VDC Research: Industrial Sensing, Networking & Control Market Blog

Can There Be Too Much Automation?

Within the VDC Industrial Automation and Control Practice we are always applauding the ever expanding role that automated processes are finding in new regional and vertical markets. In most cases, responsible/safe automation products and solutions are clearly superior to the manual industrial processes of the past. Outside of industrial plants there is another area where increased automation has paid dividends and that is in modern passenger aircraft. In either case, well tested industrial and aeronautic automation solutions transfers the control of mission critical processes to avoid operator/pilot type errors.

An article I read last week focused on some aircraft situations where the automated systems failed and, it appears the pilots had lost some of their edge with respect to the correct response they had to make. Planes that are in near stall condition need to point the nose down in order to pick up air speed. Pulling the nose up which might be the intuitive thing actually makes the stall condition more likely. Could there be a parallel from these aircraft situations and those that can take place in industry?  In my opinion, similar unexpected problems with automated processes could happen at almost any industrial facility. Most systems are designed with redundant and ultra-reliable components calculated to have the appropriate Safety Integrity Level (SIL) for the safety/process risk that is present.  On the other hand, recent events have shown that problems have already occurred in situations where combinations of failures and events overwhelm the automated systems. I was thinking about two obvious ones where this could have happened.

• At Fukushima Daiichi, from what I understand, the earthquake severed the facility's connection to the electrical grid and, then, the resultant tsunami almost simultaneously, destroyed the backup power sources. In such a case would it have been better to keep generating power with at least one of the reactors to keep the facility pumps cooling pumps running? I would estimate that the safest conventional and likely automated process thinking would be throwing the control rods in the reactors and isolating the steam pipes but perhaps this was the wrong move because of the other combined factors.

• In the case of the Deepwater Horizon, which was a well automated modern marvel of engineering we again see a chain of miss-interpreted tests, overridden alarms, and dependence on automated systems that could possibly delayed the reactions needed to save the rig by cutting the it loose from the blown out well. There were other factors in place here that I have discussed in earlier blogs but there is case to be made in that the automated safety systems fell short and it is likely that some manual reactions were not made or at least not in the correct timing and sequence.

Before I close, I do want to take some time to laud the efforts of the personnel directly involved with both cited incidents. They were in desperate situations and had to make difficult decisions and actions and, in many cases, lost their lives doing so. This posting was never intended as a slight to these fine individuals.

In closing I think that in many cases, industrial facility owners are increasingly looking for outside expertise to provide complete automated solutions with respect to process control and safety integrated systems. OEMS and equipment specifiers claim that 55% of their revenues are service related while at the same time end users are claiming ~38% of their expenses were for non-hardware related categories. To me that translates into a lower level of expertise at the point of use. It is unlikely that the automated systems that are put in place will fail but, if they do, hopefully the on-site personnel will have the expertise, decision making, and necessary reactions to prevent disasters.

 

Spectris Continues Building its Empire via Acquisition of Omega Engineering

On August 15, 2011 Spectris PLC announced the acquisition of Omega Engineering for about $475 million, a multiple of more than 2.8 x 2010 revenues of $168 million. I remember seeing the large and colorful Omega product catalogs in the office when I started here at VDC over 14 years ago.

As I recall Omega seemed to sell just about everything under the sun when it came to process measurement and control instrumentation including temperature, pressure, flow, level, humidity, strain and force; HMI, electric heaters and data acquisition products and software. Omega Engineering enjoys a strong brand name, enjoys high levels of repeat business, some customization capability and a reputation for providing quality customer service.

Omega Engineering will serve as an additional growth platform from which their Industrial Controls business, which is already comprised of Red Lion Controls and Microscan, will continue to expand its presence regionally as well as from a product platform basis. Spectris had already acquired N-TRON back in Q4 2010 as a means of expanding its footprint in network connectivity and to further leverage the company's industrial controls and test & measurement businesses.

No doubt Spectris will likely leverage the synergies afforded via the combined products and channel networks of Red Lion Controls and N-TRON along with the new product additions via the Omega acquisition to grow its presence in the process measurement and instrumentation, test & measurement, academic and even in-line instrumentation market segments. Omega enjoyed a wide base of customers that relied on the company's one-stop shop product portfolio to handle their small-scale project needs.

VDC believes the greatest value from this acquisition will come from being able to leverage a diverse product portfolio of products to gain traction with new customers with larger project requirements that prefer to deal with a supplier than can provide all their product and service requirements.

