to provide a proposal response, the client often input. Raney says companies invest millions of dollars to put spent six months with preplanning and research prior to centralization and order into their databases with varying success. submitting its proposals.

30-40%”

So, what’s the solution? Raney says companies are spending too much time on initiatives to solve the data organization/centralization conundrum. Remove the hurdle of structuring and tagging data by leaving information where it resides and instead provide engineers with tools to pinpoint that knowledge.

“When you’re an engineering company, you need to function as such. Engineers

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“Our findings revealed that if we know where the content resides within the company, we can index it and reduce the time required to mine those answers by as much as 30 percent to 40 percent,” says Raney. “This provides the client with significant time to focus on more creative and innovative solutions that could separate its proposal from the competition and help it win the bid.”

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time frame, technology, classification, filing assignee or any of 30 metadata parameters that are associated with patent (and patent application) documents. “When exploring patents over a multitude of parameters, you begin to notice patterns and trends,” he says. “It’s those patterns that make applying an analysis, such as an innovation S-curve model, to patent groupings a valuable exercise.”

In an IHS Quarterly article titled, “In Search of Blue Oceans,” Belfiore writes that the curve defines the growth path from innovation through growth to maturity. “The classic s-curve traces the evolution of a product from the birth of an idea through the early stage of product introduction and adoption, to market maturation and saturation, obsolescence and, finally, to end of life.”

Belfiore says the five inflexion points on the s-curve provide a measurement of innovation value. The ideality increases as you reach higher on the y-axis, while the product lifecycle is reflected across the x-axis. “The first inflexion point is the most difficult to determine but most valuable for companies to recognize because it identifies the next ‘big thing’ around the corner,” explains Belfiore. “Only those engineers and companies that see it understand it’s worth pursuing.

Patents can be used to find those types of inflexion points, particularly when you examine patents in groups.”

What types of patterns signal an emerging but significant shift in the marketplace? An engineer, for example, deciphers that during the previous three years, a substantial increase in filings around a specific technology occurred.

Or, a technology classification code that embodied 100 companies for a specific technology has now increased to 200 companies over 24 months with similar inventions and patent counts.

“Those are the kinds of insights you 16

can only recognize by grouping patents together,” says Belfiore. “Thus, you can see indirect but dependable indicators of movements within markets, evolutions in technology or even identifications of new market demands.”

by those contexts provides deeper insights,” says Belfiore.

Another critical piece of an effective patent search is applying appropriate time-blocking parameters. A three- to five-year period provides a manageable

INNOVATION S-CURVE The classic S-curve traces the evolution of a product from the birth of an idea through the early stage of product introduction and adoption, to market maturation and saturation, obsolescence and, finally, to end of life.

SEARCH PATENTS EFFECTIVELY Engineers rely on patent groupings to confidently identify evolving and emerging trends. Despite the view of patents as late indicators of change due to filing delays and approval time frames, they remain a vital source for innovative perspectives—assuming you know what to search for.

Applying traditional search approaches using keywords or phrases to target patents around a specific technology are often ineffective. With millions of patent documents and applications in the USPTO database and globally using WIPO, engineers find themselves overwhelmed with the sheer volume of information.

“Approach a patent search in terms of context, ‘Patents about automotive exhaust management systems,’ for example. Narrow the search further with specific phraseology and its variations, including why the technology is important, how does it fail and solutions to these issues.

Examining contextual relationships to the technology and grouping them

overview of potential trends and patterns. However, comparisons among time periods in waves (three to five years versus five to 10 years versus 10 to 15 years) can result in valuable grouping data.

Other research parameters can include: ❯❯ Technology class groups ❯❯ Filings by company or assignee ❯❯ Industry specific or across industries ❯❯ Varying applications using the same or similar technology In the case of an exhaust management system, what other environments or industries are applying the technology? For example, a search reveals that generators within a building management system are used for electricity production to supply back-up power. How is this being achieved? What are the results in terms of cost and sustainability efficiencies? Answers to these questions from an application with no relation to the automotive industry can help solve similar problems.

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Patents for Progress PATENTS IMPERATIVE FOR INNOVATION With the information and insights available in patents, engineers cannot afford not to include them as a critical source for innovative ideas. The use of patents during the innovation process ensures that you’re not duplicating concepts and technologies that already exist. It also prevents the company from infringing on current patents by knowing what technologies are protected.

