Quest For Reduced Operation Costs And Increased Business Flexibility Stimulates Uptake Of Industrial Asset Management Solutions
London, 19th September 2003 From its roots in computer maintenance management software (CMMS), modern industrial asset management (IAM) solutions have evolved to form the next step in the development of efficient industrial and manufacturing production. IAM enables companies to strategically enhance their operations by combining manufacturing or process agility with the ability to synchronise all their maintenance and operational requirements within the business as a whole. Moreover, modern asset management solutions can be a key tool in eliminating unscheduled and costly downtime, and assist in predictive planned maintenance that helps put a halt to unnecessary and unwanted disruption.The upbeat mood in the European IAM market is underpinned by findings released by Frost & Sullivan, the international consultancy firm, this week. According to Frost & Sullivans study, the aforementioned core attributes will help catapult revenues for IAM software licences from US$355.7 million in 2002 to $582.8 million in 2009.However, Frost & Sullivan warns that sentiments in the IAM market may sour should ERP suppliers flock to this buoyant industry in their droves, reaping handsome returns with their own variation of IAM solutions by synchronising their present business systems to more of an industrial bias in alignment with plant floor control. The study points to a potential danger of the established IAM sector being increasingly sidelined as more business-oriented solutions encroach on its turf.Another concern is that corporate decision-makers can often be reluctant to invest heavily in production facilities due to the significant costs that can be incurred when implementing solutions on a plant wide basis. Therefore, many industries effect their annual investment gradually, with little prospect of a major investment being conducted in any one year. However, this situation is expected to change as prospective customers' senior management realise the benefits and value that can be gained by embracing and installing an IAM solution into their business procedures, explains Brian Flannery, Industry Analyst at Frost & Sullivan.Frost & Sullivan is confident that companies seeking to invest in the health and efficiency of their operational procedures will sustain momentum behind growth in the European IAM market. The industry is still in the early stages of its development lifecycle with new software, that are increasingly web-architected, being constantly introduced. Many companies are looking to outsource their non-core areas of activity to third party contractors who specialise in particular areas of expertise, namely plant production and maintenance. Outsourcing service agreements to third party contractors enables the company to limit or cap expenditure to a known fixed amount each year and share the risks associated with day-to-day operations. It also permits them to relinquish the training of staff regarding new technology and equipment as well as other potentially costly human resources responsibilities. Investing in a modern asset management solution plays a key part in enabling a company to benefit from the supplementary value-added services that outsourcing to a service provider can offer, Frost & Sullivans study emphasises. At present, suppliers of IAM solutions are having to absorb any price increases they may wish to implement due to competitive price pressure. Only vastly superior products will be able to see any increment in prices, however, this is expected to change in future years, when greater system comparisons can be made amid more widespread standardisation of solutions, Mr Flannery notes. Large suppliers, in particular, may look towards increasing the standardisation of their software and hardware products, improving the ability to plug and play "out-of-box" solutions in an effort to keep system prices low. Smaller companies would be expected to concentrate their efforts on core competencies, thus ensuring survival through focusing their attention on improving their expertise and service products in specialist or niche market areas.Strong investment from many application industries will make Tier one customers increasingly scarce as the market matures. However, Tier two customers and below should maintain overall demand in light of sustained and strong growth rates forecast for this market as developments continue in all application areas and fuel a period of expansion. The oil and gas industry takes first place as the largest user of IAM solutions in Europe, accounting for 17.6 per cent of total European revenues in 2002. As the oil and gas industry is truly global in its operations, high-level management demands information and knowledge of processes from around the globe. Despite the tendency for smaller size projects commissioned within the manufacturing industry, this sector is expected to increase during the forecast period to command 17.0 per cent of the IAM market towards the end of the forecast period in 2009. The saturation of the larger projects assigned to Tier one companies from several of the other application sectors is mainly responsible for the growing importance of the manufacturing sector in the overall IAM market.The primary driver behind growth in every single one of the eleven application sectors under analysis in Frost & Sullivans study is the ability to reduce costs. All companies are seeking to reduce and/or fix operating costs whilst increasing business flexibility. Modern asset management solutions enable the optimisation of a processing or manufacturing facility, improving asset/plant performance to maximise revenue yet minimise cost, Mr Flannery concludes. Frost & Sullivan, an international growth consultancy, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies include custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients' management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers and support staff, spans the globe with offices in every major country.Frost & Sullivans Analysis Of The Industrial Asset Management MarketPublication Date: September 2003Report Code: B222For further information, please contact:Kristina MenzefrickePublic Relations DepartmentTel. +44 (0) 20 7343 8376Fax. +44 (0) 20 7343 firstname.lastname@example.org
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