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Sights Set on Services

  • July 21, 2009
  • Feature

Summary

July 21, 2009 by Rick ZabelAs I travel from one user conference to another, there is one clear and consistent theme coming from the major automation suppliers. Services, which include systems integration, optimization, life cycle management, asset management, and maintenance, have become a major focus for many of them. Even in this challenging economy, the services groups within these organizations continue to grow – sometimes significantly. For at least one major automation product supplier, services accounts for nearly fifty percent of revenue.If you think about it, this shouldn’t come as a surprise. With the aging workforce and retiring baby boomers, it’s difficult for manufacturing companies to find experienced engineers and technicians. So where do manufacturers turn? They either need to find a good systems integrator or they need to partner with an automation supplier. The real question is who is going to be able to best support a unique manufacturing company’s systems and processes? In some cases, the answer may not be so clear.The automation product supplier is likely the best candidate to service and support their own systems within the manufacturing facility. But, consider the fact that many manufacturing companies own multiple systems at multiple locations from multiple suppliers. Since one automation product supplier is likely not an expert on another supplier’s products, what’s a manufacturer to do? In this scenario, a third-party systems integrator may be a better choice because they, in theory, should have expertise on multiple supplier systems. Now look at the depth of the two different service entities. The automation product suppliers are much larger organizations, with deep pockets and large teams of engineers and consultants who support the services activities. Some suppliers have even partnered with and/or purchased third-party integration companies, in an effort to beef up with service groups. In comparison, maybe one or two of the largest automation and control systems integrators have a staff of 500-600 people. A few more integrators have 150-200 people. Then there’s a smattering of much smaller integrators. The larger integrators have reached significant size by acquiring smaller systems integrators. In fact, one of the motivations for growth is to expand their personnel and geographic footprint, so they can better support manufacturers with facilities in multiple locations. So the race is on. In many cases, automation suppliers and systems integrators are competing for the same business. This situation doesn’t sit well with many systems integrators, who previously worked closely with suppliers to deliver a complete solution. So, should the project size dictate who does the project? Some suppliers have been successful in securing business by offering performance or ROI guarantees on a complete system. That would be more difficult for an independent systems integrator to do. For this reason, it could be argued that the large projects and/or service contracts should be handled by the automation product suppliers and the smaller projects should be handled by the third-party systems integrators. There is evidence that some automation suppliers have adopted this philosophy through the introduction of lower-end process control systems, specifically targeted to the third-party systems integrators.It will be interesting to see how the services wars play out in the upcoming years. Will there be a fall-out between suppliers and systems integrators over certain business? Or, will there be a natural line in the sand separating those projects to be executed by suppliers and those executed by systems integrators? Time will tell. One thing is for sure - there is money in services.

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