Vertical Market Expansion into the Energy Sector


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Our latest analysis detailing vertical market expansion opportunities into the Energy sector

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Vertical Market Expansion into the Energy Sector

  1. 1. GROWTH PROCESS OVERVIEW 2013 Vertical Market Expansion Accelerating Growth through Principled Market Opportunity Evaluation and Entry Strategy Development Vertical Market Spotlight – Energy Markets
  2. 2. Why Vertical Market Expansion? After cutting expenses to CEOs are therefore One path an organization the bone in the recent refocusing on growing the might take to growing the recession, most companies top line. top line is to take an existing now recognize that they product or service into a can’t cut their way to new market. growth. Three Critical & Gated Questions for Evaluating Vertical Markets: 1 – Is Vertical Market Expansion appropriate for your company and is the timing right? 2 – If the answer yes, which vertical markets are most appropriate/feasible to pursue? 3 – Finally, what is the optimal go-to-market strategy? 2
  3. 3. Vertical Market Expansion Risks For every successful market entry, four fail. 95% of all vertical entries in the aerospace & defense industry fail to take hold. Winners and losers all look like winners at the outset – so why do so many companies head down ill-advised paths? Where Companies Go Wrong Numerous pitfalls can derail even the most well-intentioned executive •Assuming vertical market expansion will deliver expected growth •Entering multiple vertical markets simultaneously •Moving into markets not adjacent to your core 3
  4. 4. Vertical Market Expansion Best Practices Key Principles: Pursue only one or two verticals at a time Vet all opportunities for strategic fit before committing to market entry Understand that the better the assessment of market size, competitors, market share, revenue, costs, and other factors, the better their odds of making good vertical market entry decisions 4
  5. 5. The Opportunity in Vertical Market Expansion into the Energy Industry
  6. 6. Opportunism Abound Across the Energy Value Chain Oil & Gas Generation Power and Water Transmission Renewables Distributed Power Back-up End Users and Waste Streams Convergence Themes Smart Cities Green Energy Globalization Grid Modernization Shale Gas Phenomenon Data Center Energy Trends Digital Oil Fields Virtual Power Plants Connected Homes Energy Storage Smart Buildings Water and Energy
  7. 7. Energy & Environment Top 10 Technologies and Markets to Watch for in 2020 Energy Efficiency and Smart Buildings Gas-Fired Power & Shale Gas Exploitation LED Lighting Revolution Small Scale Distributed Generation Energy Recovery from Waste Top 10 Markets of the Future Energy Harvesting Smart Grids Advanced Batteries and Energy Storage Solar PV Smart Water Networks Source: Frost & Sullivan
  8. 8. The Challenges and Opportunities in Energy are Too Great for Any One Company or Industry to Address Energy management is increasingly data driven and customized Growing need for efficiency drives information-based solutions across the value chain: – Upstream oil and gas – Power generation – The Grid – Smart homes and buildings Decentralized power systems increase complexity and opportunities globally through challenges such as: – Intermittent power from renewables – Load profile uncertainty due to electric vehicles – New business models with utilities and third party energy information providers – Growth of on-site power and micro grids 8
  9. 9. Unique Qualities of the Energy Industry to Consider When Assessing a Potential Expansion • High visibility industry • Intrinsic to economic growth and development • Key target for environmental legislation • Strong public sector involvement, even ownership in certain countries • Utilities and governments with long planning cycles • Highly regulated • Large end user of materials, equipment and services 9
  10. 10. Global Analysis 10
  11. 11. Natural Gas Supply and Global Price Inequality Driving Opportunities 11
  12. 12. Increasing Complexity of the Power Grid Requires New Solutions in Monitoring and Data Management 12
  13. 13. Smart Grid a Major Area of Industry Convergence 13
  14. 14. Renewable Energy, Driven by Wind Power, Brings Growth but also Challenges 14
  15. 15. Competitive Analysis 15
  16. 16. Energy Attracting New Competitors into the Market Through Industry Convergence New materials providing • Better electricity conductivity • Better insulation • “Self-healing” for everything from pipelines to buildings Information and communications • M2M in power plants and across grids • AI, for example in predicting energy loads and demand based on weather • Gathering and interpreting high volumes of data Defense Companies • Field services for remote oil and gas: information, security, communication, etc. • Commercialization from military to private sector • Leveraging advances in small scale, efficient and light weight technologies Smart Industry Integration • Energy, IT and Energy in the Smart Home • Security, Transportation, Electricity and Water in the Smart City • IT, Building Materials, and Efficiency for the Smart Building 16
  17. 17. New Companies Entering energy Will Force Existing Competitors to Respond • Redefining “Energy” in light of changing market dynamics such as: • Shale oil & gas • Renewable energy • Efficiency and green standards • Energy savings as revenue • New business models in energy generation, procurement, and management • Moving from equipment to solution sell • Retiring workforce for operations at utilities, oil & gas and heavy industry open the door to more third party outsourcing opportunities • Increasing automation in homes, buildings, factories, the grid, cities and oil fields all center around better energy usage 17
  18. 18. Different Strategies for Entering or Expanding Share in the Energy Market Low Directly in Energy High Market Penetration Product Development Verizon is already an established player in power distribution communication, though the market has limited growth due to saturation. Using it’s large communication network and expanding into related grid markets would boost revenues and visibility By leveraging its know-how in areas of communication, monitoring, and technical advances, Lockheed Martin is able to transition key core competencies from the aerospace and defense industry into a value proposition for energy efficiency and security to utilities and industrial customers Market Development Diversification IBM, Cisco and others have embraced the Smart City, looking to connect disparate systems such as security, energy, water, transportation, and others through a connected platform to reduce costs, improve efficiency and communication across city services. Smart Cities are a new market and concept in the making, early entrants will define what the market will be Google has had several forays into the energy space, from helping homes monitor power usage, to installing and promoting electric vehicle charging stations. Google’s most recent major energy venture has been its $400M investment into solar power. What might be next, the Google Smart Energy Home? Increasing Risk Increasing Risk PROXIMITY TO EXISTING MARKET(S) Existing Market(s) DEGREE OF INNOVATION
  19. 19. Secrets to Success in Market Expansion into energy Find the Right Partner(s) Invest for the Long Term Know Your Business Model Define Your Value Proposition 19