Another critical insight of researching patents is understanding their lifecycle.

Once a patent has been granted, there are associated fees with maintaining the patent and protecting it. Within the Patent Electronic Business Center of the USPTO, engineers can enter patent numbers into the Public Patent Application Information Retrieval (PAIR) system. What Public PAIR provides is a patent history, but even more important, is whether those patents are current on fees and properly maintained by the filing entity.

Why is this critical to engineers during new product development? Belfiore says that lapsed and abandoned patents can be prime investment opportunities. “An abandoned technology patent is a rare case of a new technology that has prematurely entered the public domain. It can be improved upon by another company that can then file a new patent application and take ownership of the improved technology, without risk of infringement of the original filing company,” he says.

Belfiore adds that by not researching patents, engineers open the door to myriad risks. The cost of ignoring potential threats far outweigh the litigation risks that companies worry about—and those risks are not insignificant.

“There’s tremendous value to extract in the research, creation and management of patents,” he says. “Adopting innovative practices that incorporate patent research are likely to add more substantial value to their product pipelines, as well as to their bottom line and to their shareholders.”

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The value of patents for problem solving and innovation during new product development cannot be understated. And while engineers examine patents for critical insights related to their own projects, there are other strategic reasons to incorporate patents into your engineering workflow. Jim Belfiore, managing director, client innovation services for IHS Markit, explains how engineers and companies are approaching patents for greater value add.

PATENT IDENTIFICATION PRACTICE

Companies are creating an in-house patent practice with the purpose of identifying evolutions in technology and markets using patents as a primary source of knowledge. When reviewing and analyzing patents, the focus is on three areas.

1) IDENTIFICATION OF INTELLECTUAL PROPERTY (IP) where synergies exist with the company’s technologies. The team scours portfolios of IP in markets within and outside its own space to make those connections.

2) FUNCTIONAL NEEDS ANALYSIS to determine how technologies work, what their function is and how key inventions solved problems that plague similar companies. This type of analysis is critical not only for problem solving, but also to identify potential barriers.

3) STRENGTH OF IP TO AVOID PATENT INFRINGEMENT where the team must develop a unique and distinct technical application that is different from what’s described in the source patent. This often requires a legal perspective to ensure the company is not at risk for litigation.

IP INVESTOR TEAM

To stay abreast of emerging technologies, companies are taking an entrepreneurial approach to patents in an effort to make smart investments. Are there IP portfolios that align with the core business, functions and technologies of the enterprise? If so, does the portfolio qualify as a potential acquisition target? These are the types of assessments IP investor teams need to conduct in the quest to strengthen their IP portfolios and market share.

LINE OF DEFENSE STRATEGY

Utility patents are granted protection for 20 years prior to entering the public domain. Thus, for most patented technologies, obsolescence is a natural part of the lifecycle. However, if a patented technology is extremely lucrative or serves a critical function in the marketplace, companies want to build a line of defense around those patents to maintain their protection. In doing so, new products or additional value are created that incorporate the technology to extend its marketplace dominance. A line of defense for a new life on a product line.

PATENT BUSTING TECHNIQUE

Just as companies want to build a line of defense around their patented core innovations, competitors want to exploit any vulnerabilities that could diminish their protection. Patent busting is a technique that serves this purpose. Engineers determine where the barriers exist from practicing in a particular space, such as product needs or functions.

Solutions are then developed to overcome those barriers, effectively invalidating the patents previously holding the line. The Electronic Frontier Foundation launched its Patent Busting Project to bust patents that are limiting innovation in the software industry.

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{ RISK}

By John R. Yuva

REVERSE ENGINEER YOUR R Risk is ever-present. In the world of an engineer and new product development, risk takes on new meaning. With multiple stakeholders, tight project budgets, aggressive timelines and complex designs, the risk portfolio in the engineering environment is extensive. Once in the wild, a product’s risk profile transcends the corporate world into the customer base with millions of potential touch points. Consider Samsung’s exploding Galaxy Note 7 smartphone and Takata’s faulty airbag inflators that affected millions of customers.

And risk isn’t confined to just products. An engineer designing an oil and gas pipeline must meet performance and safety requirements while balancing costs. Regardless of industry, risk avoidance and mitigation must be engineered into products, processes and procedures.

