Industrial Services in Europe


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Industry 4.0 is a new paradigm which explains the fundamentals for the next-generation enterprise. The vision of industry 4.0 is a futuristic one requiring a wide functional transformation of the current organizational architecture prevalent in industries. Big Data, the Internet of Things and the Internet of Services are the key functional pillars catalyzing this transformation.
Frost & Sullivan’s Practice Director, Industrial Automation & Process Control, Mr. Muthukumar Viswanathan held a presentation on latest trends and developments regarding Industry 4.0 during a press conference at international trade show SPS IPC Drives in Nuremberg yesterday, entitled “Industrial Services- A New Frontier for Business Model Innovation and Profitability”

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Industrial Services in Europe

  1. 1. Opportunities in European Industrial Services: A Frost & Sullivan Insight Muthukumar Viswanathan Practice Director, Industrial Automation and Process Control 27th Nov, 2013 SPS IPC Drives STRICTLY CONFIDENTIAL
  2. 2. Contents About Frost & Sullivan 3 Introduction 9 Industrial Services - Market Snapshots 13 Project Highlights 22 “We Accelerate Growth”
  3. 3. About Frost & Sullivan 3
  4. 4. The Frost & Sullivan Story Emerging Research Growth Partnership Visionary Innovation 1961–1990 1990–Today Today–Future 1961 1990 Today Pioneered Emerging Market & Technology Research Partnership Relationship with Clients Visionary Innovation • Global Footprint Begins • Growth Partnership Services • Mega Trends Research • Country Economic Research • GIL Global Events • CEO 360 Visionary Perspective • Market & Technical Research • GIL University • GIL Think Tanks • Best Practice Career Training • Growth Team Membership • GIL Global Community • MindXChange Events • Growth Consulting • Communities of Practice “We Accelerate Growth”
  5. 5. 40+ Offices Provide Perspective, Coverage & Service By Region 250,000 SME & Global Companies, 2 million executives Others, 40.0% North America, 95,000 Companies Europe 80,000 Companies Asia Pacific 47,000 Companies South Asia 11,000 Companies Latin America 9,000 Companies Africa /Middle East 8,000 Companies “We Accelerate Growth”
  6. 6. Our Industry Coverage Automotive & Transportation Aerospace & Defense Measurement & Instrumentation Consumer Technologies Information & Communication Technologies Automotive Transportation & Logistics Energy & Power Systems Environment & Building Technologies Healthcare Minerals & Mining Chemicals, Materials & Food Electronics & Security Industrial Automation & Process Control “We Accelerate Growth”
  7. 7. Our Services GIL Global Community Growth Partnership Services GIL University Growth Consulting Events “We Accelerate Growth”
  8. 8. Why Partner With Frost & Sullivan Excellent relationships & connections with key stakeholders allowing us to recruit target groups and conduct both large or small scale research projects. Access to key stakeholders across the value chains Approach & Techniques designed to address your specific needs ..... More than 2,000 analysts and consultants globally, tracking industries and end-user markets, and having completed multiple studies and consulting projects in a multitude of markets globally Industry expertise Global Fieldwork Reach Exclusively Focused on Growth ..... In-house Primary Research 40+ offices worldwide covering mature & emerging markets Market Research, Growth Consulting & Implementation Expertise Translate Data into actionable strategy ..... Global coverage with local teams Product expertise In-house team dedicated to monitoring markets and technologies – strong base of existing intelligence Dedicated to supporting you to grow your business or industry & developing growth strategies e.g. Customer, Branding, Competitive strategies Benefits in Partnering with FROST & SULLIVAN Experience in the enduser industries Frost & Sullivan has strong experience in the end-user industries on a global and local level which can be tapped into for the purposes of this analysis “We Accelerate Growth”
  9. 9. Introduction 9
  10. 10. Industry 4.0 A Deep Dive The term “Industrial” in this context, refers to all segments within the industrial world associated with discrete/process industries. It’s scope is inclusive of enterprise applications in the board rooms to manufacturing production units in the shop floor. Wireless Intelligence Cloud Platforms Ethernet-based IP Devices Industrial Revolution 1.0 – 3.0 • Mechanical Production • Mass Production • Production Automation Intra-discipline Integration Collaboration Industrial Revolution 4.0 - Pursuits • Product Innovation • Increased Collaboration • Operational Process Enhancement • Cyber-Physical Production Technology Industry 4.0 IP Centralisation Social Innovation Processes Strategic Trends Convergence of applications will form crux of new advancements Energy efficiency and sustainability to gain greater business focus Greater presence of mobility and webbased information systems Digital Manufacturing Sustainable Manufacturing Mass Customisation Lifecycle Assessment 10 “We Accelerate Growth”
  11. 11. Automation Trends: Shaping the Future of Factories Industrial Automation Trends: Factors Shaping the Changing Industry Landscape Key Takeaway Cyber Security Cloud Computing Wireless Intelligence Product Lifecycle Management Supply Chain Innovations Service Innovations Big Data & Mobility Enterprise Integration . Integrated Industry End user quest for innovation, excellence and reduced time-to-market needs is poised to alter business landscape and impact vendor fortunes. High competitive pressures is resulting in end-user's quest to reduce total cost of plant ownership, shaping future factories besides providing the services market with impressive growth opportunities in the next-generation enterprise. Industry 4.0 is likely to usher in a new manufacturing paradigm resulting in increased in industrial productivity Frost & Sullivan Analysis 11 “We Accelerate Growth”
