Quantifying Investments and ROI in Shift Left and Shift North Strategies in Industrial Automation

In industrial automation, the "Shift Left" and "Shift North" strategies are critical for enhancing system reliability and operational efficiency. These strategies focus on early-stage validation and higher-level system integration, respectively. To effectively quantify investments and calculate ROI, a technical approach is required to evaluate the costs and benefits associated with these strategies. This document provides a detailed methodology for assessing these investments and returns.

Shift Left Strategy

Definition:

The Shift Left strategy involves advancing activities such as testing and validation earlier in the system development lifecycle. This typically involves early integration and testing of hardware, software, and control systems to identify and address issues before later stages.

Quantifying Investments:

1. Initial Costs:

• Tool Acquisition:

- Simulation Tools: Investment in advanced simulation environments (e.g., MATLAB/Simulink, dSPACE) for early validation.

- Testing Frameworks: Costs associated with acquiring automated testing tools (e.g., Jenkins, TestComplete).

• Development Costs:

- System Design: Expenses related to designing test scenarios and integration points.

- Prototype Costs: Costs for developing prototypes and initial test versions of hardware and software components.

• Training:

- Technical Training: Costs for training engineers on new testing methodologies and tools.

- Documentation: Development of training materials and manuals.

2. Operational Costs:

• Tool Licensing: Ongoing expenses for licensing simulation and testing software.
• Maintenance: Costs for updating and maintaining test environments and frameworks.y

Calculating ROI:

1. Defect Reduction:

• Defect Metrics: Measure the reduction in defect density (defects per unit of code or hardware) attributable to early testing.
• Impact Analysis: Quantify the reduction in downstream rework and field failures.
• Cost of Defects: Calculate the cost avoidance from preventing defects that would otherwise lead to expensive recalls or service interventions.

2. Time-to-Market Improvement:

• Cycle Time Analysis: Evaluate the reduction in cycle time due to earlier detection and resolution of issues.
• Project Scheduling: Measure the impact on project timelines and deliverable schedules.

3. Cost Savings:

• Rework Reduction: Quantify savings from reduced rework and late-stage changes.
• Operational Efficiency: Analyze cost reductions related to streamlined development and testing processes.

4. Efficiency Gains:

• Resource Utilization: Measure improvements in resource allocation and utilization due to more efficient early-stage testing.

Shift North Strategy

Definition:

The Shift North strategy involves the integration of systems across higher operational layers, such as enterprise resource planning (ERP) and advanced manufacturing execution systems (MES). The goal is to enhance data visibility and coordination across different operational levels.

Quantifying Investments:

1. Initial Costs:

• System Integration:

- ERP/MES Integration: Costs associated with integrating ERP systems (e.g., SAP, Oracle) with MES (e.g., Wonderware, Siemens).

- Middleware Solutions: Investment in middleware for data interoperability (e.g., OPC UA, MQTT brokers).

• Consulting and Implementation:

- Integration Services: Costs for consultancy and implementation services for system integration.

- Customization: Expenses for customizing systems to fit organizational needs.

2. Operational Costs:

• System Maintenance:

- Upgrades and Patches: Ongoing costs for system updates and patches.

- Support Contracts: Costs for technical support and maintenance contracts.

• Training:

- User Training: Expenses for training users on new integrated systems and workflows.

Calculating ROI:

1. Enhanced Decision-Making:

• Decision Speed: Measure improvements in decision-making speed due to enhanced data integration and real-time analytics.
• Decision Accuracy: Evaluate the impact on decision accuracy and the reduction in errors.

2. Operational Efficiency:

• Efficiency Metrics: Analyze improvements in key performance indicators (KPIs) such as Overall Equipment Effectiveness (OEE) and throughput.
• Resource Optimization: Measure improvements in resource utilization and inventory management.

3. Cost Reductions:

• Operational Costs: Quantify reductions in operational costs resulting from streamlined processes and reduced manual interventions.
• Inventory and Logistics: Evaluate savings from improved inventory management and reduced logistics costs.

4. Scalability and Flexibility:

• Scalability Metrics: Assess the system's ability to scale with increased demand or expanded operations.
• Flexibility Analysis: Measure improvements in operational flexibility and the system's ability to adapt to changes in the market.

Quantifying investments and ROI for Shift Left and Shift North strategies requires a rigorous technical analysis of both cost and benefit factors. For Shift Left, the focus is on early-stage validation and its impact on defect reduction and process efficiency. For Shift North, the emphasis is on system integration and its effects on decision-making, operational efficiency, and cost savings. By applying these detailed methodologies, organizations can accurately assess the value of these strategies and make informed decisions to optimize their industrial automation investments.