Internet Remains #1 Information Source Data Acquisition Users Rely On

Based on recently published research generated from VDC's 2011 Data Acquisition Solutions Market Intelligence program in which VDC surveyed 600 end users, OEMs and related stakeholders involved in using, purchasing and/or specifying data acquisition solutions (i.e. data loggers, paperless recorders, Compact PCI plug-in analog I/O boards, etc) searching the Internet remained the #1 information source respondents turned to when they wanted to learn more about data acquisition products and suppliers. VDC conducted similar research on data acquisition products back in 2008.

VDC added some new, more granular selections in terms of information sources from which respondents sought to learn more about data acquisition products and suppliers. Included among these new information source selections were Internet-search, vendor websites, direct email, professional networking sites and social networking sites. I already addressed the results from the latter two new selections in a blog posted back in June.

Interestingly the emphasis that survey respondents placed on different information sources varied by platform type as searching the Internet was the only one in which users of external chassis & modules, plug-in analog I/O boards and data acquisition software agreed upon as being #1. For example, vendor websites was cited as being the 2nd most sought out information source by users of boards and software while chassis users rated it 3rd most leveraged medium.

What is clear is that users of data acquisition solutions rely on a mixture of both traditional and digital mediums when they seek to learn more about data acquisition hardware and software solutions. Suppliers need to better understand what those preferred mediums are if they are at all interested in maximizing any marketing investments being made to capture greater mind share and, more importantly, greater business from both existing and new customers. Tailoring a marketing message chalked with informative and actionable information to the right audience is the holy grail of marketing 101. VDC's research into the purchasing behavior of data acquisition solution customers could prove to be an effective tool when employed properly.

We welcome the opportunity to learn more about some of your marketing success stories and which mediums your firm employs to reach your target audience.

Data Acquisition Applications Coming to an iPad, iPhone or Droid Near You?

The influence of Apple's innovative products such as the iPhone and iPad is real and its impact has been significant and such products have help shaped many different markets in as many news ways as there are the plethora of applications being developed around these platforms.

Feedback from almost 600 survey respondents who participated in VDC's 2011 Data Acquisition Solutions Market Intelligence program indicated that a growing number of them expect to be accessing their data acquisition applications through a mobile device operating with Android or IOS OS within the next five years. In fact almost 17% of respondents are expecting/desiring to be using external chassis & modules with Android by 2015 while almost 14% of external chassis users indicated some future usage of IOS.

It is only a matter of time before savvy suppliers of data acquisition solutions begin to develop ways in which users can begin to access data being collected via their various data acquisition solutions with an iPhone or iPad equivalent mobile device.

It is also very likely that within the next couple of years savvy suppliers will be offering cloud-based services in which they manage the data traffic, storage and perhaps even data management for companies that seek to outsource such data acquisition related activities.

We welcome any feedback on data acquisition applications which may already be out in the market and what are the initial thoughts on their effectiveness and how may they be improved or enhanced to enable the user the ability to more fully exploit the power of their smart phone or tablet.

 

Price #1 Commercial Requirement among Users of Data Acquisition Hardware Solutions

Based on soon to be published research generated from VDC's 2011 Data Acquisition Solutions Market Intelligence Program in which VDC surveyed almost 600 end users, OEMs and other stakeholders involved in using, purchasing and/or specifying data acquisition solutions (i.e. data loggers, paperless recorders, Compact PCI plug-in analog I/O boards, etc) price was the #1 most often cited vendor selection criteria among hardware users.

Price remained the #1 factor among respondents using external chassis & modules and became the #1 factor among users of plug-in analog I/O boards, where price overtook application support as the #1 factor as compared to VDC's 2008 research. VDC asked survey respondents to select their top 5 most important factors (out of 16) they considered before selecting a supplier from which they would procure their data acquisition solutions.

However the remaining top 10 supplier criteria respondents selected varied by hardware platform such as external chassis & modules vs. plug-in analog I/O boards. In fact, the top 10 commercial requirement selections even varied among respondents of the eight different vertical markets under study as users in different market segments possess some unique requirements and/or perspectives on what is deemed most important to them.

VDC provided new analysis in the 2011 research asking software respondents to rate their top 5 most important factors when considering their vendor selection. Among software respondents the most important factor was receiving strong application support. Price was rated the 2nd most important factor among software respondents.

Clearly cost containment is a critical factor which users consider before investing in a data acquisition solution and suppliers need to make every effort to strip out as much unnecessary costs as possible from their data acquisition solution.

That being said there are other important considerations which users make when considering selecting a supplier from which to procure their data acquisition solutions. In many cases these other factors may play a more dominant role in a user's decision-making process than price, if the supplier can effectively frame a value proposition that may include concepts such as ROI, TCO or a valid cost/benefit tradeoff analysis. By selling on value suppliers can more effectively overcome any price objection; every sales person knows that you never want to sell on price alone.