  12. 12. Industrial Services The New Growth Frontier for Innovation and Profitability End-user Perspective: Factors Favouring Services Areas of Service Growth Predictive Maintenance Energy efficiency On-demand Services Cyber Security Drivers Challenges Push for operational excellence Dearth of skilled workforce Maintenance as a Strategy Concerns on cyber security Regulatory compliance Demand for holistic services Mapping Potential for Industrial Services The huge demand for services in the automation space is a bellwether for the potential of the industrial services market on a large scale Industrial Services provides a new arena for end-users for improving productivity and maximising profitability in a highly competitive global industrial landscape Source: Frost & Sullivan analysis. 12 “We Accelerate Growth”
  13. 13. Industrial Services – Market Snapshots 13
  14. 14. Automation Services Precursor to the Untapped Service Market in Industrial Markets Major service end-user segments Oil & gas Chemicals Power generation Market Share More than 66% of the global automaton services market in 2012 Major automation vendors are increasingly adopting a pro-service approach that aims to derive profits out of value-added services in the long term. Global Automation Service Market, 2012, Competitive Structure 11% 7% 4% Niche service providers Regional vendors Challenges Push for operational excellence Dearth of skilled workforce Maintenance as a Strategy Concerns on cyber security Regulatory compliance Demand for holistic services Key Technology Trends Demand for retrofits and upgrades in mature markets of Europe and North America will boost demand for services Simulation modelling and advanced process control solutions are poised to likely to become an indispensable part of value-added services expected from end users Top IA Vendors System integrators Drivers 78% Remote monitoring, diagnostics, and remote maintenance in critical infrastructure industries, are likely to be next major avenues for growth in the global automation services market. “We Accelerate Growth”
  15. 15. Automation Services An Analysis Automation Services, 2012 Revenue Estimates Global Automation Service Market, 2012, Revenue by Service Type $15.2 bn Project & Installation Consulting Operational Improvement Types of Services 30% 38% Reliability-centred maintenance Value-added Services 17% Energy efficiency On-demand Services Cyber Security 15% Global Automation Service Market, 2012, Revenue by Product Type Consulting services is estimated to be the fastestgrowing segment in the global automation services market. Continuous service capabilities facilitating energy efficiency and cyber security are poised to be in demand over the forecast period. Key Takeaway: Mapping Overall Plant Maintenance Requirements Others* 17% DCS 42% MES 11% PLC 13% SCADA 17% Note: Others* includes EAM, APC, SIS, etc. The huge demand for services in the automation space is a bellwether for the potential of the industrial services market on a large scale “We Accelerate Growth”
  16. 16. New Service Framework Set to Redefine DCS Business Model Automation Services, 2012 Revenue Estimates DCS Segment $15.2 bn $5.84 bn Global Automation Service Market, 2012, Revenues by Service Types 30% 17% 38% 15% Project & Installation Consulting Operational Improvement Maintenance & Support Consulting services is estimated to be the fastest-growing segment in the global automation services market. Key Takeaways (For DCS Vendors) Continuous service capabilities facilitating energy efficiency and cyber New Service Framework security are expected to form the new service framework influencing DCS business models in industries. Project & installation cost are expected to witness a decline in value as the Realigning Current Service Offering service framework offered by vendors are being reframed with higher weightage towards after-sales service offering. “We Accelerate Growth”
  17. 17. Motors & Drives Services Market Market Indicators Percentage Sales Breakdown by Service Type Drivers Challenges European Motor Services Market, 2012, Macroeconomic challenges drive service investments Limited availability of integrated service portfolio Maximising asset utilisation Shortage of skilled workforce Maintenance as a profit strategy Emergence of low-cost service providers 5.0% Technical Consulting Motor Management Installation & Commissioning Maintenance & Repairs Others 15.1% 35.0% 21.0% 23.9% European Repairs & Refabrication Market for Electric Drives, 2012 Global Motors & Drives Market: Services Channel Analysis, 2012 Service Partners 14.0% Repair & Maintenance Refabrication Technical Consulting Total Drives Management 38.9% 29.2% Motor/Drive Manufacturers Industry End-Users Direct Consultants 17.9% Private Service Providers “We Accelerate Growth”
  18. 18. Services in Motors & Drives Market Trends, Opportunities & Unmet Needs Relevant Trends Unmet Needs Energy efficiency Energy optimisation High market fragmentation Increased complexity Complex operational needs Skilled labour requirement Comprehensive integrated service portfolio Demand for one-stop solution providers Vendor-specific service offerings Effective after-sales service strategies Predictive and preventive maintenance strategies Remote monitoring diagnostics Analysis Multi-vendor servicing capability Lifecycle management Reliability engineering Enhanced communication capabilities The emergence of complex manufacturing processes, combined with the increasing emphasis on improving plant profitability and reducing downtime will steer the growth of services in the global motor and drives market. “We Accelerate Growth”
