Condition monitoring is the process of monitoring a parameter of condition in machinery (vibration, temperature, oil condition, etc.) to identify a significant change which is indicative of a developing fault. It is a major component of predictive maintenance. The global condition monitoring services market includes hardware, software, and services.
Condition monitoring is essential. It results in cost savings achieved in operational processes, enabled by machine data, which can improve reliability and productivity of assets, minimized downtime, lower maintenance and inventory costs, higher operational reliability, improved workforce management, and optimal procurement of parts. Other benefits include increased asset life, streamlined operations through integration with other business systems for decision making, enabling environment and energy management, and ensuring operator safety.
There are various steps in the implementation of condition monitoring:
- Identification of critical assets to be monitored
- Identification of parameters to be measured and frequency of measurement
- Selection of appropriate condition monitoring solutions
- Installation of condition monitoring solutions and training of relevant staff
- Integration of condition monitoring system with other relevant systems and maintenance programs
The condition monitoring services market will undergo a significant transformation over the next 5 to 7 years with the advent of new technologies changing customer requirements in connectivity and analytics, and evolving business models among other services specifications. Worth $1.92 billion in 2017, the market revenues are expected to reach $4.8 billion by 2025 at a CAGR of 12.4%, although revenue trajectory varies among different service segments.
Improved customer appreciation of the benefits of condition monitoring, wider leverage of standards and certifications, reduced condition monitoring equipment prices, and demand for analytics will underpin growth. Customers are looking to derive actionable insights from their condition monitoring data and require assistance with integrating disparate data and leveraging analytics. The Industrial Internet of Things (IIoT) or Industry 4.0 and changing customer requirements will lead to the adoption of new business models by condition monitoring service vendors.
The global condition monitoring services market is going through an evolutionary phase. Advancements in connectivity solutions, data processing, analytics, and cloud computing underline the need for integrated service providers. This is expected to give rise to opportunities for market convergence as companies that are experienced in areas such as analytics or condition monitoring software may impact the competitive dynamics in this market.
The reboot of key oil and gas prices and key technology changes have pushed the service vendors to rethink and reinvent. Despite these trends, pockets of opportunities across the industry and increased awareness have helped the market surge ahead.
Market Overview and Technology Trends
Big Data and IoT
While Big Data, wireless technology, and IoT are seen as the way forward, the take-up of these solutions is currently not as high as initial expectations seem to have suggested. In part, this can be attributed to the fact that trained staff who act as virtual ‘human transducers’ by listening to the equipment, discussing with the onsite staff, and observing operational conditions are currently perceived as difficult to replace with remote monitoring solutions. If remote monitoring solutions are compromised by budgetary cuts, resulting in a lower number of sensors being read, then the number of fault conditions that could be detected is also reduced. However, moving forward, IoT is likely to be leveraged more effectively and as a consequence, service revenues from analytics are likely to grow. For portable condition monitoring equipment, a significant part of service is periodic calibration based on the requirements of appropriate standards. Service revenues are negatively impacted when customers choose to take their condition monitoring tasks in-house, a decision that is often prompted by the need to avoid more expensive outsourced contractor arrangements. A clearly expressed customer need is for more complete solutions (rather than a mere product). This will present the condition monitoring industry with increased future opportunities for customized solutions that help customers meet different needs across different applications and will involve a level of consulting to harness data for improved outcomes.
Hardware
Although hardware technology has not seen much transformation in recent years, progress has been made in condition monitoring software and analytics segments. Hardware is becoming increasingly commoditized, and product differentiation in this segment is diminishing. However, the industry has benefited from faster processors and improved signals, resulting in better analysis across multiple channels.
Data Analytics
Data analytics, especially with predictive analytics, is an increasing expectation among customers. This often prompts discussions around centralizing data across multiple sites so that consistency of data is achieved. However, a major roadblock remains the inability of many customers to convert the flood of new data into actionable information. This is often the result of inadequate understanding of condition monitoring principles and the equipment, as well as inadequate training of relevant staff. In addition, customers may have to recalibrate their expectations regarding the immediate impact of Big Data. This is because Big Data systems need to observe machine failures repeatedly before they can analyze adequately and predict effectively for the future.
Communication
Customers are looking for wireless condition monitoring solutions to achieve a cost-effective option for the labor-intensive process of running cable for hard-wired systems. However, this is generally for non-critical assets which do not need to be monitored constantly and where resolution is scaled back.