 

Wireless Charging Could Empower Sensing in Industrial Applications

I saw an interesting article this morning about wireless charging that got me thinking about its possible use in industrial sensing. This technology is being developed by a MIT spin-off WiTricity and it's new partner MediaTek. The wireless charging they are working with is a big step beyond the inductive type charging plates that are currently on the market but, instead can charge devices at a distance. Obviously a cell phone that never needs charging and, perhaps, a much smaller battery geography would be a big deal on the consumer market but I'm thinking it could be a game changer in industrial settings.

Using wireless data transmission solves a lot of sensing problems particularly in equipment that has a lot of moving parts but that still leaves the problem of powering the device. Newer sensors with ultra low power demand and advanced long-life batteries solve some of this but, I suspect that they still leave some sense of concern that a dead sensor battery could idle an entire production line. Some of this concern could be alleviated by energy harvesting and/or solar technology but these are not ideal in all cases. But, if you could eliminate much of the battery size, combine energy harvesting and WiFi type power, you could have a really small wireless sensor that would be ultra-reliable. To me that's a pretty big deal.

Accuracy Remains #1 Technical Requirement of Data Acquisition Hardware Users

Based on soon to be published research generated from VDC's 2011 Data Acquisition Solutions Market Intelligence Program in which VDC surveyed almost 600 end users, OEMs and other stakeholders involved in using, purchasing and/or specifying data acquisition solutions (i.e. data loggers, paperless recorders, Compact PCI plug-in analog I/O boards, etc) accuracy remained the #1 most often cited hardware product selection criteria (rated #1 in 2008 VDC Research). VDC asked survey respondents to select their top 5 most important factors (out of 24) they considered before investing in a data acquisition solutions.

However the remaining top 10 product factors respondents selected varied by hardware platform such as external chassis & modules vs. plug-in analog I/O boards. In fact, the top 10 technical requirement selections even varied among respondents of the eight different vertical markets under study as users in different market segments possess some unique requirements and/or perspectives on what is deemed most important to them.

VDC provided new analysis in the 2011 research asking software respondents to rate their top 5 most important factors when considering their product selection. Among software respondents the most important factor was the compatibility with their operating system. Accuracy was rated the 3rd most important factor and was preceded by ease of use.  Users may associate accuracy as being an issue more relevant to hardware and thus place less emphasis upon it when considering data acquisition software.

VDC also asked respondents to rate their top 5 most important commercial requirements (out of 16) they wanted to see provided from suppliers of the data acquisition solutions from which they are considering purchasing. That information and some of its ramifications are saved for a blog on another day.

 

Wireless Sensor Networks and The Cloud Are Raining Data

Although I did not have a great deal of time to walk the floor and visit every booth to learn about all the new (and not so new) products and technologies exhibited at the Sensors Expo, I did glean the sense that wireless sensor networks and cloud computing are gaining traction as users increasingly embrace the benefits of wireless connectivity to obtain data and also grapple with what to do with all the data being collected, analyzed and managed.

Based on extensive research from VDC's Wireless Industrial Networking Products research we know about the many benefits and factors which are driving demand for wireless connectivity and sensor monitoring is an application well suited to benefit from the usage of wireless networks. Cloud computing is supposed to provide the user with greater performance capabilities, real-time analysis and data storage capabilities and the possibility for a 3rd party to manage part of, or all of, the data process of collection, analysis and storage. 

Companies such as Digi International and MicroStrain were highlighting offerings which leveraged both wireless sensor networks and cloud computing and there were several other companies that were highlighting a wireless sensor network solution leveraging an 802.11x network standard, an 802.15.4 (ISA-100, Wireless HART, Zigbee, etc.) network standard and/or a proprietary narrow band solution (2.4 GHz band, 900 MHz band, etc.)

VDC will be launching a new project on wireless sensor networks later this year and the impact of cloud computing and who manages all the data being acquired from the burgeoning use of wireless sensor networks will no doubt be part of the research discussion. We are very much interested in learning about what issues, questions and market forces are of greatest interest to the marketplace and welcome any feedback you can share or questions/issues to consider.

A discussion about for which applications users may choose to leverage cloud computing's capabilities is a blog for another day. 

Marketing Data Acquisition Solutions in the 21st Century

One of the benefits of being a founding sponsor of VDC's market intelligence is the opportunity for clients to review the survey tools and make suggested questions/inputs for considerations prior to launching the web survey and phone interviews. Here is a short blog about one such interesting example from our ongoing 2011 Data Acquisition Solutions Market Intelligence project.

I must admit that when one of our sponsors wanted to add professional networking sites (i.e. LinkedIn, etc.) and social networking sites (i.e. Facebook, etc.) to the list of information sources users rely on to learn more about data acquisition solutions and suppliers I did not anticipate getting much, if any, responses from survey respondents. Regardless I added them to the list so as to provide that benefit and was interested to see the results.

