More resilience, more digital, more agility, more sustainability - the knock-on business demands from COVID-19, according to Schneider Electric CEO Jean-Pascal Tricoire
- COVID-19 has accelerated operational focus in a number of key areas for Schneider Electric's industrial customers. What comes next?
Tougher operational resilience and much more digitization have been forced up the corporate agenda in light of COVID-19 - and any potential post-pandemic economic turndown will cement this. That’s the prognosis from Jean-Pascal Tricoire, CEO of French energy and industrial automation giant Schneider Electric:
COVID-19 has not really changed the real priorities of our customers, it's just forcing the tough questions, accelerating all of us to take faster on board decisions. Of course, most of what we've done in the past three months has been to react to the COVID-19. It has forced up the subject of resilience of operations and business continuity, for all of us. But what we've seen is that it brought back on the top of the agenda also the level of efficiency. Our customers are asking to step up efficiency to face a recession in many countries .
The virus itself has had varying levels of impact depending on which sectors those customers operate in, he adds:
Some of them have been boosted by the virus, most likely examples are data center [providers] or hospitals. Some of them have seen the demand really reduced by the virus. Actually most of our companies have been facing both of those two equations at the same time, facing a very volatile environment and the need for super agility, forcing us to look for more efficiency on one side, or more resilience and capacity on the other side.
But whatever the operating sector, a drilling down on digital has been universal:
There is a universal winner in the response to the virus and that winner is digitization. The need for digitization has been reinforced by the fact that our customers want to do everything remotely, All of our customers have been facing huge resilience issues on the installations and digital has been the response in many cases to that higher need for residence.
The shift to remote working has undoubtedly been a major catalyst here, argues Tricoire:
Our customers want to do everything remotely. They have been facing many cases where operators can't go to a site or operators can't go in numbers to a site. [They] speak about the need for unmanned operations, speak about the need to train operators without going on site with digital trainings based on virtual reality, or assisting an operator on site remotely with augmented reality. The need which is emerging is the need to manage your company from one remote unified Operations Center.
As for the demand for heightened resilience capabilities, this stems from three drivers, he adds:
The first one is to connect everything, because everything connected can be monitored and being monitored you can make it more resilient. The second one is to predict. We've seen multiplication by three the demand for everything which is linked to asset performance in our systems. And the third point is to make sure that once you have predicted, you can prevent the outage or the breakdown by sending service people.
Schneider has seen all this in action during the pandemic period:
Our service centers have been very busy during the crisis as people want to prevent outages based on the data they are collecting,. What we have already realised during this crisis is that the robustness of your installation is as high as the weakest point of your facility or your company. Companies are a combination of an access to the grid, the power distribution, the building management, the IT management and then the process management. To make it more resilient, our customers have been asking for more automation, so that more problems can be solved, automatically, at a local level, without human intervention. They have been asking for a set of analytics software from the data which is extracted into the installation to get more indication of what they need to do.
The Schneider solution to this is what Tricoire calls “a series of EcoStruxure automation architectures” that plug into a set of advisors in [Schneider subsidiary] Aveva software modules to predict on to prevent problems. This is backed up by integrated services for cyber-security and the network of service centers. As an exemplar, he points to Enil, an Italian multi-national energy utility group:
Enil is really a forward thinking and forward looking utility in the world, which has been at the forefront of digitization forever. They've been digitizing their installations [since] much earlier than many of their peers. Think about the competitive advantage when you have to face as a utility in some countries a decrease of consumption by 40% in industry, coupled with an increase by 20% in residential [demand] where people are confined. You have to manage it in real time. This is a kind of resilience that digitization coupled with predictive analytics is bringing to a company like Enil.
Outside of the immediate demands of the COVID-19 crisis, digital transformation efforts among industrial customers is also being boosted by sustainability needs. This is a long-standing area of focus for Schneider, says Tricoire:
We have all realised that if we want our business to thrive, it needs to be more sustainable. Of course, the mega trend toward sustainability was there before [COVID-19]…We have developed over years a practice of consulting for energy on sustainability which is actually Schneider-agnostic. The journey we propose to our customers is first to digitize installations to make sure they monitor their installation and know where they are in terms of energy, carbon and resource usage; strategize an holistic way of dealing with sustainability; execute on that strategy; and iterate, because the journey to sustainability is a marathon without finish line. You can always do better or more sustainably in the way you run your business.
But although that consulting is agnostic, there is a commercial interest for Schneider here, he admits:
We are not only doctors giving you advice; we are also pharmacists. We have clear solutions for the execution of a sustainability strategy. Over time we've developed very strong guidelines and beliefs around sustainability which should be around more efficiency, which is the first priority of sustainability. Second is more circularity. Here again digital allows you to trace what's happening in your processes and allows you to organize and put into operation that circularity. The third one is more electrification because electricity is the only vector that allows you to de-carbonize. And the 4th one is s to de-carbonize the supply of electricity based on renewables. based on micro grids.
Schneider also practises what it preaches, he insists:
We are practitioners. We are not only a technology company. We operate 200 factories 100 distribution centers and we like to benchmark ourselves to learn from the others. Gartner last month gave us a full ranking, as a fourth best performing supply chain in the world. We were coming from a rank of 74 five years ago. We've done that progression mostly thanks to digitization. Another place where sustainability has been good to us is our capital market, the way people invest at Schneider. Today Schneider is the fifth company in the world where environmental and responsible firms are investing the most, because of our commitment and because of what we have proved through the digitization of our operations.
Tricoire concludes that while the past few months have seen enormous upheaval around the world, the underlying basics of industrial operational needs have not changed and the constant is a need for more:
COVID-19 has not changed the fundamentals. We are all still geared to more agility because there will be more crisis; more efficiency because the economy will be on the pressure; on more sustainability because we still need to fight climate change.