Industrial Services Market - A New Business Frontier for Profitability


Published on

The industrial services space provides high potential for industrial vendors to diversify and expand their value proposition to clients. Industrial vendors need to assess and understand the key growth areas for services to align their solutions with end-user requirements. This briefing will discuss opportunities, growth, and the future potential dynamics driven by current market needs assessments.

Published in: Business, Technology
1 Like
  • Be the first to comment

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Industrial Services Market - A New Business Frontier for Profitability

  1. 1. Industrial Services - A New Business Frontier for Profitability Niranjan Paul, Research Analyst Industrial Automation & Process Control 01 July 2014 © 2014 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. 2 Today’s Presenter Experience in the field of consulting and market research across the Industrial Automation and Process Control Division. Particular expertise in the European Pumps, Valves and Compressors (PVC) segment and specialize in conducting growth consulting research studies and generating market focused intellectual property. During my time away form work, I love to read and also find that cycling during the weekends keeps me refreshed. Niranjan Paul, Research Analyst Frost & Sullivan India
  3. 3. 3 Contents 3 Market Overview—Executive Insights, Drivers and Restraints1 Market Analysis2 End User Snapshot3 Key End User Requirements4 Key Selection Criteria by Country5 Roadmap for the Future6 How Does it Fit into the Industrie 4.0 Perspective?7 Q&A8
  4. 4. 4 Scope of the Briefing Product Segmentation End-user Segmentation • Oil & Gas • Chemicals & Petrochemicals • Food & Beverage • Water & Wastewater • Pharmaceuticals • Metals & Mining • Power Generation • Others (Pulp & Paper, Marine, etc.) • Pumps • Industrial Valves and Actuators • Compressors • Electric Motors • Electric Drives • Industrial Gearboxes • Industrial Automation Services Segmentation Installation & Commissioning Training Spare Parts & Consumables Maintenance Repairs Engineering & Consulting Advanced Services Extensions, Upgrades & Retrofits End of Life Services Replacement
  5. 5. 5 Market Overview—Executive Insights Maintenance as a strategy Emphasis on advanced services Adoption of integrated solutions Emphasis on on-site training Growth Opportunities CEO 360 Vision CEO 360 Vision Industrial services is expected to shape new business models of major industrial vendors Industrial vendors are striving to widen their service portfolio to be recognized as a service solution provider Industrial vendors are expected to be establish service centres as close to their customers as possible Competitive Landscape End-users Perception of Services & Opportunities for Vendors Snapshot of the Industrial Services Market Major service providers Market Share Industrial Vendors OEM More than 3/4th of the global industrial services market in 2013 Service Companies EPC
  6. 6. 6 Market Overview—Drivers and Restraints (Current and Future) Denotes long-term impactDenotes current impact DriversRestraints DriversRestraints Increasing emphasis on improved asset utilisation Greater technical complexity of installed equipment Standardization of price and quality across manufacturers Conservative mind-set leads to slow technology adoptionReduction in greenfield investments Increased competition from low-cost service companies Industrial Services Market: Key Drivers and Restraints, Europe, 2013–2018
  7. 7. 7 Market Overview—Key Trends Market Trends Increased end- user focus on establishing longer service contracts Increased end- user outsourcing Proliferation of non-genuine spare parts Maintenance Manager of a Global Pulp and Paper Company “Everything to do with product maintenance is outsourced either to equipment manufacturers or local service providers.” Factory Manager of a Global Food & Beverage Company “Quality of service is the most important factor in the food and beverage industry. If a baby dies anywhere in the world due to our product, that would be the end of our company. So, we prefer to establish long service contracts.” Industrial vendors should capitalize on the increased end-user outsourcing of maintenance and service requirements and the requirement for extended service contracts to build long-lasting relationships with their clients.
  8. 8. 8 Market Analysis 25.3% 8.3% 28.9% 7.3% 5.6% 5.8% 18.8% Pumps Valves Compressors Electric Motors Electric Drives Industrial Gearboxes Industrial Automation 0 5 10 15 20 25 30 2013 2018 Revenue(€Billion) Year Industrial Services Market: Percent Revenue Forecast by Product Type, Europe, 2013 Industrial Services Market: Revenue Forecast, Europe, 2010–2018 CAGR = 5.7%
  9. 9. 9 Market Analysis (Continued) Industrial Services Market: Percent Revenue Forecast by Service Type, Europe, 2013 17.3% 1.9% 23.4% 14.9% 12.8% 4.2% 9.3% 7.0% 3.0% 6.2% Installation & Comissioning Training Spare parts & Consumables Maintenance Repair Engineering & Consulting Advanced Services Extensions, Upgrades & Retrofits End of Life Services Replacement High Medium Low • Spare parts & Consumables • Advanced Services • Replacement • Repair • Engineering & Consulting • Extensions, Upgrades & Retrofits • Training • End-of-life Services Service Type – Growth Potential Chart, Europe, 2013
  10. 10. 10 Examples: Water and Wastewater, Pulp and Paper, Marine, Metals and Mining, etc. Examples: Oil and gas, Power Generation, Chemical and Petrochemical, Food and Beverage, Pharmaceutical Industrial Services Market—End User Snapshot Industrial Services Market: End User Profile, Europe, 2014–2018 Critical Infrastructure Industries End-user Characteristics Roadmap for Service Providers Focused mainly on the quality of services provided, and not on its price Willing to adopt new technology, but only after stringent tests have been completed Prefer outsourcing of non-core maintenance and service requirements Wide service portfolio with capability to provide advanced services Skilled service personnel with high degree of technical expertise Non-critical Infrastructure Industries The sovereign debt crisis in Europe has increased price sensitivity among customers Focused mainly on the price of services offered Conservative nature pertaining to adoption of new technology Educate the customer on the benefits of advanced services Provide services at competitive prices
