Obsolete Technology: How to Justify an Upgrade

116511066Technology obsolescence alone isn’t normally enough to justify a large capital upgrade. But, two drivers that typically kick off the initiative are improved reliability and increased performance. Increased performance is the most commonly cited reason because functionality and performance improvements across all areas of operations is a common business goal.


The concern about technology obsolescence is that the technology has gone beyond its useful life cycle and the results are the following:

  • No more replacement parts and limited technical support available from the vendor.
  • Uncertain reliability of 3rd party repaired obsolete components
  • Very little technical expertise in house (troubleshooting, configuring the hardware)
  • Extended production downtime (financial impact estimated in cost per unit)

When is it time for an obsolete technology upgrade?

The goals of reliability-focused upgrades are to reduce unplanned downtime and maintenance costs. The added benefits of the upgrades is to help improve the capability to drive process optimization, increase operation rates, reduce equipment downtime, minimize changeover time or  improve product quality.

Reliability-focused upgrades can be justified through a risk evaluation that will identify where the risks are and its impact to productivity.

  • How much obsolete hardware is involved?
  • What is your current level of production downtime caused by obsolete hardware failure?
  • What is the cost of the downtime?  (lost production time X number of lost units X the sales cost per unit.)
  • How much loss profit is due to the downtime?

The additional benefits for upgrades can be justified through the following:

  • Yield improvement due to better controller accuracy
  • Reduced downtime due to improved system warning and alarming
  • Production quality improvements due to the ability to historize data for trending
  • Cycle time and changeover time improvements due to the change in drive technology.

New projects planned for the line or facility, might also be a good time to include the cost of the technology upgrade as a part of the capital expenditure, since the upgrade provides additional line improvements.

Identify Scope Challenges and Risk

Next step is to identify the scope challenges of the upgrade and the risk associated with the work.This analysis should be prepared to help identify what type is mitigation is required to minimize or eliminate the risks. Risk identification is a recurring process as you progress through the project

The resulting document might look like this Challenges and Risks sample:


Upgrade Challenge Description Risk
1.  Record Set versus As Built Obtaining accurate records of all old hardware and wiring. Out of date documentation
2.  Equipment Panels and Wiring Remove old equipment hardware; remove all wiring; install new equipment; re-wiring of all cables Extended downtime due to hardware change-out and high risk wiring problems
3.  Complex production setup Interdependencies: Multiple lines with shared equipment Upgrading one line risks impacting other processes
4.  Integration of new hardware with existing equipment Installing new hardware systems that is not compatible with the existing equipment. Improper data exchange from one system to another.
5.  Ensure that program conversions are executed correctly Converting the old code from the old hardware to the new hardware Out of spec product; equipment not functioning as designed.

Risk Assessment and Analysis

Once risks are defined, you can decide the best approach to mitigate each one. The result would look something like the sample chart below. (The risk assessment and analysis is most effective when conducted by the in house engineering team, engineering partner and technology partner.)

Defined Risk Risk Mitigation
What new parts are available to upgrade the existing? Partner with vendor
How to test configuration prior to installation? Assembly on a back-plane and off-site testing
Manual Recipe versus Automated Product Recipe programming Set-up recipe format and test prior to installation
Integration with existing systems Partner with vendor
Wiring Detailed diagram of old wiring to new configuration

In-House Engineers or System Integrators?

The highest risk of all is performing an obsolete technology upgrade for the first time with in-house engineering: lack of resources, not enough time or experience level. In-house engineers already have the challenge of supporting daily operations and working on improvement projects; not a lot have been fully trained in performing systems upgrades. By working with System Integrators with the technical expertise and experience in doing these types of project, you help to minimize your project risk.

Developing a relationship with a System Integrator, will help provide opportunities to train and develop in-house resources for future upgrades or other phases of the project. To develop the appropriate approach, you should  estimate the direct costs and indirect benefits for engaging a systems integrator, including system knowledge, installation sequences and vertical startup. Factors and benefits that can affect these costs include:

  • Experience with equipment upgrades.
  • Impact on production downtime and scheduling.
  • Startup support and manpower.
  • Final documentation.
  • Vendor relationships through installation/technology procurement/integrator.
  • Hands-on training such as networking, programming, HMI software development.
  • Project Management: conducting risk assessment, project task breakdown, schedule management, resource management.
  • Benchmarking: future technology upgrades, recipe and batch system, programming.
  • Technical Knowledge: building capabilities for future upgrades, understanding sequence changes, improve in-house technical abilities.

Once the scope, cost and assessment is compiled, the next step is to present to Management for approval. If you would like help developing a Risk Evaluation or you would like to learn more about mitigating obsolete technology risks, Contact Us today.