How is this achieved? And what are the strategies to implement solutions? Jeff Cloutier and Steve Noth, both experienced engineers and product managers at IHS Markit, share insights into risks impacting engineers.

Steve Noth

18

Jeff Cloutier

Q

What are some of the things that put innovative thinking at risk?

Driving innovation requires the time and resources to devote to the pursuit. Whether it is new product design or tactical problem solving, innovation requires the time to discover, brainstorm, discuss, experiment and test. There is a creative component that needs to be unleashed.

This can sometimes be lost in the day-to-day pursuit of tactical objectives.

Innovation takes different forms.

While we all search for the next market disrupter, incremental innovation is a more reachable goal for most people.

Looking for ways to incrementally improve existing products and processes through benchmarking and empowered discovery can bring amazing results.

Innovation, continuous improvement, and kaizen all require exposure to new inputs of information. Diverse, collaborative ideas coming together with external information and research to create new concepts and approaches are often needed for innovative breakthroughs.

While extraordinary innovations can sometimes fall out of the sky, innovating consistently requires taking the time to understand problems and seek answers from new and unexpected sources.

Q

How has design complexity impacted engineers’ approach?

The biggest impact of ongoing design complexity is the need for great collaboration among different subject experts. Complexity makes it

increasingly difficult for any one individual to have deep expertise in all aspects of a design. Integration among software, hardware, electrical and mechanical through a systems approach is critical to a successful design. Interface, packaging and the regulatory environment further widen the requirements and the contributors.

A technical team must have the ability to work individually and then quickly come together and exchange critical concepts and information. A team must have the people, the organization and the tools to work together toward common objectives. Such collaboration comes in many forms— live communication, remote meetings, documentation and coordinated activities. All are critical to the team successfully navigating the complexity.

Q

Describe strategies to successfully transition a project from development to sustainment.

As above, this speaks to the need for proper information transfer and effective collaboration. Technical teams are no longer self-contained units. To recruit the right expertise for success, teams often extend across the globe to include external supplier and contractor partners. This creates additional organizational and communication complexities across teams. Thus, it requires establishing clear team objectives at the beginning through sunsetting/decommissioning.

Clearly documented and understood roles and responsibilities mitigate risk of confusion. The best results derive from every team member contributing their unique perspective and expertise.

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R RISKS Q

Frequently, engineers require more than 13 unique data sources to find answers to engineering challenges.

And engineers often make technical decisions with incomplete, inconsistent and inadequate information1 due to the extensive nature of the process.

Comprehensive knowledge discovery tools form a cornerstone to enable successful project execution.

What are strategies for preventing overall project risk?

Scope, schedule and cost risks continually challenge project teams. As the project builds, so does the risk impact. The best approach includes early knowledge discovery to promote risk avoidance and early risk realization. In many cases, related, critical information is available to those capable of navigating the quagmire of internal and external data repositories.

Resolution often exists within previous challenges of a similar nature and their documented solutions. These answers can come from both inside the organization and from published solutions of other corporations.

Companies that successfully tap into the vast reservoirs of internal and external information to quickly find answers often see a significant reduction in project risk.

How can an engineering intelligence platform help?

Engineers need to access many different data sources to get information and then quickly share the information across an often-decentralized project team.

In every situation discussed previously, an enabled knowledge discovery platform would help the technical workers expedite design goals and reduce project risk. An engineering intelligence platform, such as the Engineering Workbench from IHS Markit, mitigates organizational risk by exposing all potential answers to an engineering problem within a single platform, whether they reside inside or outside an organization’s firewall. Such engineering intelligence tools save time by concurrently querying multiple disparate sources, but also prevents missing a solution that has already been developed, and identifies any patents or regulations that may impact a design or solution.

Q

Describe strategies to overcome change management risk and ensure project

success.

Change is inevitable; leading organizations embrace change as a continuous improvement tool.

When changes are necessary, the best strategy is to quickly determine the desired end-state, assess the downstream impacts and intently plan. Document this information and put it in stakeholders’ hands so they can make necessary adaptations. The cost of change is always lowest when its implementation is well planned and organizational effects are well understood. Ongoing checks to identify requirements and gaps in the plan enable the team to foresee changes and implement course corrections.

Q

How can improved knowledge discovery reduce business risk?

