E-Business, Software & Solutions Drive PAS Market Growth To 2004
11 Jul 2000
The worldwide Process Automation System (PAS) market will experience overall limited growth through 2004, but the markets for optimisation software and services will increase sharply. PAS suppliers are also striving to empower themselves and their customers through the adoption of e-business models, says the new PAS Worldwide Outlook study from ARC Advisory Group.
'The PAS market effectively mirrors trends in the overall process automation market in many ways, according to ARC Director of Research Larry O'Brien. Growth opportunities in the PAS market are harder to find and more challenging than ever. The fastest growing markets today are not the refining and petrochemical industries, but the food & beverage and pharmaceutical industries.' Suppliers are forced to address new industries, new applications, and provide a wider range of products, services, and solutions. Niche suppliers are either getting squeezed out of the business or acquired by the large multi-billion dollar leaders.
ARC's recently released PAS Worldwide Outlook - Market Analysis and Forecast to 2004 shows that PAS hardware revenues are decreasing at double-digit rates. ARC believes that many suppliers will get out of the hardware business altogether. Suppliers such as Honeywell have already jumped on the hardware outsourcing bandwagon through their relationship with Rockwell for the production of PlantScape hardware.
Software revenues will increase at the average annual rate of over 5 percent through 2004. While software is a high growth area, ARC believes that service revenues will increase at an even faster rate. Project services, for example, will increase at the average annual rate of over 8 percent through 2004. Maintenance services will increase at the even higher average annual rate of close to 11 percent as users continue to outsource more of their maintenance functions.
According to Dick Hill , Vice President, Automation Systems & Solutions at ARC, 'Most of the major PAS suppliers are finding substantial growth opportunities in the simulation, optimisation, and enterprise production management software markets'. Much of this advanced software is sold as part of a complete PAS solution. PAS suppliers are also capitalising on the advanced ongoing services required by the installation of products such as optimisation software. The market for PAS maintenance services, for example, is expected to grow faster than that for PAS engineering and installation services through 2004 as users continue to invest in optimisation solutions and outsource maintenance activities that were traditionally performed in-house.
E-business will drive the overall business strategy for both suppliers and users in the near future. Many major automation suppliers announced major e-business initiatives in the last quarter. Siemens, for example, announced in February that it would aggressively strengthen its position in e-business and services. The company plans to generate one-quarter of its total sales online. Honeywell continues to expand on its MyPlant.com business. MyPlant recently formed an alliance with Microsoft for the use of Microsoft's DNA 2000 platform for building and deploying distributed applications.
The alliance will also speed the adoption of Internet-based solutions in Honeywell's target manufacturing markets. On the user side, manufacturers continue to invest heavily in E-Marketplaces. Daimler-Chrysler, Ford, and General Motors recently combined their online purchasing activities.
The companies will run a B2B exchange to more easily purchase materials and collaborate with suppliers. USX, Eastman Chemical, Dow, DuPont, Kraft, and many other leading manufacturing companies have also made heavy investments in e-marketplace B2B solutions in the past couple of months.
Further information on the new Worldwide PAS Outlook study can be found on the ARC web site: http://www.arcweb.com/promos/pas.asp
Further information can be obtained from ARC Advisory Services UK, Compass House, Vision Park, Histon, Cambridge, CB4 9AD; Phone: +44 1223 257744; Fax +44 1223 257832 or on the Internet at http://www.arcweb.com
