Partly in response to overall automation market conditions, but largely in response to evolving user challenges and requirements, major suppliers have their automation service capabilities expanding from project and engineering services through services for operations and maintenance. At the same time, the Industrial Internet of Things (IIoT) now provides an enabling platform for a new generation of IIoT-enabled remote support services. These span the plant lifecycle, from system engineering and design “in the cloud,” to data as a service for operating process plants.
These services can be quite sophisticated, involving complex analytical capabilities. On the other end of the spectrum, smaller “microservices” are particularly easy to use and deploy and provide quick, easy to access information about key plant assets.
Suppliers are boosting their services business through acquisitions, partnerships, and by developing their own organic capabilities. The small-to-medium sized system integrators continue to be attractive targets for acquisition; but technology companies that enable traditional automation suppliers to provide an IIoT-based solution are also fair game. In a bid to provide more information about critical plant assets, suppliers are also acquiring equipment that encompasses everything from small specialty sensors and on/off valves, to heavy rotating equipment such as compressors and turbines. To round out their services capabilities, some suppliers are even forming closer alliances with skid-mounted equipment suppliers; technology licensors; and engineering, procurement, and construction (EPC) firms.
To date, the IIoT message for manufacturing has focused largely on unlocking asset information to support the move toward condition-based and predictive maintenance strategies. Others see the IIoT as a way to provide a path to improved plant operations, operator training services, and more. This brings new concerns and questions regarding how the automation suppliers will provide remote services for asset management and monitoring, particularly around who owns the plant data and how that data gets shared. Cybersecurity is another primary concern.
However, despite these concerns, as end users continue to struggle with the mass exodus of experienced talent in the workforce, automation suppliers have a prime opportunity to expand their respective service businesses with new service delivery approaches and capabilities. The focus for end users today is on leveraging automation supplier-provided services to improve operational excellence and manage the large number of migration and modernization projects currently taking place, as well as to manage the increasingly demanding role of commercial IT technologies in manufacturing. As the market begins to recover and capital projects once again fill the pipeline, end users will also require more services related to project management and engineering.
IIoT Breathes New Life into Remote Services
Automation suppliers are aggressively targeting IIoT-enabled services for remote monitoring and support of their customers’ plant assets. The ability of the IIoT to take large amounts of plant and asset data and put it into the cloud for analysis provides a relatively simple, secure, and cost-effective way for the technology suppliers’ experts to perform predictive analytics and provide guidance on how to improve plant operations, increase maintenance effectiveness, and avoid unplanned downtime.
The IIoT also makes it much easier to provide simple “micro services” that provide real-time feedback on the condition of certain classes of plant assets, from sensors to control valves to pumps and heat exchangers. These micro services can also incorporate “lightweight” analytics models that can present information in very simple ways on mobile devices. More complex and far reaching services can incorporate sophisticated models and analytical tools to optimize the performance of thousands of individual assets or classes of assets across an entire plant, multiple plants, or the entire enterprise.
In both cases, the “expert analysis” aspect of these solutions is what makes them a service. Automation and equipment suppliers, OEM skid-mounted equipment manufacturers, and even technology licensors are providing bundled solutions that incorporate expert feedback either dynamically in real time or offline.
The Hybrid Product/Service Model
These new types of IIoT-enabled services could not exist without the products and applications. The new breed of connected products go hand in hand with connected services. Services are going to become a much bigger component of markets that once focused almost exclusively on products and hardware. Many end users are also moving to a model where they don’t even purchase the equipment. The equipment itself can be provided as part of an outcome-based service agreement that includes the software and monitoring services. Many industries have had success with this model, with GE’s airline “turbines as a service” model probably the most well-known example.
IIoT Services Bring New Questions Regarding Data Ownership and Cybersecurity
A lot of data is starting to flow from process plants into IIoT-based applications and solutions. This increases the concern many end users have expressed about data ownership and data sharing. Suppliers are already putting policies into place that protect customer data. At the same time, the suppliers should benefit from the knowledge gained from these large datasets to improve the quality of their products and add more value to their services over time.
Security is another matter. IIoT has already increased the attention being paid to cybersecurity and will almost certainly increase demand for cybersecurity services from automation suppliers. As of now, all the major suppliers have cybersecurity service offerings. These range from sophisticated consulting and site survey capabilities to outsourced cybersecurity related-functions such as patch management, version upgrades, and threat detection.
Supplier Service Capabilities Can Reduce Project Costs
IIoT isn’t the only major trend. End users continue their strong focus on drastically reducing the cost and complexity of automation projects. Again, these services go hand in hand with a new generation of products such as configurable and characterizable I/O and cloud-enabled system engineering environments that allow for late binding of the automation system software to the hardware.
Most of the major suppliers started building their main automation contractor (MAC) capabilities approximately a decade ago as it became clear that shrinking end user resources and the EPCs’ diminishing focus on process automation were creating burgeoning demand for a single point of responsibility for all of the automation-related aspects of a project. Today, the supplier MAC capabilities incorporate these new technologies to drastically reduce the time to project completion and minimize customization costs associated with automation projects.
Acquisitions and Alliances
Automation suppliers have made a lot of acquisitions and alliances in the past two years as they push to fill gaps in their service offerings and strengthen key areas like automation project engineering and execution, asset management capabilities, and IIoT-connected service offerings. If anything, the pace of this activity is increasing. If you look at every major acquisition, investment, or alliance on the part of process automation suppliers over the past couple of years, they are either totally service-focused or have a services component.
The small-to-medium sized systems integrators remain attractive targets for suppliers that want to round out their project execution capabilities. Most recently, Rockwell Automation acquired independent systems integrator, Maverick Technologies, one of the leading SIs in North America. Emerson Automation Solutions acquired MRG Consulting in 2014, which specializes in reliability consulting services and now forms the basis for Emerson’s reliability consulting solutions.
The ABB alliance with Aker, announced at the OTC show this year, promises to bring more remote service capabilities and enhanced diagnostics to subsea equipment. Yokogawa, which has been buying up IIoT software companies like Industrial Evolution and making investments in Silicon Valley-based fog computing companies like FogHorn, has just announced the acquisition of Soteica VisualMESA, a provider of MES software and services for the process industries.
The Siemens acquisition of Dresser-Rand in 2015 provided access to that company’s huge installed base of turbines and the associated services business. This was largely the same thinking behind the GE acquisition of Alstom Power. Honeywell acquired the gas metering solutions business of Elster Group in 2015 and cloud infrastructure and application provider Movililzer in 2016.
The services business is more of a moving target than ever. IIoT has created whole new ways of selling service and has created new product/service hybrid models and micro services capabilities. This is creating a lot of new opportunities for end users to manage their workforce crisis and could be the catalyst that finally causes end users to take advantage of the diagnostics capabilities they already have in their installed base of intelligent devices and plant equipment.
End users should also consider new business models that focus on outcome-based contracts. In the future, owning the automation equipment or other plant assets will not be as important as ensuring you achieve operational excellence from that equipment and the production process. ARC’s soon-to-be-released Supplier Provided Automation Services report will provide a good starting point for owner-operators to evaluate supplier capabilities and market presence by industry, region, and types of products and solutions supported.
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Keywords: Automation Services, Industrial Internet of Things (IIoT), Remote Monitoring, ARC Advisory Group.