  11. 11. 11 Industrial Services Market—Key End User Requirements Analysis Key End User Requirements Quality is an indispensable factor that remains critical in curtailing plant downtime Key Unmet Needs Owing to stringent market conditions, end users prefer service providers with a holistic solution Increasing complexity of applications is expected to drive the need of skilled service providers End users need low-cost service providers to cater to majority of non-critical and general servicing Close proximity to end-users facilities is crucial to ensure promptness of services Dearth of competent in-house manpower demands the need for end users to look out for regional service providers Multi-vendor capability is an important factor as it minimizes time and resources spent in handling vendors/service providers Possessing wide variety of skills amongst the service providers is slowly turning into a prerequisite Focus on energy efficiency raises the demand for efficient services. Lack of in-house expertise makes service providers an indispensable option Data analytic services coupled with systems performance monitoring solutions are areas that pose to have immense potential but remain untapped The evolving manufacturing processes brings about high levels of complexities, combined with the increasing emphasis on improving plant profitability and reducing downtime. All these factors are more likely to steer the growth of services.
  12. 12. 12 Industrial Services Market—Key Selection Criteria by Country Industrial Services Market: Key Selection Criteria by Country, Europe, 2013 As cash reserves lessen and markets move eastwards, end users in Russia are looking at Services to contribute towards stabilizing their productivity rate Advent of digital technologies and relentless focus on maximizing return on investment promotes the growth potential of external service providers End-user’s focus on asset optimization services is pivotal to steer the growth of services market in Denmark, Finland, Norway and Sweden End-user requirement for advanced monitoring solutions and the establishment of service centers within France is expected to result in growth opportunities Economic sluggishness coupled with realization of merits in reducing carbon footprint have led services to play a key role in plant upgrading activities Quality is an indispensable factor. End-users in Germany are willing to pay a premium for quality service in order to curtail downtime 0 1 2 3 4 5 Germany France UK Italy Scandinavia Russia Quality of Service Response time Service Portfolio Reputation/Brand Recognition Geographic location Price of Service Multi-vendor capability
  13. 13. 13 Service Provider Localized Service Presence Training - Cost or Profit Center? Industry Convergence Spare parts – Genuine vs Pirated Capitalization of End- user Outsourcing Effective leveraging of diminishing talent pool Industrial Services Market—Roadmap for the Future The aftermarket segment is going to provide significant growth opportunities for market participants during the next 5 years; industrial vendors should ensure that they enhance their service portfolio and widen their service presence, thereby enabling them to be viewed as a solution provider. Industrial Services Market: Roadmap for the Future, Europe, 2014–2018
  14. 14. 14 Industrial Services – How Does it Fit into the Industrie 4.0 Perspective? Product Services Asset Services Plant Services Ecosystem Services The amalgamation of Internet of Services with the Internet of Things will give birth to a new cloud-based maintenance and service model , that is poised to transcend plant operation and help improve efficiency across the enterprise. The dynamics of the emerging service framework will create new seats of ownership in the value-chain of industries Comprehensive asset services that are product neutral will be a key segment of opportunity for expansion in the future. Services to become an exclusive entity with little or no dependence on product sales. This will give rise to a new business model that will promote “product as a service” The focus on service as the new business model has gained considerable traction in the developed world. The trends of plant outsourcing and value-added services have disrupted traditional business strategies of industrial vendors, resulting in major transformations across the value-chain. In the current context, the business model of services is at a crossroads. With the advent of I4.0, the service proposition is expected to grow in complexity, necessitating a need for discerning end-user needs in line with the vision of I4.0. How are end-users planning to approach service partnerships in future? Will increasing service needs decline end-user stakes in production?
  15. 15. 15 Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunities
  16. 16. 16 Your Feedback is Important to Us Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by “Rating” this presentation. What would you like to see from Frost & Sullivan?
  17. 17. 17 Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare, and Twitter
  18. 18. 18 For Additional Information Julia Nikishkina Communications Executive Industrial Automation & Process Control +7 (499) 213 0156 Niranjan Paul Research Analyst Industrial Automation & Process Control (+91) – 44-6681 4030 Sivakumar Narayanaswamy Research Manager Industrial Automation & Process Control (+91) – 44-6681 4038 Muthukumar Viswanathan Practice Director Industrial Automation & Process Control (+44) – 20-7915 7804
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.