May 2017 - McIlvaine Insights 13

The Water Treatment Chemical IIOT webinar is scheduled for May 10 at 10:00 A.M. You can sign up for this and other webinars at Weekly IIoT Webinars.

Attemperators are causing major problems in gas turbine combined cycle plants. The Gas Turbine Decisions, April 18 Update, provides the status. You can access this at 59D Gas Turbine and Reciprocating Engine Decisions. This is the brochure for the service, but the latest update is used as a sample. The service provides the knowledge needs: Alerts, Answers, Analysis, Advancement. The April 18 Update is the example of the Alerts. The service is a way to interface with gas turbine owners and keep up with the latest developments.

McIlvaine has hundreds of thousands of links on Google. If you enter Google and type in McIlvaine plus any word or words you can find a surprising amount of information. For example when you type in McIlvaine IIoT and Remote O&M you get pages of links to our Insights, but also access to YouTube webinars on IIoT for air pollution control, wastewater, ultrapure water, etc.

Adding company provides additional focus. If you type in McIlvaine Company Weir, you get two pages of links identifying Weir rankings in pumps, valves, and activities in flue gas desulfurization.

McIlvaine believes that IIoT will make a huge impact on the world but only if it is empowered by IIoW (Wisdom). The Global Decisions Orchard provides examples of a structure for improving wisdom Free News and Analyses in the Global Decisions Orchard

The McIlvaine market reports, databases, people directories, and decision systems are all part of the IIOW fabric. The McIlvaine IIoT and Remote O&M is the thread to strengthen the fabric.

Water Treatment Chemical Companies will play a Leading Role in IIoT and Remote O&M

Water treatment chemicals (WTC) companies presently derive substantial profit from their process knowledge. This asset will be leveraged in the new world of IIoT to create double digit profit growth for those who seize the opportunity. The profit increase will include:

Water treatment chemicals companies have traditionally been selling a combination of knowledge and product. Sales engineers have fulfilled a service and advisory role. The value added has been process knowledge and the ability to provide the right mix of chemicals.

Treatment chemical companies are already providing remote monitoring services. Nalco has installed more than 1000 3D TRASAR boiler automation systems supported by Nalco 360^T Service, to provide 24/7 monitoring for boiler systems.

Solenis has its OnGuard Controller System also supported by 24/7 remote monitoring.

GE TrueSense directly measures all three primary chemistries used in cooling water treatment and interfaces with InSight, GE's cloud-based knowledge management solution.

Kemira SMART chemical treatment of sludge enables the optimization of chemical consumption but also delivers the best dewatering performance. This requires knowledge of the different operational characteristics of centrifuges and belt presses.

IIoT and Remote O&M is much more than just optimization of treatment chemical use. It is optimization of the entire process. Top management is recognizing this opportunity. Danaher has embraced IIoT with the strategy of embedding its equipment with sensors with the expectation of increased consumables sales opportunities.

Danaher now owns Pall, Hach and Chemtreat. In the future Hach sensors can be sending data to remote control centers operated by Pall, Hach, and Chemtreat. This will supplement data on the plant which will be supplied by other vendors. The plant and third party O&M providers will be viewing all the remote input. The cloud-based system will provide the details which will allow decisions on whether to replace a Pall filter element or just change the Chemtreat chemical dosage to reduce the scale.

The enthusiastic proponents of IIoT tend to downplay the importance of what they call "subject matter expertise". McIlvaine thinks that IIoW (Industrial Internet of Wisdom) is even more important than IIoT. In fact, the potential should be viewed in terms of IIoW empowered IIoT. The decision to change chemicals or replace a filter element must be made somewhere. If the filter is purifying condensate in a gas turbine combined-cycle plant, one needs to know how often the unit is cycling and also the condition of the boiler tubes. Many plants are upgrading filters due to contamination from ambient air through air cooled condensers.

