Collaboration of hydraulics, process automation, and IT competencies have opened doors to new services in the pumps market.
Originally, pump manufacturers were primarily involved in designing and manufacturing standard and customized pumps based on the requirements of the industry. Over time, there has been an evolution in the business model from product-based products to solution-based offerings. There are also advancements in the type of communication from analog to digital, and mode of communication from wired to wireless. Until 2000, process automation and control solutions were collaborated with fluid handling products and systems. This introduction of technology convergence of pump and automation systems clearly marked the change in the working style from being independent to being more collaborative. Due to the lack of competencies in software or electrical/electronics skills, pump manufacturers have become involved in either working partnerships or in mergers and acquisitions (M&A) with IT or electronics companies. Increased customer demand from manufacturers is one of the prime reasons driving this change.
The Industrial Internet of Things (IIoT) has acted as a catalyst in the transformation of business models at a faster pace. Germany’s Industrie 4.0, China’s Made in China 2020, and USA’s consortiums such as the Industrial Internet Consortium (IIC) are coming up with protocol standards for machine and cloud connectivity. Standardization of protocols will improve process visibility of the plant floor. However, top management, due to its conservative mindset, is skeptical about adopting standards within organizations. This is expected to change in the future if value is seen in modifying existing infrastructure. More collaborations and memberships with IIoT-related consortiums and pump manufacturers are also expected to happen. The evolution of business models has led pump manufacturers to adopt a ‘one-stop shop’ solution to serve its customers in the most efficient way.
This ‘one-stop shop’ idea has become a popular trend because of the need to reduce operational costs by reducing installation time and integration of equipment from multiple vendors. There has been a pressing demand from customers to reduce the number of suppliers by consolidating a broad range of services and minimizing the number of interfaces. For OEMs, it eliminates the need to handle multiple suppliers and helps to manage the system through a single point of contact. Furthermore, customers are more confident to transfer more project management and installation tasks and focus on processes that can be carried out by the newly built system. Suppliers have transitioned from offering commodity products to rendering highly customized value-added services (VAS).
The new business paradigm is to adopt the ‘plan-complete-verify-and-proceed’ cycle rather than former business styles that ensured a ‘life-cycle-costing’ approach. In addition, collaboration between hardware and software services’ digital-twin technology has given rise to new services that were impossible in the past. Availability of in-depth information from equipment in the process plant helps operators and management to make better-informed decisions and perform accurate real-time predictive maintenance, thereby eliminating the process of collecting data manually.
It is not mandatory for pump manufacturers to have process knowledge, but possessing technical knowledge on how the entire system works will help the plant to operate at maximum efficiency. Pump manufacturers are taking steps to hire engineers with process and control system knowledge, as this will help during the commissioning process. One of the ways to guide clients lacking experience with the methods and techniques is by providing technical training of the entire system by an expert technician who has appropriate knowledge to improve efficiency. Another way to serve clients better is by establishing service centers in various locations and increasing accessibility for clients to reach pump experts in case of emergency or machine downtime. IIoT can come in handy for offering services to clients in locations where pump manufacturers do not have branches.
With the help of IIoT, plants from various locations can be connected and data can be uploaded into cloud networks. This data can be accessed easily from any location. This serves to eliminate travel expenses for pump companies by providing them with access to a plant from a remote location without having to send technicians to another part of the world to troubleshoot issues. Cloud service providers have options of subscription, leasing, and other fee-based costs. With predictive maintenance service, it is possible to predict and prevent future failures that could lead to downtime of the plant. Manufacturers believe that revenue from aftermarket service and sales will accrue, due to signing service contracts with the customers and by supplying spare parts, thereby reducing sales of counterfeit parts.
Today, almost every pump manufacturer has changed their business practice from a product-based to a solution-based business model. If similar services with the same amount of process-based technical knowledge can be provided by all manufacturers, there should be a differentiating factor to gain competitive advantage over others. One of the main reasons for manufacturers remaining hesitant to adopt these new features is the risk involved in implementing new technology that has not stood the test of time. The demand for implementing smart technology in PD pumps is also quite limited due to its straightforward application in displacement of liquid from inlet to outlet without any need to modify the pressure head in the system. There is no headroom to improve efficiency of systems using PD pumps, unlike systems that use centrifugal pumps.
According to F&S research analysis it is expected that approximately 90% of the business models in 2020 will be driven by cloud services, raising the demand for global cloud computing market to $250 billion in the same year. Now that almost every company has adopted this strategy of offering value-added services (VAS) instead of just selling pump assets, the most crucial success factor is scalability.
Scalability beyond traditional product offerings and competing beyond a company’s traditional industry will be essential, as more manufacturers will start converging products and services. Connectivity is the key enabler to make new business plans a success by providing transparency in processes and access to enormous amounts of data that will help in analysis and decision making. Furthermore, growth of IIoT services in the centrifugal pumps market is expected to increase. Although the technology is new and manufacturers are still trying to prioritize on the right services (among all the IIoT services available for the pump market) solutions-based business models are soon expected to be a successful source of revenue.
