Frost & Sullivan Says Automation Services to Present Opportunities
-- Business & Technology News, 15/6/2009
According to Frost and Sullivan, services play a key role in extracting maximum returns from available assets and also in extending the life cycle of industrial assets. Automation services solutions enable improvements in Overall Equipment Effectiveness (OEE) at a reduced cost while supporting the functioning of production processes. Accordingly, the EMEA automation and control solution (ACS) services market is set to experience a compound annual growth rate of 9.58% to reach $ 8416.41 million by 2015, says Frost and Sullivan.
“Extending the life cycle of the asset and gaining maximum returns on it has become an urgent need for most end users, resulting in the heightened reliance on services for enhancing asset maintenance and management,” notes Frost & Sullivan Industrial Automation Research Analyst Khadambari Shanbagaraman. “In addition, limited in-house expertise due to an ageing and increasingly reduced labor pool have further jeopardised the situation, causing end users to depend solely on automation suppliers for complete support and maintenance.”
According to recent analysis by Frost & Sullivan, oil and gas together with the chemical and power generation sectors accounted for around 62 per cent of the total ACS services market in 2008, with the total EMEA ACS services market accounting for $ 4436.10 million that same year. The demand for field and migration services as well as operational services is particularly high among the oil and gas and power generation sectors. Other sectors such as food and beverages and pharmaceuticals contribute more towards consulting services since the production process of these industries is governed by EU and medical standard bodies mandated regulations related to human safety. Project engineering and installation services which accounted for nearly 38 per cent of the total European ACS services in 2008 are expected to witness lower growth due to decreasing capital expenditure. With end users displaying a preference for one-stop-shop services support, a Main Automation Contractor (MAC) approach has gained significance among automation vendors. Outsourcing automation services to an MAC reduces the total automation expenditure by almost 25-30 per cent as vendors are involved from the initial stages of the production process until the final site completion.
“While automation services provide more scope for end users to concentrate on developing their core business, it also presents an ideal opportunity for suppliers to advance their vertical and multi-vendor expertise, increase their geographic penetration and position themselves as complete automation contractors rather than just product suppliers,” comments Khadambari Shanbagaraman. “The net impact of such trends is likely to spur automation vendors to increasingly realign their business structure towards expanding their customer base in this competitive market.”