Vimal Kapur President, Honeywell Process Solutions Industry Perspective

Welcome

40th 1,200+ Attendees 302 Companies

47 Industries

34 Countries

Agenda

Challenges

Solutions

Conclusions

CAGR 2014–15

CAGR 2010–14

Since the last recession, industries have been challenged to do more with less CAPEX…

2015 Americas CAPEX ($B)

Slower project activity across multiple industries with significant impact on Oil & Gas since Q4 2014

$280 $160

$100 $90

$60 $40

$20 $15

Oil & Gas Power Batch MMM

Chemicals Refining

P3 Water

12% -28%

2% 3%

1% 0.5%

6% -7%

3% 2%

-2% -10%

9% 0%

2% -5%

Total $ 760M Source: IHS May 2015 Estimates

-25.7%

20.2% 18.9%

0.4% 1.2% -0.4%

-12.3%

2009 2010 2011 2012 2013 2014 2015

…as well as do more with less OPEX

Change in OPEX Spending vs Prior Year

Bounced back just after recession; very tight spending since then with further declines in 2015

Source: IHS May 2015 Estimates

Aging assets and workforce are driving a larger skills gap

9% 10% 16%

12% 11%

42%

< 5 5 to 10 11 to 20 21 to 30 31 to 40 > 40 years

22% of the Baby Boomer Workforce has Retired Since 2006…but the Plants from the Same Generation are Still Operating

Baby Boomers in the Workforce

Asset Age Average Asset Age 36.5 years

Source: Deloitte analysis based on data from U.S. Bureau of Labor Statistics

60 60 60 60 59 56 55

53 51

49 48 46

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 M

illio

ns

22%

Obsolescence of open systems are introducing disruption to plant operations

Closed Systems Open Systems

Benefits

Challenges

• Proprietary • Expensive hardware • Isolated systems

• Limited 3rd party influence • Standard less expensive hardware

(PCs) • Integration with other systems

• Dependence on 3rd party • Faster HW and SW obsolescence

Windows XP Hit End of Support on April 8th 2014

Increasing Threat of Cyber Attacks

48% increase in overall number of detected attacks

Power & Utility companies reported a 6-fold increase in number of detected threats from the year before

3.4 9.4

22.7 24.9 28.9

42.8

2009 2010 2011 2012 2013 2014

Millions of Detected Attacks Across All Industries

Source: PWC The Global State of Information Security Survey 2015

48%

Environmental Regulations Continue to Increase

EPA’s Clean Power Plan “Estimates are that it will cost the power industry up to $480B over the next 15 years to comply.”

NERA Economic Consulting

Tighter Emission Controls for Automobiles

“Rules are likely to cost Refiners $10B in capital costs and $2.4B/year in compliance expenses.”

Baker & O’Brien Consulting

National Emission Standards for Hazardous Air Pollutants

“Estimated cost to the Oil & Gas industry for compliance will be $170M annually.”

Environment Protection Agency

Boiler MACT

“The final boiler MACT rule is estimated to cost the Pulp & Paper industry $3B.”

Pulp & Paperworkers Resource Council

Safety Remains the Highest Priority but is Plateauing

Incident rate continues to drop, however

is the goal

Total Recordable Incidents per 100 Full Time Workers

Source: US Bureau of Labor Statistics, December 2014

3.9

3.6 3.5

3.4 3.4 3.3

2008 2009 2010 2011 2012 2013

0

Do more with less

Operate safely and in compliance

Leverage technology in order to stay relevant and competitive

In summary as operators you are asked to:

1

2

3

Manage the skills gap 4

Agenda

Challenges

Solutions

Conclusions

DCS’ Expanding Role

Alarm Mgmt

RTU

Safety Systems

F&G Systems

Historians

PLC

Metering Systems Power

Mgmt Turbine Control Systems

Alarm Mgmt Safety

Systems PLC

RTU

F&G Systems

Historians

Turbine Control Systems

Power Mgmt

Metering Systems

Metering Systems

Alarm Mgmt

RTU Safety

Systems Power Mgmt

F&G Systems

Historians

PLC

Turbine Control Systems

DCS

DCS as the focal point for all your control functions

• Single system and user interface leveraging scarce resources

• Single platform facilitating and lowering the cost of installation and maintenance

• Doing more with less

Disparate systems performing isolated control of your plant

• “Black Box” control • Multiple user interfaces increasing

complexity and maintenance costs • Complex integration required to

bring data together

Cloud Engineering is now a standard part of HPS automation projects

Cloud Computing Milestones

Leverage Global Resources, Reduce Schedule and Lower Costs

Amazon enters the Cloud

Cloud use expands as more vendors enter the market

Open Source Cloud Movement takes hold

Cloud computing finds its niche

HPS embraces Cloud computing for customer projects

2181

9300

Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15

Cloud Project Use at HPS

# of Projects # of Virtual Machines on HPS’ Cloud

2006

2008

2010

2012

2013

As of April 2015 almost 2,200 projects have been executed in the cloud environment