The ability to access relevant information easily and fluidly across the technical organization separates the leaders from the laggards. But finding relevant and credible information in the everexpanding data universe is a daunting challenge. Resources for such data must be comprehensive in scope, but also efficient and powerful in discovery and access. Because work

Q

How does the “people factor” influence project schedule, quality, compliance and budget risk?

Project success and risk avoidance results from empowered people making timely and well-developed solutions. Teams that struggle with access to information or the bandwidth to appropriately collect data will see technical decisions with higher-than-expected risk.

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teams are distributed across an organization, it’s unknown where the engineering challenges will occur and what resources will be needed.

Enabling effective tools and processes across the entire team allow the right questions to get asked, timely data to be collected and the optimal solution developed.

Q

For additional insights into engineering risks, challenges and solutions, visit the Engineering Intelligence InfoHub at ihs.com/ei. For more information on the Engineering Workbench, visit ihs.com/ewb.

InfoCentric Research

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{ OVER-ENGINEERING}

By Ian Mitchell

MEASURING THE HIGH COST OF

OVER-ENGINEERING

Not all standards are created equal.

Here’s how companies can adopt a “less is more” approach to engineering and come out ahead on cost.

20

I

t’s no secret that standards, and the proper application of those standards, can drive dramatic cost improvements in design and engineering. But what many companies don’t realize is that not all standards are created equal.

Industry standards (such as those from professional societies, industry consortia, and national/international standards bodies) encapsulate the best practices from within specific sector(s) and establish benchmarks that are agreed upon by multiple entities.

Conversely, proprietary company/ internal standards, while required in many cases to address special use cases, drive up costs and don’t leverage the economies of scale and standardization across the supply chain.

The decision on what type of standard to use—an industry standard, a modified industry standard, or a proprietary internal standard—can

have far-reaching effects and can ultimately determine the success or failure of a project. This article explores the roots of this “standardization” dilemma, and lays out some concrete steps that every engineering-intensive organization should take to ensure that their standards and specifications are optimized for cost, quality and performance.

THE PROBLEM – AN INNOCUOUS BEGINNING The problem begins to surface when organizations take industry standards, bring them under their own roofs, and begin to modify or append to fit their special needs or purposes. The decision to deviate from industry standards may seem justified at first. Perhaps engineers want to accommodate for special conditions (such as extreme environments), address challenges seen on past projects, or improve

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The Forklift Effect The combination of industry maintainability. to exorbitant specification and moving to industry and internal standards also Perhaps product heights because standards on select valves could save creates what engineers and or project it, in essence, has upwards of $25 million in annual suppliers refer to as the “forklift” managers want become a soleprocurement costs. Expand that to all effect. One internal standard to encapsulate source provider of the high-cost/highly-procured items can easily reference 10 or more corporate when others where internal standards are being other standards, some internal practices or react cannot compete. utilized and the potential for savings and some industry/internationto competitive This problem has becomes even more dramatic. al standards, which then referpressures. But one become pervasive, ence another 10, and so on. By thing is clear— ballooning to the A PROJECT APPROACH TO the time you add up all of the once deviations are point where it is STANDARDS OPTIMIZATION standards documentation for made, the costcosting industry A standards optimization project a particular project, you have a escalation process an estimated $38 can result in significant return on very tall stack of paper. begins and, more billion annually. investment, proven to drive both often than not, the immediate and long-term cost savings, company has just “sub-optimized” the LESS REALLY IS MORE along with improved quality and deployment of those standards.

In the end, the incremental compliance. Often included as part Sub-optimization of standards takes improvements (if any) from highlyof a company’s digital transformation many forms. Out-of-date references, customized internal standards initiatives, the purpose of a standards over-engineering/over-specifying, rarely pay off. Not only do they not optimization project is to identify the “forklift” effect of referenced drive the intended benefit that the sub-optimally deployed standards and standards [see sidebar above], and lack company was targeting (e.g., reliability, put a program in place to either replace of supplier feedback are just a few maintainability), but creating internal with industry standards, or justify (via of the factors that contribute to cost standards is also very expensive— a business case) any deviations from overruns. Ultimately, when internal something that companies can’t afford industry standards. standards are used (versus industry to overlook in today’s competitive, standards), companies pay a heavy cost-conscious business environment.