It can be argued that the water treatment chemicals division has the process knowledge base to take the lead. In any case those companies with niche experts who understand the processes and the relationship of the product to the process efficiency will be the ones in demand.

In order to maximize the potential, WTC companies will need to copy the Buckman example. Process knowledge must be cultivated. Buckman Laboratories led the way in the 1990s with the bestselling book "Building a Knowledge Driven Organization". Sales people posted questions into a company intranet system. The priority of personnel from top management down was to provide answers. Twenty years later this effort can be made much easier and better with IIoW. The scope of each niche expert should become smaller as knowledge expands. This means adding 8 percent more niche experts each year after the base of thousands of experts is developed.

The treatment chemical companies are potentially facing some pretty stiff competition. Let's says Accenture or Genpact supplies complete digital process management and strategic sourcing systems for all the BHE facilities comprising 7 percent of U.S power generation and gas transmission. Basic chemicals could be purchased and mixed for all the plants. Genpact is already supplying process management for several Duke wind facilities. If Genpact was contracted with AEP, Duke and BHE it would be purchasing 25 percent of the U.S. power plant water treatment chemicals.

The large strategic procurement firms are making a practice of hiring experts from industry. Seven percent of the knowledge workers retire or change jobs each year. However, their expertise is higher than average. As a result, 15 percent of the industry knowledge is in play each year. A treatment chemicals company can have a knowledge advantage today but lose it tomorrow. On the other hand, a company which adopts a robust IIoW program is not dependent on the knowledge of the few and makes superior decisions with the niche expertise of the many.

The system suppliers are either customers or competitors. MHPS has remote control centers in the Philippines and Orlando providing support for power plant rotating equipment. A sister company, Mitsubishi Electric is in water treatment. The transition to becoming a strategic procurement source is a goal that many system companies have selected. IIoT and Remote O&M is a springboard to this goal.

But in terms of profitability wisdom and knowledge will be even more important than the information and data. WTC companies can leverage this in their core WTC and non-core businesses to add revenues of $30 billion in 2025.

Water Treatment Chemical IIoW Empowered IIoT Opportunity
Category	2025 Revenue ($ billions)	Percent
Conventional Treatment Chemical Revenue	39	2.8
IIoT Supplemental Opportunity	30	2.2
Sub Total	69	5
Total Specialty Chemical	1400	100

The $69 billion is only 5 percent of the specialty chemical opportunity. For companies such as Suez the larger opportunity is measured in tens of billions of dollars. In the McIlvaine IIoT and wastewater webinar the power of the combination of GE Water with Suez remote monitoring and operation of water and wastewater treatment facilities was demonstrated.

BASF has an opportunity even larger than that of Suez. In the broadest sense, it is investing heavily in sustainability. As a result, BASF can offer clients improved "sustainability" and not just higher profits. (McIlvaine has developed a simple metric to measure sustainability based on individual life quality impacts (Sustainability Universal Rating System). BASF can leverage its IIoT efforts in its manufacturing plants with its WTC IIoT efforts.

The core market includes chemicals to treat water, wastewater, steam and slurries. Here is the current market.

WTC Market - $ Millions
Subject	2017
Total	27,585
Activated Carbon	772
Chelants	663
Corrosion Inhibitors	6,111
Defoamers	608
Inorganic Flocculants	3,459
Ion Exchange	903
Odor Control	956
Organic Flocculants	4,497
Other	1,389
Oxidizers & Biocides	2,993
pH Adjusters	1,486
Scale Inhibitors	3,748

Pulp and paper making is a unique market for many treatment companies. Water treatment chemicals are part of a larger category labelled specialty chemicals or performance chemicals. The market for this broader category is $1 trillion per year. Large players include Dow Chemical, BASF, Bayer, INEOS Group and DuPont.

The IIoT and Remote O&M market for these major chemical companies is huge. This effort can be combined with the IIoT efforts at their manufacturing plants. BASF has taken a further step and offers industrial wastewater treatment as a service in an area surrounding one of its German plants.