The future is here for Honeywell

When one has worked at a single company for nearly 30 years, one tends to think in decades, rather than a few years at a time.

And it is in decades that Ashish Gaikwad sums up the evolution of Honeywell Automation India Limited (HAIL) since he joined them in 1992. The ’90s were all about digitising core industries like steel, power, and petrochemicals, transitioning them to semiconductor-based electronics like industrial web apps and embedded systems. The new millennium brought a fresh set of changes: converting mounds of electronic data into meaningful information to shape decision-making, giving rise to services like predictive maintenance. In the decade since 2010, says Gaikwad, the company harnessed the power of artificial intelligence (A.I.) and quantum computing to develop technology such as warehouse robotics.

“This new decade is going to be all about autonomous systems,” says Gaikwad, who is now HAIL’s managing director. And by autonomous, he doesn’t mean just driver-less cars. “The aim is much bigger than that. We want to think about how this technology can reduce accidents on the road, make transportation accessible to all, and much more,” he adds. After the digitisation of the IT, retail, media, and banking industries, it is finally the turn of the industrial and manufacturing sectors. Robotics, A.I., and automation, hitherto mere buzzwords, are becoming reality. Smart factories, smart logistics, smart mobility, smart grid, and smart homes/cities: the decade has numerous possibilities; some already coming to life.

Aiming big has helped HAIL—a unit of the U.S.-based industrial major Honeywell International Inc.—expand its product portfolio manifold since it set up shop in India in 1984. Over half its revenue, according to brokerage YES Securities, comes from its Process Solutions unit, where its solutions such as simulation technology and wireless field devices are used in the oil and gas, power generation, chemicals, mining, and metals industries, among others. A third of revenue comes from the Building Solutions unit—which makes fire detection, alarm systems, security systems, etc.— and the Building Management Systems unit, which provides automation technologies, such as for heating and cooling systems, in airports, metro stations, IT parks, and similar buildings. Clearly, the company has a few autonomous systems already, but India’s industrial sector has a long way to go to catch up with global peers.

Ironically enough, it was the now year-long battering due to the Covid-19 pandemic that acted as the impetus for Indian industries to finally join the ‘Industry 4.0’ revolution. The Fourth Industrial Revolution is said to be borrowed from the German government’s 2011 strategy to computerise manufacturing. The possibilities span from virtual meetings to remote support to resolve a factory or on-field incident, like say at an oil pipeline. For HAIL, it also presents an opportunity to move beyond the ‘industrial’ tag. “In the next leg, we are bringing a lot more software layered on top of physical offerings. So to bring these digital and physical worlds together is one of our biggest missions, especially for cybersecurity in industrial networks,” says Gaikwad. Its other mission is to help industries reduce their focus on fossil fuels and further their sustainability agenda.

“We define Industry 4.0 as a connection between people, services, and things,” says G. Balaji, head-energy industries, ABB India. “Intelligent things are instruments, devices, and systems such as robots, drives, motors with sensors, and I/O devices. We see factories of the future will have complete automation from order to delivery.” At the end of the day, it is also about cost savings, says Shridhar Kamath, partner, Deloitte India. “Increased efficiency is the best way to cut costs, and this is where automation and robotics play a pivotal role.”

Even companies like IBM are seeing increased demand for next-generation technology, from a variety of clients. “We are seeing a focus on intelligent A.I. in every conversation with our clients, be it in BFSI, telecom, retail, manufacturing, consumer goods, auto, etc. The pandemic has forced enterprises to innovate,” says Anil Bhaskar, business unit leader, IBM India/South Asia.

Bhaskar imagines future workplaces will require critical reskilling and upskilling as technology automates mundane tasks, freeing employees for higher-value work. But he adds, “Like every other transformative technology, from the steam engine to the Internet, we believe that A.I. will ultimately create more jobs than it displaces.” A report from Deloitte last year found that while 81% of India’s workforce expects the use of A.I. to ‘increase’ or ‘increase significantly’ over the next three years, only 26% feel their organisations are ‘ready’ or ‘very ready’ for the change, and 86% believe they have to reinvent their organisations’ ability to learn.

Reinventing and, indeed, inventing is something that HAIL does in spades, especially for the Indian market, says Gaikwad. “It’s a myth that technologies are evolved outside of India, and then handed down to us. A lot of this development—creating these new products, new technologies, software, etc.—is actually aided by a large force of our employees who have been working on this for the last two decades. When we try to solve a problem of, say, the developed world like North America or Western Europe, it’s a very different problem than India. It is not always possible that you take the same portfolio that is successful in the rest of the world and just hard sell it in India,” he says.

HAIL calls it the 'east for east' strategy, where it creates products tailored to markets like India, China, Korea, Southeast Asia, and parts of the Middle East. For example, last September the company launched Blu tag, a temperature monitoring and data logger for cold chain applications in India. “When pharmaceutical products need to be transported, they go long distances, and one is not able to keep track of the environment (temperature and humidity) in which it is transferred. This is a problem which is quite unique in India because we are a large country and the weather conditions are very different,” he says. Another innovation born out of this strategy is making expensive software applications, originally meant for big data firms, accessible to smaller companies and startups through a Netflix-like subscription model. “This was not tested anywhere else in the world, but we are testing it in India first so that our small and medium enterprises can also have access to the technology at an affordable price,” says Gaikwad.

It is perhaps no coincidence that Gaikwad’s two examples are outside of the industrial and manufacturing industries, which house several of HAIL’s clients, and have been hammered by the pandemic as well as ever-rising oil and gas prices. “HAIL’s business is highly linked to global business cycles, especially for energy and process industries. Any major slowdown in global GDP poses a downside risk to the company’s growth,” brokerage ICICI Securities said. That was evident last financial year when the company’s revenue fell in every quarter, resulting in a 7.5% slide in annual revenue to ₹3,043 crore for FY21.

Another risk that ICICI highlights is that a large part of HAIL’s business—about 38% of revenue—is concentrated in parent Honeywell International Inc. and its affiliates. “The major part of exports come from its parent, which implies greater reliance on Honeywell Inc.’s growth—a key downside risk to our thesis,” the brokerage said.

HAIL’s one-word answer to all such risks is: innovation; quickly and at scale. “We have to, therefore, look at innovation where it makes the most sense,” says Gaikwad. “Once the concept is clear, we have a process of quickly getting the product out. And if it’s failing and not really solving the problem, then rather than getting emotionally attached to it, we just move on and try something else.”

Many companies curtail spending on research, especially in an economic downturn, says Gaikwad. “We don’t believe in that. We try to continue our innovation activities with a short-term view when it comes to managing our costs and a long-term view of not compromising on the future,” he says.

“Globally, we’ve been a diversified industrial conglomerate and the only reason I believe we have withstood the test of time is because we’ve kept ourselves transforming every decade,” says Gaikwad. For him, betting on new technology is like planting a new seed. “Some of those seeds turn into saplings and some become large trees. I don’t think they’re a playbook or a guide that will tell us whether we’re right or wrong. So we do the seed planting in bad times and in good times, and that probably is the secret sauce.”

Seeds waiting to bloom in the next few decades.