Integration
There is increased demand for integration of condition monitoring with other operational and business systems (e.g. CMMS) so that condition monitoring is not looked at in isolation (for example, viewing vibration data alongside pump data). While conventional process control systems such as SCADA do enable this, in several scenarios independent systems do not ‘talk’ to each other.
Regional Trends
North America
North America has remained stable, spurred by demand from the O&G and power generation industries, creating potential growth opportunities for condition monitoring equipment vendors. The US economic indicators improved in 2016, despite monthly swings, and this continued into 2017 with GDP growing at approximately 2.5%. In addition, the shale gas revolution and investments into power generation, particularly renewable energy, contributed considerably to the demand for condition monitoring in the United States.
Europe
The European economy is recovering from a downturn and is showing positive signs of growth. Particularly, demand from renewable power and the O&G industry is picking up. Currently, the focus on renewable energy, particularly wind, is expected to be an important growth opportunity for this segment in the long term, which creates huge market potential for condition monitoring equipment and services. The government support and initiatives to implement Industry 4.0 in this region has led to higher penetration of condition monitoring among the various end-user industries. For example, electricity demand in EU-28 has been steadily increasing over the past 10 years at a CAGR of 2% and the consumption stood at 3128 TWH, which will drive the condition monitoring in the power sector
Asia-Pacific
The slowdown in O&G prices can impact the profitability of many asset-intensive companies such as those in the oil and gas industries and gas power plants. This has led to an investment in predictive maintenance technologies that can improve machinery uptime, plant optimization, and reliability. O&G and power companies in the Asia-Pacific have started embracing information technology/operational technology (IT/OT) convergence and are more interested in predictive analytics compared to other regions. In addition, many developing regions in the Asia-Pacific are piloting remote condition monitoring and the success of these projects opens up a significant market for outsourced service models in condition monitoring.
Latin America
Condition monitoring opportunities in the power generation sector are driven mainly by hydro and wind segments. The coal segment accounts for only a small percentage of the region’s electricity capacity. The O&G sector will continue its recovery from a slowdown in this region, but unfavourable political scenarios in a few countries will restrain the growth. Therefore, the growth of condition monitoring services in the power generation sector is expected to be higher than in the O&G sector in Latin America during the next 5-year period.
The Middle East and Africa
In the Middle East, condition monitoring services opportunities are driven by the gas and wind segment in this region, with minimal new investments in coal. O&G companies have realized that in a turbulent oil market, IIoT could be the difference between success and failure. For example, the Al Waha Petrochemicals Company has partnered with Honeywell for its cloud-based Process Reliability Advisor solution. Frost and Sullivan expects similar initiatives will be taken by all the major O&G companies in the Middle East and this will drive the condition monitoring services market. In Africa, the gas, hydro, and wind sectors present the biggest opportunities for vibration monitoring services. The growth of the oil industry will be driven by new exploration initiatives taken by governments across Africa. However, due to oil production cutbacks in a few African nations, condition monitoring services opportunities will be lower in O&G than in the power generation sector.
Last Word
Services are expected to be the new profit centers in this competitive environment. This will be reflected in a strategic shift in the business approach of condition monitoring companies towards services, driven by the end-user need to reduce the total cost of ownership (TCO). As a result, more service-based business models are likely to come online, leveraging the convergence of several technologies. Big Data analytics and predictive diagnostic services will create opportunities for vendors to build competitive advantage and add value in a market where hardware is approaching commoditization. Industry 4.0 and convergence trends will drive toward connectivity that would facilitate real-time data collection. Increasing efforts will be made to convert Big Data to smart data. Transforming industry ecosystem will encourage a lot of collaboration and mergers and acquisitions activity as condition monitoring equipment manufacturers look to broaden their capabilities in areas such as online monitoring, Big Data, and predictive analytics. Vendors providing IIoT solutions will lead the innovation in this market and gain a competitive edge.
Mega Trends and the competitive landscape are discussed in details in the published Frost & Sullivan research study titledGlobal Condition Monitoring Services Market, Forecast to 2025. For comments or questions and inquiries about the study, please contact the author Sambaran Das at sambaran.das@frost.com or Prem Shanmugam at prem.shanmugam@frost.com
