February 2017 - McIlvaine Insights 2

The Industrial Internet of Things (IIoT) and remote operation and maintenance will combine to create a market worth $1.4 trillion in 2030 according to the latest forecasts in N031 Industrial IOT and Remote O&M Market Report published by the McIlvaine Company.A series of nine webinars will provide some of the conclusions from the report. The presentations will be followed by a discussion period where participants can share their views and ask questions. Each webinar will be scheduled on a Thursday at 10:00 a.m. CDT. Participation is free.

February 16 - IIoT and Remote O&M Markets: Questions to be addressed include: Why combine IIoT and Remote O&M forecasts? Why will this market grow at 13%/yr.? What are the major markets segmented by industry, region, and product? What are the limiting factors to growth? How do suppliers best take advantage of the opportunity? To register click on

$22 Billion Sedimentation and Centrifugation Market will take many Potential Purchasing Routes

Due to the rapid development of the Industrial Internet of Things (IIoT) it is clear that there will be a large sedimentation and centrifugation market, but it is less clear who will be the purchasers. Centrifuge manufacturers are well positioned to take a leading role due to the challenging maintenance requirements for this high-speed equipment. Many centrifuge manufacturers already have remote monitoring programs. Centrysis wireless remote monitoring is web-based and tracks 32 key parameters. It includes alerts, reports and service.

Alfa Laval has several remote monitoring initiatives including decanter centrifuge condition monitoring at the Metropolitan Wastewater Reclamation District of Chicago. Vibration is monitored and controlled through a X20 PLC from B&R Industrial Automation. A custom I/O module has reduced costs and made remote monitoring attractive.

Alfa Laval has expanded the concept to related remote monitoring and service. The Octopus biosolids dewatering centrifuge autopilot monitors and controls all aspects of the dewatering process. This includes material feed, polymer dosing and internal decanter settings. Infrared sensors analyze performance and automatically make the necessary adjustments.

GEA is using SAP HANA software as part of a predictive maintenance and service program for food processors. The program also is geared toward optimizing the performance of decanters and separators. The program opens the door to modular service-level agreements, warranted availabilities and insurance for customers.

A similar program called GEA IO provides remote operation of separators on merchant ships and ferries. Performance on lube oil purification and water treatment is optimized. The operation is seamlessly integrated into the central digital control system for the ship. GEA is pointing to a future of autonomously operated ships. The elimination of the crew reduces operating costs by 20 percent. The first prototypes have already successfully completed test runs. A team of operators remotely monitors operations and if necessary can take control.

Level control is fundamental to any sedimentation process. With the advent of microprocessors, ultrasonic technology moved into the level instrumentation mainstream where today it is one of the most common and favored techniques in use at wastewater treatment plants. Many of the characteristics unique to ultrasonics can be managed automatically by signal processing algorithms programmed into each instrument. Today's operators can take successful performance of an ultrasonic instrument for granted assuming the instrument is properly applied and installed.

The Drexelbrook CCS4000 Multi-Channel Sludge Blanket Level Monitor helps keep track of effluent quality in up to four separate water and wastewater treatment clarifiers and thickeners. The system uses ultrasonic technology to measure the compacted sludge level, the lighter rag material above the interface, and clarity loss in the water above the blanket and rag levels. The monitor eliminates worry about the adverse effects of denitrification, septic sludge, washouts, and mechanical breakdown of rakes. Compacted sludge tracking ensures that only dense sludge is withdrawn from the vessel, reducing pumping and disposal costs. At the same time, the lighter rag layer can be tracked to monitor the settling characteristics of the vessel, and the output can be used to control the use of chemical additives.

The heart of any clarifier or thickener drive unit is the main gear and bearing. One of the most obvious design features of the DBS drive unit is its torque gauge. DBS has used a large diameter stainless steel gauge that accurately indicates torque in foot-pounds or Newton-meters. The DBS torque gauges can be fitted with 4-20 mA torque transducer for remote monitoring and control. This information allows industrial users to increase the throughput and efficiency of their process.

IIoT and Remote O&M developments will help boost sedimentation and centrifugation revenues to just under $15 billion by 2026.

Sedimentation and Centrifugation Revenues ($Millions)
Segment	2026
Centrifuge Equipment	4,000
Service On-Site	1,000
Remote Service and Monitoring	1,800
Sedimentation Equipment	5,800
Service On-Site	940
Remote Service and Monitoring	1,200
Total	14,740

The projected remote O&M revenue is $3 billion which is in addition to just under $2 billion in onsite service.

