Keywords: Automation Services, Automation Suppliers, Operational Services, Value-Added Services, Performance Services, MAC
Despite mounting economic softness worldwide, demand for value-added services continues to grow as end users, faced with constrained internal resources and a wave of retiring engineers and technicians, rely ever more on their automation suppliers.
According to a recent ARC market study, operations-related automation services growth has outpaced both hardware sales and project services as end users continue to focus on core businesses and reducing costs. ARC expects all suppliers will continue to develop innovative operational solutions to help address the changing business climate. “End users’ interest in value-added services continues to grow as they realize the value their suppliers can provide to help them meet their own shortfalls in qualified personnel,” said Mark Sen Gupta, Senior Consultant and principal author of ARC’s “Supplier Provided Automation Services Global Market Research Study”.
Challenges Remain
Clearly, the automation services business is experiencing a transformation. Today’s technology users rely on their suppliers to provide a continuously expanding scope and depth of automation-related services.
Despite uncertainty in regional economies, the automation services markets continue to outpace hardware sales. While suppliers that are heavily focused on upstream oil and gas have suffered along with the recent price drop, suppliers with a diverse portfolio of services offerings across multiple industries appear to be thriving. End users continue to slowly shift their resources to core competencies, choosing to look outside for automation-related expertise.
The result is that technology users rely on suppliers to provide a continuously expanding scope and depth of automation-related services. This report zeros in on many of the core service areas experiencing more rapid growth and how end users can work with suppliers to reduce costs and provide a path to operational excellence.
Importance of Developing a MAC Strategy with Vertical Industry Focus
For the past few years, the focus of the automation business has been on services, with combined project and aftermarket or operational services accounting for almost half of total revenues. This trend will continue, and ARC projects the revenue percentage of the services segment will grow as the cost of hardware comes down. Leading the services segment is the concept of main automation contractor (MAC), in which one entity, usually a major supplier, assumes full responsibility for supplying and implementing all process automation on a project. End users demand the MAC contractor has extensive experience in their vertical industry. A talented MAC team that can implement a successful refining project is usually not the same team that can implement a successful specialty chemical or power plant project.
For more information on this ARC study, please visit our Market Research section.