Predictive maintenance gains momentum as demand among vendors, buyers and VC investors grows

Predictive maintenance gains momentum as demand among vendors, buyers and VC investors grows

In 2017 we've seen that the scale of IoT initiatives in Europe is increasing and is going beyond the proof of concept stage as enterprises start to see IoT's strategic importance in their future growth. PAC surveyed more than 250 senior decision makers of European manufacturers and more than 200 senior decision makers of European transport operators, and the results showed a clear appetite for IoT solutions as companies plan to increase their IoT investments. One of the major drivers of such developments is the need to become more operationally efficient.

By implementing IoT solutions companies will unlock new data streams from their existing assets, business processes, workforce and even customers. and with the help of predictive analytics they could achieve cost savings. PAC’s sees predictive maintenance use cases as a great way to achieve savings by reducing unplanned downtime, increasing utilization of machines or vehicles. On the back of predictive maintenance servitization of the products can be improved and new business models can be launched.

Developments in the market suggest that stakeholders are already moving forward with predictive maintenance. We can see vendors activating partnerships to enable predictive maintenance offerings, technology buyers investing in predictive maintenance solutions and venture capital firms investing in predictive maintenance innovators and start-ups.

A recent partnership between BT and Hitachi will focus on the development of Industrial IoT use cases. The initial focus will be on asset intelligence and predictive maintenance solutions. Another partnership is between HPE and industrial giant ABB, which will see the two companies merge their IT and OT capabilities to develop joint Industrial IoT use cases.

Technology buyers are looking to benefit from predictive maintenance not just on the shop floor, but also by embedding predictive analytics into their products and offering better maintenance services. A few weeks back, jet manufacturer Rolls Royce launched its business unit called ‘R2 Data Labs’ which offers predictive maintenance services to its jet engine user customers, where the service is enabled by Microsoft Azure IoT suite.

Another manufacturer thinking to the future is Thyssenkrupp Elevator which inked a long-term deal with Cyient that will boost the manufacturer's predictive maintenance platform for the elevator industry called ‘MAX’, which according to manufacturers can cut downtime by 50%. Another example is the US pump manufacturer Flowserve that partnered with Azima, who will boost its products with predictive maintenance capabilities and enable them to detect faults weeks and even months ahead.

During the last couple of months of 2017 even VC investors, (that generally didn't show the same level of interest for IoT as for some other technologies), invested in start-ups that are in one way or another involved in predictive maintenance. These include:

  • £3.5 million Series A investment in Senseye which develops a software for monitoring the condition of pipes and runs predictive maintenance algorithms to reduce maintenance costs by 40% and unplanned downtime by 50%.
  • $117 million VC investment into the US unicorn Uptake, which is valued at $2.3 billion. Uptake analyzes industrial equipment data in near real time and runs predictive algorithms in order to revolutionize the maintenance process.
  • $2.7 million seed investment from a range of VC firms in Israeli startup Aurora Labs, which develops software that can predict bugs in software within connected cars.
  • $40 million Series C investment (led by the US bank Wells Fargo and Nvidia) into the startup H20 that provides a machine learning platform which can be used for a range of applications, including predictive maintenance.
  • £250k investment from Mercia Fund Managers together with £104k from Innovate UK into a startup called CorrosionRadar which addresses the problem of corrosion monitoring in pipelines.
  • Earlier in 2017, Series E investment for Tom Siebel's new venture C3 IoT, valued at $1.4 billion. One of the company's bets is predictive maintenance on the back of IoT in range of sectors.

PAC expects that the niche players and start-ups operating in Industrial IoT and predictive maintenance area will continue to gain attention from investors, as investors will see plenty of exit opportunities in future coming from a range of players such as system integrators, platform providers and the industrial giants.

Predictive maintenance also presents an opportunity for a wide range of vendors, as use cases require expertise in IoT solutions, data handling and process orchestration, as well as in development of unique predictive algorithms, while at the same time preserving security. Moreover, organizational support in implementing the predictive maintenance paradigm and its integration within the supply chain system and other enterprise applications will be key to their success.

At PAC we believe that IoT has a strong momentum in industries such as manufacturing, energy and transport. Predictive maintenance will be one of the core use cases, as most of the companies will look to improve their operational efficiency and cut costs. To explore the appetite for such investments PAC will survey more than 200 senior decision makers in manufacturing and transport sector companies, and discuss the current and future focus of their IoT initiatives on predictive maintenance use cases.

We have a final opportunity for additional sponsors to support this research. If you are interested, please contact Mathieu Page at m.page@pac-online.com