There are pump, valve, treatment chemical, and related operation and maintenance revenues which are not included in the narrower definition of sedimentation and centrifugation but are part of the total revenue potential. There is an additional $8 billion in potential revenue for third party suppliers.

Third Party O&M with Sedimentation and Centrifugation ($Millions)
Segment	2026
Equipment	9,800
Service on Site	1,940
Remote Service and Monitoring	3,000
Potential Third Party Purification Process Revenues	8,000
Total	22,740

The move toward third party O&M will create an annual market potential of $22.7 billion by 2026. This includes $8 billion which would otherwise be in plant expenditures but will be instead provided by third parties.

There is likely to be both sharing and competition among suppliers. Companies such as Accenture, Genpact, and Wipro are offering digital process management systems which have procurement as a service component. It is possible that Accenture could purchase the water treatment chemicals, pumps, and valves. SAP is already partnering with GEA and has Asset Intelligence Network with a registry of components such as pumps with cloud-based support to provide details on parts. Nalco and other water treatment chemicals companies have 24/7 remote monitoring centers up and running.

The other type of competition will come from companies, such as Suez, that are offering total operation and maintenance of the purification systems. Such companies are already operating municipal water and wastewater plants. The build, own, operate concept can be applied to industrial water and wastewater treatment systems as well. With IIoT and specifically digital process management, the elimination of operators makes third party contracts much more attractive.

Suppliers of sedimentation and centrifugation equipment can take bigger or smaller pieces of the pie. In the case of GEA which already supplies complete food processing systems, the role of third party O&M will be a natural transition. For many suppliers, it will be important to partner with companies who have the best potential to capture market share.

Ultimately there will be much more awareness and reward for those companies supplying products with the lowest cost of ownership. With sensors providing performance and maintenance data on a continuous basis there is clarity as to superior products. Some sedimentation and centrifugation suppliers have the opportunity to invest in better products and leave the remote O&M to others. The path for each company is likely to be unique and challenging due to the rapid evolution of what McIlvaine coins as IIoT empowered by IIoW (Wisdom). McIlvaine is providing a strategic planning package which includes some consulting and access to both the following reports.

The market for ultrapure water systems and components will exceed $12 billion in 2026 according to the latest McIlvaine forecasts. This includes $2 billion of IIoT related products and services supplied by ultrapure water system and product manufacturers. In addition, $2 billion of ultrapure water products previously sold directly to operators will now be sold to third party O&M companies. As a result, there will be a $4 billion market shaped by IIoT.

Ultrapure Water System and Component Market 2026 ($ Billions)
	Total Market	IIoT Related Market
Power	5
Electronics	4
Pharmaceutical and Other	2
Additional IIoT Revenues	2	2
Rechanneled Revenues		2
Total	13	4

A supplier of pumps, filters, valves, piping, treatment chemicals, or instrumentation has the opportunity to boost revenues. A smart pump or valve needed to communicate with the cloud is worth more than a dumb one. Suppliers of water treatment chemicals such as Nalco can boost sales with remote monitoring services.

These suppliers will also find that part of their market once served directly will now be served through third parties, so identification of new potential purchasers and specifiers is important.

System suppliers are one potential revenue source. MHPS, Siemens, and GE already have remote O&M services for turbines. It is very likely that one or more will expand into O&M for the related ultrapure water systems. Suppliers of pharmaceutical and semiconductor manufacturing equipment will also expand their offerings with IIoT.

A UPW supplier may also move into the broader O&M role. Danaher is moving aggressively into IIoT. The company supplies Pall filters, Hach water monitoring and Chemtreat treatment chemicals, so it could take on a larger role and possibly partner with valve and pump companies to provide integrated O&M.

3M is another candidate. 3M products for ultrapure water, include Pre-RO, Resin Trap, Point-of Use Pre-Filtration, and Point-of-Use Final Filtration. Degasification membranes are also supplied. 3M has installed sensors on its ScaleGard Blend Series of water filtration products. ScaleGards are typically used at restaurants to purify the water for soda machines. By digitizing the water systems, the restaurant managers receive alerts on their computers or mobile phones when a part on the machine needs to be replaced. The system also automatically sends an alert to 3M channel partners, letting them know when to deliver the replacement part.

3M's Active Safety software lets plant managers track safety issues on the production line. They attach an RFID tag to each piece of personal protection equipment, so managers can keep tabs on who's wearing what device, whether they are properly trained and if the equipment is in compliance with regulations. So, expansion into a broad IIoT role is a possibility.

Another group are O&M specialists. There are a number of such companies offering O&M services for gas turbines.

