FARO is Deeply Bound ETHICALLY and Intellectually to the TECHNOLOGY
What are the benefits of using 3D scanning in digital engineering? How does it help in civil infrastructure and building construction?
The entire process is an evolution of a process that has been happening in factories for a long time. Before an object is built in a factory, it starts off as a complex CAD drawing or CAD design. During the manufacturing process, this object will undergo quality control, which involves the assembly being checked and compared against the original CAD drawing or design, using scanning technology.
The same scenario is now prevalent in part in the construction industry. All designs are prepared using CAD. These could be based on existing designs that are reverse engineered or newly created designs. Similarly, using scanning technology, these CAD designs can now be used to monitor and check against the CAD and the actual as-built can be monitored and recorded during the construction process.
3D scanning has taken a longer time to penetrate the industry probably because of the nature of the technology.
Accuracy and resolution of the data is of paramount importance and ease of use is essential. In factory metrology, while working around a car or an aeroplane or an engine, we work in microns accuracy. In the realm of the construction and surveying, we work in millimeters accuracy but in often more challenging and difficult circumstances.
Today, our scanner products are highly enabling in the sense that physical size is optimized for the construction and surveying industry, with accuracy in the millimeter or sub millimeter range, which is suitable for the industry applications and the software is developing to mimic the typical workflows of the construction site.
FARO has a wide range of laser scanner products depending on the application requirements, whether you are indoors or outdoors, whether they require long range or short range, or need high accuracy or low accuracy.
In addition, we have taken our metrology software, which was developed around CAD and measuring objects against CAD, and transformed that into, let’s call it, metrology software for the construction environment.
You can call it construction validation or survey validation; it’s really the same thing. You are building according to CAD, and since you can scan during the entire project, you can achieve total quality. In the construction environment, the process becomes far more complete as at every step that you are doing 3D scanning, comparisons to CAD and making sure that you don’t have errors. There is an additional value in the construction industry, which is not seen in the factory metrology industry, and that’s called the “as-built documentation”.
So with the as-built documentation, you can take a part of the building, dial back in time and actually see through the walls to all the underlying construction — where are the pipes, where are the wires — and this provides a high degree of accuracy. This represents, really, a new level of value because the as-built documentation will be valuable to everybody involved in the life cycle of a construction project and the maintenance and modification throughout a building’s lifetime.
Construction has always been typically laggard in adoption of new technologies or going digital rather. How do you project the adoption of these new technologies, laser scanning in particular, in the years to come?
Rather than criticizing the construction industry about being laggard, I would say that the enabling technology was really not available. Only in the last decade, with the introduction of less expensive, more rugged and accurate 3D scanning devices, has the market been enabled. It’s only recently that we are coming up with relevant software to allow construction-oriented 3D measurement (to be compared) against the CAD information. So, there is a tremendous rush right now to take advantage of these efficiencies in the construction industry.
When our (FARO) first protocol measurement technology was introduced in 1993 in the factory metrology environment, it took time for people — almost a whole generation – to get accustomed to it and be re-awakened to the possibilities of 3D. People are trained in the old way, and they have to learn and adopt the new way; this usually requires a generational change.
Our industry is now supplying products and tools that drive better efficiencies and the receptiveness in the market has been really impressive.
How do you think these technologies can be leveraged to advance the AEC industry? Can you give some projections?
At the moment there are very few tools available for avoiding, what we call in the manufacturing industries, scrap and rework. Scrap is when the part made incorrectly beyond repair and it has to be thrown out. Rework is when you find an error in your assembly and you have an opportunity to rework it. These two elements are profoundly important in construction. The tolerance for problems of scrap and rework in construction is very high right now because it’s considered part of the normal business. This will no longer be tolerated to the same degree in the near future.
By avoiding rework, approximately 50% reduction can be achieved in cost. With 3D scanning, construction companies can scan continuously and immediately point out if a pillar is being put in the wrong place or the floor is not quite flat or the girder is not supporting correctly. Such early detection makes contractors and architects perform better. Errors do not stack up and cost of rework is subsequently reduced.
One area where scanning is going to be of utmost important is the high definition maps like the way it has made a mark in automated cars, IoT, etc. How do you see the market shaping up?
There are two parts to this market. There is the autonomous vehicle market, which has driven a tremendous drop in cost in using semi-conductor-based LiDAR, which works in the centimetre-range in object identification.