We are simplifying FAT process by leveraging the Cloud

Securely connect physical hardware to Virtual System

• Controllers • Safety Manager • Serial I/O and field devices • 3rd Party Systems • Lab systems

Test Target Hardware and Applications from Anywhere in the World

We are reducing configuration and set up time by up to 60% using our Cloud tools

Cloud Based Factory

Web Channel Ordering & Download

• Transmitters ordered to exact engineered requirements

• Delivered fully configured right out of the box

• Eliminate ordering errors • Minimize paper work • Reduce commissioning time

We are also increasing training flexibility thanks to the Cloud

• Accessed over a private secure network • Very small footprint at customer site • Honeywell Support & Engineering

groups have instant access • Subscription pricing model

Honeywell-maintained Training System

Virtual OTS in the Cloud Hosted by Honeywell

Comprehensive & Integrated Process Safety Management

Worker Safety

Access Control & Monitoring Emergency Shut Down

Gas Detection Alarm Management

Operator Training Perimeter Monitoring

Asset Management

Detect Prevent Protect

Providing innovative solutions to continuously assess your cyber risks in real time

Intuitive interface with at-a-glance visibility and understanding with clear

KPIs and drill down detail

Proactively identifies cyber vulnerabilities and threats and quantifies and prioritizes risks

Actionable intelligence with advice and decision support

Immediate information for ongoing situational awareness

Game-changing, platform delivering real time monitoring and management of cyber security risks

Developed specifically for industrial environments

Driving the Industrial Internet of Things with OPC UA

“OPC UA is one of the most important modern standards for industrial facilities and many further scenarios in an intelligent and connected world. OPC UA is considered a central building block on the way towards Industrie 4.0. It is the first unified, worldwide recognized industrial protocol for a secure smart factory.”

Holger Junker, Federal Office for Information Security, (BSI), Head of Division

Benefits • Native Security • Multi-platform implementation • Scalability – from embedded

smart sensors to mainframes • Easy engineering • Connectivity with context

(value & timestamp)

Downtime Monitoring

ERP

CMMS

Operations Monitoring

Asset Manager

Excel RCM Strategy

Tool

Operator Round

RBI Database

Condition Monitoring

RTDB

Your investments in applications are not fully leveraged…

Information between data sources Applications

Further complicated by number of human interfaces

…but can be brought together through dashboards and workflows for better decision making

Complete Solution to Enable SMART Operations

Visualization Metrics Management Events & Notification Collaboration & Workflow

HPS Software Mobile Enabled • Mobile device used for shift handover • Applications available for your iPhone/iPad

Control Functionality Enabled • Safe operating limit dashboards for your

mobile device

Alert Enabled • Alarms and alerts visible on your mobile device • Process deviations on your mobile device

Expansion of Mobility Solutions

0.0 8.0 12.0 15.0 2.0 6.0

10.0 2.0

6.0

12.0

2012 2015 2016 2017

Control Functionality Enabled

Alert Enabled

HPS Software Mobile Enabled

Applications Mobile Enabled

Driving Outcome-based Solutions in Services

2015 marks the “rise of the outcome-based solution” February 2015, CFO Magazine

2015: Outcome-based, value-priced

2014: Cost-plus, break-fix

Customer Revenue / Production

HON Price

+/-10% Contract Performance Swing

Customer Revenue / Production

HON Price

Expect 50% Adoption of Outcome-based Contracts Over the Next Three Years

Do more with less

Operate safely and in compliance

Leverage technology in order to stay relevant and competitive

Everything that we are doing is focused on helping you to…

1

2

3

Manage the skills gap 4

Agenda

Challenges

Solutions

Conclusions

Our objective is to put you, the customer, at the center of everything we do…

Cash Order

Delivery

Presales

Customer Touch Points

Time to bill Invoice accuracy

Delivery Support

On-time product delivery Product quality Technical support

On-time proposals Expected quality

Access to information

Order acceptance and confirmation

Timeliness of communication

On-track with schedule Critical path avoidance

Re-work Product quality Expected delivery time Expected lead time

1

2

5

4

3

6

My Priorities

Continue to innovate to address your biggest concerns • Do more with less • Operate safely and in compliance • Leverage technology in order to stay relevant and competitive • Manage the skills gap

Continue to invest in technology differentiation and leading edge automation solutions

Build and strengthen our HPS culture to put customer experience at the heart of everything we do