The digital process management companies are still another set of contenders. They offer analytics and Procurement As A Service (PAAS) as part of their packages. Accenture, Wipro, and Genpact are examples.

Some of the specific players are filtration companies such as GE Water and Ovivo. Pump companies include Flowserve, and Sundyne, a division of Accudyne. Both provide other products and would have the depth to play a larger role. Danfoss is another pump supplier. Its complimentary products include drives and HVAC equipment used in pharma and chip manufacturing.

Prochem, Hach, Mettler Toledo and other instrument suppliers offer remote monitoring including input from:

Kurita has a remote monitoring system and since it supplies water treatment chemicals it can include its chemicals supply as part of the program.

Veolia supplies complete UPW systems. The Orion package features Reverse Osmosis (RO) membranes, integral recovery RO and concentrate recycle along with purified water.

Orion includes TFT HMI with the options of Siemens and Allen Bradley PLC units. This updated HMI technology displays key sustainable parameters such as CO_2, water and energy savings. The latest Integrated Smart Module (ISM) sensors have also been used for monitoring and control aspects. The Orion can be linked to the new Veolia technology, Vision. This customer portal is a private, secure web-based platform that allows access to all information regarding Orion, its products and services. Vision Air also allows for remote monitoring, giving further control and enabling access to real-time encrypted performance data, including alarms and equipment status.

Large semiconductor tool makers could also expand into UPW O&M. A leading-edge fab might contain >1,000 tools, with several dozen key sensors on each tool, and each wafer may see as many as 1,400 process steps. Huge streams of information are coming from fab tools, wafers, GDS (design) files, and facility systems such as chillers. Applied Materials is a major tool provider but also provides IIoT services.

Applied's technology-enabled services go beyond the maintenance-driven relationships Applied has with chipmakers. Most large manufacturers are already collaborating with the company on data-driven analysis projects, drawing upon Applied's E3 performance-tracking and data-mining software, as well as libraries and models. Applied engineers record vibration data, wafer placement images, optical emissions, and other sets of information to help enrich analysis models.

An aspect of the IIoT in pharma is the modularization of pharmaceutical production plants. IIoT infrastructure allows modular automation to scale production up or down according to market needs. This enables faster time-to-market for pharmaceutical products in accordance with the regulations and required approvals for specific markets and regions.

The challenge for the future of pharmaceutical manufacturing is to be highly flexible with adaptable automated production. Today, there are still many manual processes in drug substance and drug product preparation. Managing the data and being able to make automatic adjustments or decisions based on the data implies advances which IIoT promises to deliver. Cloud based systems can also integrate the important UPW data and make the UPW system as flexible as the rest of the manufacturing operation.

The impact of IIoT and Remote O&M will be substantial. The path to success will be complex. McIlvaine has two services to help guide the suppliers:

The Utility E Alert and Utility Plans database are tracking automation as well as environmental upgrades. In the U.S. there will be a surge in automation projects due to the likelihood that existing coal plants will be allowed to operate for the next decade or two. The capital investment is relatively low compared to the cost savings in fuel. The greater reliability also adds significant benefit.

In India there is a big retrofit program for FGD and NO_x control. In other Asian countries there are many new coal-fired boilers underway. Information on this service is found at 42EI Utility Tracking System.

The Industrial Internet of Things (IIoT) is predicted to add $20 billion/yr to valve manufacturer revenues by 2025⁽¹⁾. This addition will be a function of:

IIoT will be the catalyst to improving valve performance. Sensors which monitor the health of every valve focus management's attention on making better choices in the future. They also focus supplier attention on the subject and provide guidance on choices with the lowest total cost of ownership.

The convergence of purchasing and other IIoT functions is expressed in the Genpact characterization of itself as providing "digitally powered business process management". One aspect is strategic purchasing while another is optimization of operations. For Duke Energy, it integrated remote monitoring from several different wind turbine OEMS into a comprehensive digital program for improving wind generation operations.

So a supplier of smarter valves for wind turbine operations will find that companies such as Genpact, Accenture, and IBM focused on digitally powered business process management will be an important influence on valve selection.

McIlvaine has created a beta website for BHE ⁽²⁾. It has data on the components including valves for the hundreds of coal, gas, wind, solar, hydro, and biomass generation facilities owned by this Berkshire Hathaway subsidiary. The BHE operations also include gas transmission companies who have more than 70 compressor stations. There are lubrication valve details for pumps, pulverizers, fans, compressors, engines, turbines (steam, gas, and wind).