PHASE 1 – price for customized parts, products By reducing the prevalence of internal Analysis and Prioritization and services—often 20 percent to 100 standards and focusing instead Some companies have dozens percent more than those that adhere to on leveraging industry standards, or even hundreds of internal industry standards1. organizations typically realize massive standards. This phase identifies cost improvements. those standards that have the highest WHEN ENGINEERING For example, one large MEETS SUPPLY CHAIN operator in the oil and gas Proprietary company standards space recently assessed its Figure 1: RANKING STANDARDS BY ‘TOTAL COST’ SCORE replace or supplement baseline own internal valve High Total industry standards with an everstandards. Through Cost Impact growing number and variety of internal that process, it Score TOP requirements. These “variances” often uncovered numerous PRIORITY lead to unnecessary re-engineering and areas where the valves Standards for Phase 2 results in products and projects that were over-specified are more expensive and do not provide versus industry a meaningful performance edge. Lack standards, and that Low Total of standardization also restricts the the deviations were Cost Impact choice of manufacturers/suppliers, not justified. It Score forcing companies to buy from a was estimated that Low High Spend Spend certain vendor that can raise prices eliminating over

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procurement and/or manufacturing costs associated with them; and hence, the biggest opportunity for improvement. This initial phase quantifies the cost impact of standards, and prioritizes internal standards for action. To do this, equipment and project spend data is collected, then “cost drivers” are modeled based on analysis, surveys and input from experts. Each standard is ranked based on spend and cost impact, creating a ‘Total Cost Score’ (see Figure 1).

Those standards with the highest ‘Total Cost Score’ proceed to Phase 2 – Conformity Assessment.

Potential Cost Drivers of Internal Standards WWIs there a clearly stated

purpose for an internal/ proprietary standard?

WWAre industry standards being leveraged where possible?

WWIs it a direct overlay of an industry standard?

WWWhat are the deviations from

THE SHORT- AND LONG-TERM RESULTS OF STANDARDS OPTIMIZATION

the industry standard?

WWAre deviations clearly indicated?

PHASE 2 – Conformity Assessment

WWWhat is the rationale for

The Conformity Assessment process uncovers existing deviations between internal standards and industry standards, and if there is a path to convergence or even replacement of the internal standard. Function Modeling and Value Engineering tools (such as those available in the IHS Markit Engineering Workbench) record and rank deviations from industry standards that expose the company to risks of noncompliance as well as unnecessary added costs. It accounts for both qualitative (subjective) or quantitative (objective) deviations from acceptable values for cost, conformity and compliance, and arrives at an overall cost/value score for the standard.

WWAre you filling gaps that

PHASE 3 – Identify Potential Solutions

The outcome identifies areas where internal standards overlap or have the same intent as the industry standards.

IHS Markit utilizes semantic analysis tools, along with its library of industry standards, to determine if replacement with an industry standard is possible.

For well-established engineeringintensive organizations, this is a sample breakdown of standards analyzed in a standards optimization project (see Figure 2).

For high cost, highly procured items, replacing just one internal standard with an industry standard can save millions of dollars annually. A comprehensive standards optimization project, involving dozens or hundreds of standards, can result in mindboggling cost savings. A recent IHS Markit analysis revealed that a global oil and gas company could save upwards of $180 million annually by implementing the recommendations across its entire collection of internal standards. These savings include not only material costs, but also a host of other factors, ranging from internal and external engineering and contractor hours to inventory management costs to transportation and labor. As one engineer said, “IHS [Markit] consultants are true professionals in methodology and problem-solving... Ten minutes into our mentored project workshop, we were already seeing solutions from new perspectives.”

deviations?

industry standards are not covering?

WWAre requirements subjective?

WWAre acceptance criteria clear?

❯❯ Is there a lower-cost alternative to a rupture disc mechanism that could protect the springs used in sour service operation? ❯❯ Are there alternatives to ISO 15156 conformity that address the sulfide requirements at lower cost?

Standards ELIMINATED

In this phase, a complete series of questions are used to triage and down-select potential solutions.

NEW Example questions used in an oil Standards and gas company project included: ❯❯ Is there a lower cost alloy that could replace Hastelloy C-276 in support of sour service operation?

Standards KEPT

Standards IMPROVED

For more information on standards optimization, visit: ihs.com/standards-optimization

Figure 2:

SAMPLE STANDARDS BREAKDOWN 1

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Wall Street Journal “Is Standardization the Key?” 22 April 2015

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