Feedback from over 220 respondents indicates that I may be operating from a 20th century mindset when it comes to marketing.

Below are the top level breakdowns of survey results and where these two mediums fared amongst of list of 19 different information source selections.

Professional Networking Sites

24% of external chassis & module users cited professional networking sites (10th out of 19). 

28% (8th) of plug-in boards users cited relying on professional networking sites

16% (11th) data acquisition software users rely on professional networking sites

As a member I know that people utilize various LinkedIn groups to ask questions about products, solutions, suppliers, etc. Perhaps suppliers can become active participants in such discussions by using "soft sell" approaches which offer up helpful recommendations, perhaps even citing their own solution. Advertising on websites such as LinkedIn may be another way to reach a targeted customer segment. Personally I recommend the "no-cost" solution of being an active group participant; but even that takes time and consistent follow up to have any chance of being effective, so there is no free lunch.

Social Networking Sites

16% (15th) of external chassis users cited visiting social networking sites  indicating their belief that they may learn something on Facebook or some other related website about DAQ.

17% (19th) of board users cited visiting social networking sites

only 8% (19th) of data acquisition software users cited visiting a social networking site

I am not sure why someone would visit Facebook to learn more about data acquisition solutions and suppliers. Perhaps our respondents were using Facebook to keep in touch with colleagues or to utilize that venue to engage in discussions about data acquisition solutions from people they know and trust. With over 500 million users on Facebook I imagine there may be a few data acquisition solutions users, suppliers and/or related stakeholders lurking around who may be happy to share an opinion or suggestion.

If you want to learn more about the other 17 information sources users rely on to learn about data acquisition solutions and suppliers or the plethora of additional analysis on users requirements and preferences, adoption plans, purchase plans, technical and commercial requirements and much more, drop me a line at [email protected].

 

Any Pac Man Activity Coming for Data Acquisition Solutions Suppliers in 2011?

After pondering some of the past noteworthy mergers and acquisitions (M&A) made in the data acquisition solutions space, such as National Instruments buying Measurement Computing Corp (MSS) and IOtech back in 2005 and HBM (Spectris) acquiring LDS and SoMat Corporation (via nCode) in 2008, I started to wonder if we may see any M&A activity in the data acquisition solutions space in 2011 or beyond.

According to VDC's ongoing 2011 Data Acquisition Solutions Market Intelligence program, the total data acquisition solutions market opportunity may reach close to $1 billion in 2011. That sizable market opportunity is actually comprised of two major product platform categories - external chassis & modules and plug-in analog I/O boards.

Within each of these major platform categories is a number of data acquisition products which serve a plethora of different application segments, functional usages and customer classes. This market dynamic represents both a challenge and an opportunity to any savvy data acquisition supplier.

How does a supplier grow their business in a fragmented market with expectations of average growth  in demand (some products will enjoy above average growth) over the next five years, while achieving reasonable margins and maintaining a "corporate soul"?

Michael Porter I am not; however my 18 years in business and an MBA have imparted a basic understanding that there are only a few courses of action which make any business sense when confronted with such a challenge.

1) Tread water by maintaining your existing customer base with legacy products and obtaining sufficient new customers to offset any customers that you loose - either to competition, an acquisition or they go out of business. This "harvest" approach yields little or no material growth (beyond inflation rate) and is not typically a recommended course of action; unless of course you operate in some protected enclave where your legacy products yields nice margins and you experience little or no competition (wake me up Dorothy when we get to Kansas).

2a) Grow organically by designing new products, and/or enhancing existing ones, that are designed to meet the specific application, technical and commercial requirements of new customers operating in an existing served market/customer segments.

2b) Grow organically by leveraging existing products and solutions into new market/customer segments by showing customers how your products solution can meet their specific needs and application requirements, thereby providing ROI.

3) Partner with other suppliers who offer complimentary data acquisition solutions which would enable you to penetrate into new market segments and/or grow your share in existing market segments in which you lacked a critical component (i.e. think FDA 21 CRF part 11 certification) necessary to compete. Options are likely limited with this approach.

4) Acquire other data acquisition solution suppliers who can provide access to new product platforms and/or growth technologies (i.e. wireless, etc.) and/or the acquiree can provide access to new markets and/or customer segments through an established brand, a strong sales team, deep engineering and/or applications expertise, a strong service/support value proposition, or other compelling factors.

Option #4 leads me back to my initial question and title of this blog. 

I cannot say for sure what, if any, M&A activity in the data acquisition solutions marketplace may take place in 2011, but I will certainly be keeping my ear to the ground. Anything can happen when the economy continues to show signs of solid recovery and the price of a target is right.