With IIoT BHE would be able to continuously monitor the performance and health of these valves and to make purchasing decisions with a great deal more knowledge than it would have absent IIoT.

The strategic sourcing consultants and end users all emphasize that lowering costs is not a specific objective. Amgen has three pillars for procurement:

Lowering cost may be part of the operational efficiency strategy, but with smart valves the opposite will be true. Pay more for "smarter valves" and improve efficiency.

Saudi Aramco has its own strategic procurement division. It tested 75,000 valves for four major projects and found an average of 3.3% of the valves had defects. For one project the number was over 10%. Shell has expressed concern about valve defects and the inability of valve manufacturers to extend warranties if Shell were to take the repair on itself. With IIoT and remote monitoring the valve supplier and Shell can be well informed about the condition of each valve. This shared knowledge will make it easier to decide how to repair it without loss of guarantees.

With access to a cloud based system valve suppliers, plant purchasing, plant operations, system suppliers, and outside strategic procurement consultants will all have access to the valve health and performance data on every valve. In the past remote monitoring, usually has been applied only to control valves. With IIoT remote monitoring of all valves will be economically justifiable.

Valve suppliers have the opportunity with remote monitoring to change maintenance procedures to prescriptive rather than predictive. Considerable cost savings are achieved when only the valves in need of repair are opened. The anticipation and avoidance of problems can have a large operational payback.

Automation suppliers and consultants acknowledge the need for subject matter expertise but do not give it the highest priority. The recipe for Tiger soup can be more easily obtained than the tiger. Subject matter expertise is a "very tough" tiger.

It can be argued that the rate of progress depends more on new ways to develop and utilize subject matter expertise than IIoT. McIlvaine coined the term IIoW (Industrial Internet of Wisdom) to cover the systematic leveraging of subject matter expertise.

Plant specific information: In the beta site for BHE the background data such as air and water permits, white papers, and articles all are displayed and linked to specific plants and processes. Every week hundreds of useful bits of BHE information become available.

Industry specific information: The BHE site also has links to Coal Fired Power Generation, and Gas Turbine Combined Cycle Decisions which also include valve decision guides for individual processes, e.g. HRSG. Input gained from coffee breaks at a PowerGen convention can be categorized as "data". Papers presented at the conference can be grouped under "information". EPRI studies can be grouped under "knowledge". But it takes a cloud type integration to create wisdom.

Product specific information: One of the Amgen pillars of procurement includes not only supplier access but innovation. Conferences and magazines on valves such as published by KCI are extremely valuable. However, this data needs to be organized and analyzed. McIlvaine Decision Guides on molecular sieve and choke valves are examples. There are innovations which change the options in both applications. The decisive classification of valve types and the numerical identification of Chinese suppliers are further examples.

Process specific information: There is little communication among industries. BHE now is testing a NO_x control process in a coal-fired plant based on revelations in a McIlvaine webinar relative to success in the refining industry. The hard coating innovations which are improving valve performance in one process in one industry need to be considered by operators of similar processes in other industries.

Niche expert utilization: Every year the industry loses five to ten percent of its expert knowledge. The 30-year veteran has 10 times the experience of the employee on board for just three years. When the retiree becomes a consultant, he is quickly diverted from his main field of expertise. The large consulting companies are reluctant to employ anyone who is not generating billable hours.

Suppliers are not organized to leverage niche expertise. Robert Buckman wrote a best seller in the 1990s on a 'Knowledge Driven Organization". He, as CEO, and all his staff started the day by reading the requests from the hundreds of salesmen selling water treatment chemicals and then were tasked to provide expertise where applicable. With IIoT it is now possible to identify and utilize the niche expertise in a very efficient way.

IIoT combined with IIoW promises to change the way valves are purchased and also the profitability and market dynamics. It is not an exaggeration to conclude that this combination is very likely the most important variable in the future of the valve industry.

(2)Berkshire Hathaway Energy Supplier and Utility Connect published by McIlvaine Company

The Industrial Internet of Things (IIoT) and remote operation and maintenance will combine to create a market worth $1.4 trillion in 2030 according to the latest forecasts in N031 Industrial IOT and Remote O&M Market Report published by the McIlvaine Company. A series of nine webinars will provide some of the conclusions from the report. The presentations will be followed by a discussion period where participants can share their views and ask questions. Each webinar will be scheduled on a Thursday at 10 a.m. CDT. Participation is free.

Questions to be addressed include: Why combine IIoT and Remote O&M forecasts? Why will this market grow at 13%/yr.? What are the major markets segmented by industry, region, and product? What are the limiting factors to growth? How do suppliers best take advantage of the opportunity?