Then there is another realm, which is the high-definition. High-resolution data is required for making intra-manufacturing or construction calculations and observations in the forensics business, where a great level of detail, both image and 3D, are required.
So, the market is really bifurcated into two parts — high speed, low resolution, low accuracy market for the autonomous market; and a very high resolution, high accuracy market for surveying grade imaging and 3D measurements. We do not intend to be in autonomous low resolution, low accuracy market. We will focus on the high resolution, high accuracy market.
You as the co-founder of FARO served as the chairman of the board of directors since its inception in 1982. You also have served as the CEO from the company’s inception until January 2006. What drove you to return to take charge of the day-to-day operations?
As a founder and originator of some of the technologies, I am deeply bound ethically and intellectually to the technology and the importance of the marketplace. Since the inception of the company, I have been involved in almost every important matter. When FARO Technologies’ growth rate started faltering during late 2015, and new competitors started entering the market with the latest technologies, the Board of Directors and management team decided to reconfigure and restructure the company to be able to better compete in new markets, one of which is the construction BIM-CIM market. In that capacity I agreed to take on the charge of CEO and help the company to organize and harmonize its efforts to enter into new verticals and generally reinvigorate the company and its technology road map going forward.
It’s been almost two years since you took charge again. What key steps have you taken to reshape the company and prepare for a successful future?
Principally an examination was undertaken to assess the competitive and organizational deficiencies. After the analysis, an initiative called “Going Vertical in Harmony” or GVH was introduced. This initiative was comprised of two primary components.
One was to define the vertical businesses in which the company predominantly operates.
FARO, at its core, is a three-dimensional measurement company and hence it was found that the products that were primarily focused around factory metrology, while extremely effective, were too generic in addressing key requirements for other market segments. In order to configure the products and our development in a manner to become better aligned with other, specific market segments, such as public safety or construction BIM-CIM, the organization needed to develop products and sell them in a manner which was appropriate to these verticals.
So, a number of vertical business groups were created based on specific customer focus areas that included Factory Metrology, Construction BIM-CIM, Public Safety Forensics and Product Design. Also, a new vertical was introduced for more custom solutions, which is called the 3D Machine Vision.
During this time it was also discovered that the organization had become geographically disconnected into three moderately different companies around the world. This caused certain inefficiencies and the market was concerned about the company’s profitability. It was necessary to globalize and harmonize the efforts to maximize the growth and optimize administrative and research expenses through global harmonization, which was the second component of this initiative.
FARO GVH initiative constituted an 18-month effort and we have successfully completed most of the objectives that were set by (to be completed by) mid-2017.
What are your key success criteria/metrics where you could eventually conclude that your return as CEO has been a success?
I would like FARO to return back to a mid-teens revenue growth rate, and at the same time would like to see that by 2019 operating margins are also in the mid-teens area. In addition, the company wants to ensure that the gross margin returns to the historic averages of around 60%. So, there are three components — the mid-teens top line growth rate, gross margins of 60% or greater, and mid-teens operating margins. Finally and most importantly I want FARO to continue to lead its chosen verticals with best in class solutions which provide excellent value propositions.
Where do you expect to see FARO five years plus in the future?
FARO intends to be the most trusted and leading solution provider for 3D measurement. We strive to be a leader in the technology and want to play a major role in the verticals that we have identified. I believe the Construction-BIM-CIM market will be a multibillion dollar business. The addressable market is actually substantially larger than the factory metrology market. The public safety market is also becoming much more important. We are capable in all those areas, we intend to retain our leadership and become, hopefully, a multibillion dollar company over the next 10 years facilitated by our success in these particular verticals.
FARO’s success is undoubtedly related to the leaders who drive the organization. What has been your leadership style to keep this going, make it a success and for so long?
I believe everybody should be imbued with a desire to lead in the technology and to transform the world we work in. You have to be inspired by the capability of technology to transform our lives and the industries of interest. It’s that inspiration which makes you constantly look for new and innovative approaches and discover how to be part of that revolution. That’s the kind of spiritual inspiration I have tried to bring back to the company. We aim to be always at the leading edge, providing value-added propositions, and providing highly productive tools at very reasonable prices. We intend to lead in providing products that are simplified for anybody’s use. That’s what keeps us motivated to excel.