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The ISA Business Model
by Terry V. Molloy, PE
(Reprint from January, 2003 Transmitter)
It has been a year since I completed my term as District
11 Vice President and I would make a few
observations based on the feedback received
from members and friends.
Bob Webb, a long time ISA leader and
friend reported that Chicago was “good.”
He thought the technical program was
very good and well attended. Attendance
at the exhibits was 12,100 according to
ISA’s report on the web site. This
was less than past years but understandable
given the current economy. The real
question is can we expect to see a recovery
in attendance at these large national shows?
The total number of exhibitors and
the exhibit space sales were also down.
Again understandable, but still leaving
the question will exhibit space sales improve
in the future and will the attendance improve
enough to justify the cost? Our members,
especially those in the “user” community
can best answer that question.
Yes, the point of this little editorial
is to again ask those of you out there using,
maintaining, and replacing your instrumentation
and control systems, “What do you need from
ISA?” Those of us that started our
careers in the 1960’s know why we joined
ISA and have stayed members all these years.
But as we leave the profession to
enjoy life with all the money we made in
the “Market” prior to March of 2000, we
are concerned about the future of our profession
and the only real technical society that
has ever met our needs. We want to
help our volunteer leaders and the paid
ISA staff preserve and improve our society
and continue to promote our profession.
If you had $20 million dollars and wanted
to start a business serving our profession
what would your business model look like?
Bare in mind that you must provide
products and services to your customers
that will keep them coming back year after
year. Would your primary target market
be the suppliers of products and services
to the process control industry or would
it be the users of the technology? Would
you attempt to retain a non-profit status?
What would your primary products be
and who would be your competition? What
would your competitive advantage be over
that competition?
Well the ISA has about $20 million in
reserves and maybe a little more in assets,
I have not seen a balance sheet recently.
Right now it is clear we are losing
money with the current business model and
or the way it is being implemented. What
has changed (besides the sagging economy)
that is causing this to happen? The
Internet has not only changed the way people
communicate, but also the way they get technical
and product information. The process
industries have been moving new facilities
offshore where the labor is cheaper and
the environmental regulation “friendlier
to industry.” During the last ten
years there has been a consolidation of
suppliers with a tendency toward “vertical
integration” where one company can provide
an integrated solution for the process.
More companies have been “outsourcing”
their technical work as their senior staff
retires and the in-house experience decreases.
Besides that, the cost of keeping
a real expert on staff is often prohibitively
high. Deregulation of the power industry,
the absence of major new construction of
power plants (no NUKES), and turnkey gas
turbine units have caused significant downsizing
of companies like Bechtel, and PG&E,
in the San Francisco Bay Area. This
has impacted the suppliers of process control
equipment because the low hanging fruit
is gone. The supplier can no longer
walk into Bechtel with an I&C group
of twenty or more engineers and find a project
to bid on. He may even have trouble
finding an engineer working on a real project
much less an I&C engineer.
One of the trends in the industry that
ISA has served in the past is for a large
company (like Rockwell Automation) to put
on their own C&E in a nice but inexpensive
location and invite their customers. When
all is said and done this alternative is
often less expensive than exhibiting at
the ISA C&E in Chicago. It is
also significantly cheaper for the attendees;
the company pays for most of their meals.
The other advantage for the company
is that their competitors are not presenting
at the technical conferences.
At this point it should be clear that
a business model that focuses on supplying
products and services to the suppliers of
products and services to the process control
industry is going to be faced with a lot
of competition and a limited marketing advantage.
We must always remember that employee
skills are quickly transferable to another
company if the money is right. More
simply put, if our business is conferences
and exhibits with the emphasis on the exhibits,
many companies can provide this service
and if our only advantage is our staff,
they can be hired away.
What services do the suppliers need that
the users also need and how could “our new”
company provide them? One answer to
that question is “Standards.” The
users in the process industries would prefer
that the same plug fits in all 15 amp /
110 volt sockets. The suppliers want
to supply a product that meets their customer’s
requirements while at the same time being
able to add or eliminate features increasing
product differentiation and competitiveness.
When you think of ISA, are standards
the first thing that comes to your mind?
That is not the case for most of the
members I know today.
It is interesting for those of us that
were around when ISA was still a teenager.
We had the opportunity to work with
some of the original members of our society.
Back then it was the “User” that promoted
our profession; the vendors came to learn
and develop relationships with the users.
These “Users” were the pioneers and
leaders in the use of this evolving technology.
When they put on a technical conference
the attendees can to learn, not look at
the vendor’s exhibits. Back in the
“Good Old Days” the vendors were happy to
buy exhibit space in the hope of finding
a new customer or two. Of course back
then the cost of exhibit space was intended
to cover the cost of putting on the technical
conference, not running a C&E business
for a year.
Back to the basic question; “WHAT SHOULD
THE ISA BUSINESS MODEL BE TODAY?” Should
we return to our “Roots?” How do we
develop a competitive advantage over other
organizations that have evolved and are
competing for our members? What role
should the Internet play in this new business
model? As the Internet evolves and
wireless communication capabilities increase,
how will we maintain the expertise we need
to compete in the information services market
to fulfill our mission: To answer
that question we need to know and understand
the ISA mission. From the ISA web
site:
Today’s Mission:
The mission of ISA as the global
society for instrumentation, systems,
and automation is to:
Maximize the effectiveness of ISA
members and other practitioners and
organizations worldwide to advance and
apply the science, technology, and allied
arts of instrumentation, systems, and
automation in all industries and applications.
Identify and promote emerging technologies
and applications.
Develop and deliver a wide variety
of high-value information products and
services to the global community.
The Founders’ Mission:
The object of the Society shall be
to advance the arts and sciences connected
with the theory, design, manufacture,
and use of instruments in the various
sciences and technologies.
Comparing the “Founders’ Mission” with
“Today’s Mission” I find that the concept
of "Global” has been added to the mission
statement along with “products and services.”
A very fundamental question arises;
as a non-profit volunteer technical organization
should our mission be to develop “products
and services,” and should those products
and services be “global” in nature? If
the answer to either question is “Yes” then
what should those products and services
be, and what will our competitive advantage
be over others capable of offering the same
product or service?
I have my opinions; I would like yours.
Please send me e-mail at tvmolloy@cmes.net
with your thoughts and comments or you may
mail me your comment at: 21 Caribe Isle,
Novato, CA 94949.
new: 2/4/03 GJG
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