ARC explores forces driving rise of plant, enterprise asset management
Dedham, MA — June 20, 2003 — The worldwide plant asset management (PAM) and condition monitoring (CM) market, which totaled almost $900 million in 2002, will reach almost $1.3 billion by the end of 2007, expanding at a cumulative annual growth rate (CAGR) exceeding 7 percent, according to a new study by the ARC Advisory Group.
ARC also is forecasting that the worldwide market for enterprise asset management (EAM), including IT assets, is currently at $1.6 billion and will grow at the cumulative annual growth rate of 3.1 percent, reaching $1.9 billion in 2007.
"Climate Is Right"
"The climate is right for plant asset management and Condition Monitoring solutions to grow substantially," said Dave Clayton, a senior analyst and author of ARC's study "Plant Asset Management and Condition Monitoring Worldwide Outlook."
"Capital asset management is once again a key managerial concern," Clayton explained. "Manufacturers are facing challenging markets and expensive overcapacity. Survival demands reducing costs and capital assets are becoming the target of these efforts."
ARC notes that investments in capital assets are staggering, with manufacturers in process industries such as petrochemicals, chemicals, metals, and pulp and paper having billions of dollars invested in each of hundreds of plants worldwide. Although the nature of assets may differ, discrete manufacturers of automobiles, semiconductors, aerospace, and electronics can be equally asset intensive.
Moreover, ARC reports that nearly two-thirds of manufacturing investments are in production facilities that directly affect the company's ability to generate revenue. Acquiring, maintaining and disposing of these assets is serious business. A fractional improvement in the managing of capital assets can be worth billions of dollars annually across all manufacturers.
However, today's lack of concrete information pertaining to capital assets makes any decision regarding postponing asset purchases or eliminating capital assets a gamble. The importance of an effective capital asset management strategy that enables executives to make such decisions accurately and confidently is painfully clear.
Cutbacks, Computer Literacy Driving Adoption
ARC also believes that cutbacks in maintenance staff and the new wave of computer-literate maintenance technicians are driving the adoption of new technologies in PAM and CM solutions. Unlike their predecessors, the new breed of maintenance technicians is more likely to adopt new technologies, according to the analysts.
Wireless technologies, in particular, are changing the face of asset management, according to ARC. The growing shortage of maintenance experts is creating a parallel demand for remote access to vital condition data. Due to staff cutbacks, today's maintenance staff doesn't have the time to travel to the plant to investigate every alarm. The new wave of maintenance technicians is demanding remote access to relevant condition information during alarms. As more solutions capable of remote access to condition data become available, their sales will increase overall PAM and CM market growth. Wireless technologies and the Internet are also allowing suppliers to expand into new markets involving previously inaccessible equipment.
In addition, ARC believes that an increasing demand for solutions that provide actionable items as opposed to reams of raw data is contributing to PAM and CM growth. Traditional CM systems supply raw data to in-house experts who analyze the data and make recommendations regarding each asset's health. To accurately assess the remaining operational lifetime of a capital asset requires a broad range of expertise, including intimate knowledge of vibration, oil analysis, motor current dynamic characteristics, thermography and process conditions.
However, as experienced and knowledgeable employees leave manufacturing plants in greater numbers, the era of in-house maintenance experts is coming to an end. The need for open, fully integrated solutions capable of examining all of the above measurements and drawing accurate conclusions from the disparate data, is fueling growth of the new breed of integrated PAM and CM solutions, ARC concludes.
EAM Set for Growth
Elsewhere, ARC is forecasting that the worldwide market for enterprise asset management (EAM), including IT assets, will reach $1.9 billion in 2007.
"The majority of the EAM market growth will come from application service provider (ASP) Web-hosted solutions and industrial IT enterprise asset management (ITEAM) opportunities," according to Houghton LeRoy, ARC Director of Research and author of the study "EAM/CMMS Solutions Worldwide Outlook."
"The EAM market has matured where software license sales are declining and customer service requirements are increasing," LeRoy added.
Customer service and support expectations in asset intensive industries has increased, requiring more consulting and continuous improvement services from suppliers, ARC believes. Companies that have seen good benefits are expanding EAM functionality to other groups and facilities, while companies with little or no payback justifications are looking for help establishing key performance indicators to measure return on investment (ROI). Some are even outsourcing the problem to service providers who offer performance guarantees.
ASP Model Promising
Several EAM suppliers are realizing the strong growth potential for outsourced services such as ASP Web hosting which includes maintenance, repair and operations electronic procurement (eMRO). ARC writes that Web hosting is a very attractive and cost effective approach for asset management, electronic purchasing and other enterprise applications, permitting faster implementation, simplifying support, integrating distributed operations, facilitating collaborations and reducing total cost of ownership (TCO). Customers pay only for needed functionality and can accurately determine their costs.
Meanwhile, IT organizations have managed office networks, servers and PC workstations for many years. The proliferation of IT standards and equipment throughout the enterprise has forced considerable overlap in IT and EAM solutions. ITEAM will become a natural extension of many EAM solutions over the next five years, offering considerable opportunities for sharing best practices and emerging technologies, ARC predicts. A one-solution approach will eliminate unnecessary duplication of many common functions, helping to reduce costs, increase productivity, and better share critical asset information. ARC expects to see more mergers, acquisitions and consolidation of EAM and ITEAM suppliers.