  19. 19. Industrial Gearbox Services Key End User Requirements – Selected Quotes “What are the top criteria you use when selecting a gearbox service provider? How would you rank these criteria in terms of importance when selecting a gearbox service provider?” “What types of services do you typically require on the industrial engineered gearbox?” Measurement Reaction Time Low High 1 Time to Deliver 2 3 4 3 4 High 2 3 4 Geographic Location 2 3 4 2 3 4 2 3 4 5 High High Re-Builds 5 “Growing interest for predictive and preventive maintenance techniques of servicing is witnessed especially in the energy and mining sectors.” Condition Monitoring 2 3 4 5 Low High 1 High 1 5 Low 5 Low 4 1 High 1 Maintenance 3 Low 5 Reputation/ Brand Low Recognition High 2 1 Repair/ Machining 5 Low 1 Low 1 High 2 Parts Replacements 5 Low 1 Types of Service Provided Measurement 2 3 4 5 Low High 1 2 3 4 5 “Spare parts replacement accounts for about 60.0% of the sales. The rest is split between repair, maintenance, re-builds and condition monitoring.” Source: Frost & Sullivan analysis. “We Accelerate Growth”
  20. 20. Pump Services Market Types of Maintenance Total Pump Services Market: Types of Maintenance, Europe, 2012 • • • • Breakdown Maintenance Repair and maintenance carried out subsequent to pump failure The most inefficient way of maintenance and works only if large inventory of spares is available Predictive Maintenance Maintenance carried out only if necessary and warranted by operational conditions Reduces the need for high spares inventory, as some lead time is available to purchase spare parts • • • • Preventive Maintenance Maintenance carried out at pre-defined time intervals before the pump actually fails Involves possibility of reduced performance through unskilled personnel or futile maintenance Pro-active Maintenance Utilizes all of the other maintenance techniques along with root cause analysis Requires knowledgeable technicians Source: Frost & Sullivan analysis. “We Accelerate Growth”
  21. 21. Conclusions Ecosystem Services Integration of Internet of Services with the Internet of Things will give create a new cloud based maintenance and service model Plant Services Industrial Services The dynamics of the emerging services framework will create new opportunities in the value chain of industries Asset Services Comprehensive asset services that are product neutral will be a key segment of opportunity for expansion in the future. Product Services Services becomes an exclusive entity with little or no dependence on product sales – a new business model that will promote “Service as a Product" Source: Frost & Sullivan analysis. 21 “We Accelerate Growth”
  22. 22. Project Highlights 22
  23. 23. Project Scope Industry Scope Country Scope The project will cover Europe (EU 27, Norway, Switzerland) and Russia and will provide country / region profiles for the Top 5 industrial services markets. The markets currently targeted are: Germany, France, UK, Italy, Northern Europe Other countries may be included which may be identified during the research. The project’s opportunity assessments will focus on equipment that are utilised within the following end user markets: Oil & Gas Chemicals & Petrochemicals Food & Beverage Water & Wastewater Pharmaceuticals Metals & Mining Power Generation Others (Pulp & Paper, Marine, Building Services , Material Handling etc) “We Accelerate Growth”
  24. 24. Project Scope Product Scope Services Scope The service types scope for this analysis will be limited to the services relevant to each of the product types and will be including as applicable: The product scope for this analysis will be limited to: Pumps Industrial Valves and Actuators, Control Valves Repairs & maintenance Compressors Spare parts Electric Motors Retrofit Electric Drives Condition-based monitoring, Industrial Gearboxes Preventive maintenance Industrial Automation Predictive maintenance Filed instrumentation devices Reliability-centred maintenance Energy efficiency Lubrication maintenance Calibration Diagnostic & inspection Optimisation On-demand Services Field Services Cyber Security Other service types will be included which may be identified during the research. “We Accelerate Growth”
  25. 25. Project Objectives Objective 1: To provide a detailed assessment of the European industrial services market (2012) – Top 5 countries / regions Frost & Sullivan aims to quantify the size and growth potential of the industrial services market in Europe. The assessment’s focused objective will be to identify and quantify key supply opportunities for existing and potential market participants within this high growth market. Objective 2: Frost & Sullivan will achieve this aim by focusing on the following objectives... Objective 4: To quantify and provide key insights on the European industrial services market (2009 – 2012), including an overview of the market structure; key competitor profiles; purchase trends; supply, pricing and demand trends Objective 3: To identify and discuss key challenges, drivers and restraints of the European industrial services market, (2013 – 2018), including impact analyses for each of the discussed market dynamics To provide forecasts (2013 – 2018) for the industrial services market including a breakdown of the forecasts by product segment and end-user industry Objective 5: To identify key supply opportunities and make recommendations for potential and existing market participants intending to grow within these markets “We Accelerate Growth”
  26. 26. Thank You 26
  27. 27. Contacts Muthukumar Viswanathan Practice Director - Europe - IPC and M&I Direct: +44 20 7915 7804 Email: “We Accelerate Growth”