This industry segment has made the most progress in leveraging IIoT for remote O&M services. Turbine and component suppliers have remote monitoring centers operating around the clock. This session will explain why a 2030 forecast of $30 billion is predicted. It will answer the question as to how established technologies such as remote vibration analysis will be combined with analytics and decision making relative to all components in the balance of the plant.

This session will build on nine hours of webinars recently conducted on optimizing NO_x emissions, 42 years of data analysis in Coal-fired Power Plant Decisions and a previous McIlvaine report entitled Information Technology in Electricity Generation. It will discuss the basis for an $80 billion 2030 forecast for coal-fired IIoT and remote O&M with a focus on the potential for utilities in developing countries to take advantage of the world's expertise through services from international consortia.

The potential for pump suppliers to add $20 billion of annual revenue and create new market routes for pumps valued at $25 billion will be discussed along with the evolution from vibration and lube oil monitoring to maximizing efficiency and minimizing maintenance costs. Based on the research in N019 Pumps World Market the session will discuss the various routes to market (system suppliers, third party O&M providers, and direct to end users).

The role industrial valves will play in expanding the market to $1.4 trillion while generating $20 billion in additional valve revenues and carving new routes for valve sales worth $30 billion will be explained. Insights from N028 Industrial Valves: World Market will be leveraged to predict the evolution of smart valves, valve inventory management programs such as being offered by GE, integration with third party programs and the role for subject matter experts.

McIlvaine predicts this market will grow to $168 billion by 2030. Insights from N049 Oil, Gas, Shale and Refining Markets and Projects will be used to describe the present disparate programs and the eventual amalgamation to interactive systems using open platform software. Safety, security, maintenance, environment, and efficiency will be considered. The webinar will include uses in the upstream, midstream and downstream segments of the industry.

The basis for a $350 billion 2030 market will be provided. The broad range of applications as delineated in many market reports "Markets" will be analyzed. This includes thousands of applications including ones as diverse as vibration monitoring and polymer dosage for centrifuges to filter condition monitoring for stationary IC engines. Clarcor already provides a total filtration solution package which includes replacing of all filters in a plant as needed. Donaldson offers a filter program for off road engines.

Municipal water and wastewater treatment systems are challenged by long pipelines subject to leakage, corrosion, odors and blockages as well as by maintaining valves and pumps in remote locations. New wireless technologies are already enthusiastically embraced. McIlvaine will provide insights based on several of its services: 62EI North American Municipal Wastewater Treatment Facilities and People Database and 67EI North American Public Water Plants and People as well as on ongoing private studies on subjects such as aeration compressors. This market is projected to reach $168 billion in 2030.

The basis for a $60 billion 2030 IIoT forecast will be explained. Continuous emissions monitoring systems are now required in many industries in many countries. Typically minute by minute emissions of each pollutant are transmitted to owners as well as enforcement agencies. There is a huge potential to integrate the information from these systems with combustion and other process optimization systems to operate plants based on both total economic and environmental cost of ownership.

Periodic recorded webinars with suppliers, consultants and end users will be linked from this page as well as being displayed in Hot Topic Hour recordings. Much of the future sensor input will be related to environmental performance. This in turn is tied to the regulations. Recently, we conducted an interview with Patricia Scroggin of Burns & McDonnell. You can view it at Meeting the new ELG and CCR requirements- options explained by Patricia Scroggin (Interview Dated: 1/20/2017).

If you are a subscriber to 44I Coal-fired Power Plant Decisions, you are eligible to participate in the following LinkedIn discussions. (If you are just a tracking system subscriber you can add the 44I for just $800 plus $80/additional user/yr. You can add application and technical information or any other information which will help power plants select the lowest total cost of ownership products. The discussions are a bridge between the webinars and the intelligence system which includes the database. So, you can also send us case histories and white papers. The postings will be monitored to eliminate commercial messages which are not constructive. The service is free of charge to any power plant in the world. So, keep in mind that viewers might be from Asia or Africa. To join one of the discussion groups just click on the LinkedIn group and ask to join.

Rate of Progress = 1 x IIoT + 2 x IIoW
	IIoT	IIoW
Data	Physical parameters and status of each component	Google, blogs, news
Information	Historian, Edge Computing, SCADA	Papers, presentations, Valve World magazines, and conferences
Knowledge	PLC, Data Analytics Remote monitoring with alarm system	Association white papers, structured LinkedIn discussion groups
Wisdom	Digitally powered process management	Leveraging subject matter expertise by plant, industry, product, process, and niche expert