Dedham, MA — June 20, 2003 — The worldwide plant asset management (PAM) and condition monitoring (CM) market, which totaled almost $900 million in 2002, will reach almost $1.3 billion by the end of 2007, expanding at a cumulative annual growth rate (CAGR) exceeding 7 percent, according to a new study by the ARC Advisory Group.
ARC also is forecasting that the worldwide market for enterprise asset management (EAM), including IT assets, is currently at $1.6 billion and will grow at the cumulative annual growth rate of 3.1 percent, reaching $1.9 billion in 2007.
"Climate Is Right"
"The climate is right for plant asset management and Condition Monitoring solutions to grow substantially," said Dave Clayton, a senior analyst and author of ARC's study "Plant Asset Management and Condition Monitoring Worldwide Outlook."
"Capital asset management is once again a key managerial concern," Clayton explained. "Manufacturers are facing challenging markets and expensive overcapacity. Survival demands reducing costs and capital assets are becoming the target of these efforts."
ARC notes that investments in capital assets are staggering, with manufacturers in process industries such as petrochemicals, chemicals, metals, and pulp and paper having billions of dollars invested in each of hundreds of plants worldwide. Although the nature of assets may differ, discrete manufacturers of automobiles, semiconductors, aerospace, and electronics can be equally asset intensive.
Moreover, ARC reports that nearly two-thirds of manufacturing investments are in production facilities that directly affect the company's ability to generate revenue. Acquiring, maintaining and disposing of these assets is serious business. A fractional improvement in the managing of capital assets can be worth billions of dollars annually across all manufacturers.
However, today's lack of concrete information pertaining to capital assets makes any decision regarding postponing asset purchases or eliminating capital assets a gamble. The importance of an effective capital asset management strategy that enables executives to make such decisions accurately and confidently is painfully clear.
Cutbacks, Computer Literacy Driving Adoption
ARC also believes that cutbacks in maintenance staff and the new wave of computer-literate maintenance technicians are driving the adoption of new technologies in PAM and CM solutions. Unlike their predecessors, the new breed of maintenance technicians is more likely to adopt new technologies, according to the analysts.
Wireless technologies, in particular, are changing the face of asset management, according to ARC. The growing shortage of maintenance experts is creating a parallel demand for remote access to vital condition data. Due to staff cutbacks, today's maintenance staff doesn't have the time to travel to the plant to investigate every alarm. The new wave of maintenance technicians is demanding remote access to relevant condition information during alarms. As more solutions capable of remote access to condition data become available, their sales will increase overall PAM and CM market growth. Wireless technologies and the Internet are also allowing suppliers to expand into new markets involving previously inaccessible equipment.
In addition, ARC believes that an increasing demand for solutions that provide actionable items as opposed to reams of raw data is contributing to PAM and CM growth. Traditional CM systems supply raw data to in-house experts who analyze the data and make recommendations regarding each asset's health. To accurately assess the remaining operational lifetime of a capital asset requires a broad range of expertise, including intimate knowledge of vibration, oil analysis, motor current dynamic characteristics, thermography and process conditions.
However, as experienced and knowledgeable employees leave manufacturing plants in greater numbers, the era of in-house maintenance experts is coming to an end. The need for open, fully integrated solutions capable of examining all of the above measurements and drawing accurate conclusions from the disparate data, is fueling growth of the new breed of integrated PAM and CM solutions, ARC concludes.
EAM Set for Growth
Elsewhere, ARC is forecasting that the worldwide market for enterprise asset management (EAM), including IT assets, will reach $1.9 billion in 2007.
"The majority of the EAM market growth will come from application service provider (ASP) Web-hosted solutions and industrial IT enterprise asset management (ITEAM) opportunities," according to Houghton LeRoy, ARC Director of Research and author of the study "EAM/CMMS Solutions Worldwide Outlook."
"The EAM market has matured where software license sales are declining and customer service requirements are increasing," LeRoy added.
Customer service and support expectations in asset intensive industries has increased, requiring more consulting and continuous improvement services from suppliers, ARC believes. Companies that have seen good benefits are expanding EAM functionality to other groups and facilities, while companies with little or no payback justifications are looking for help establishing key performance indicators to measure return on investment (ROI). Some are even outsourcing the problem to service providers who offer performance guarantees.
ASP Model Promising
Several EAM suppliers are realizing the strong growth potential for outsourced services such as ASP Web hosting which includes maintenance, repair and operations electronic procurement (eMRO). ARC writes that Web hosting is a very attractive and cost effective approach for asset management, electronic purchasing and other enterprise applications, permitting faster implementation, simplifying support, integrating distributed operations, facilitating collaborations and reducing total cost of ownership (TCO). Customers pay only for needed functionality and can accurately determine their costs.
Meanwhile, IT organizations have managed office networks, servers and PC workstations for many years. The proliferation of IT standards and equipment throughout the enterprise has forced considerable overlap in IT and EAM solutions. ITEAM will become a natural extension of many EAM solutions over the next five years, offering considerable opportunities for sharing best practices and emerging technologies, ARC predicts. A one-solution approach will eliminate unnecessary duplication of many common functions, helping to reduce costs, increase productivity, and better share critical asset information. ARC expects to see more mergers, acquisitions and consolidation of EAM and ITEAM suppliers.
