NR2330

NEWS RELEASE                                                                            March 2017

$11.5 Billion Opportunity for High Performance Valves in IIoT and Remote O&M

The Industrial Internet of Things (IIoT) is a powerful new force shaping the way valves will be purchased. The demand for valve automation and communication of valve health and performance will be driven by IIoT advances. With the rapid reduction in the cost of high quality sensors and the introduction of wireless technology smart valves will be communicating with remote operators on an accelerated basis.

Emerson, Flowserve, Pentair, GE and other valve companies are already pursuing this market and generating revenues of $7 billion. This includes smart valve revenues plus valves sold through IIoT decision makers. Some are third party operators. In other cases, they are corporate entities with many plants and centralized IIoT based valve selection. One important segment is repair part inventory and replacement.

The world industrial valve revenues will grow from $62 billion in 2017 to $88 billion in 2025.

World Industrial Valve Revenues $ billions
Segment 2017 2025
Traditional route to market 55 71
New route to market 4 10
New smart revenues 3 7
Total 62 88
IIoT Impacted Market 7 17

The traditional market will grow at 3% per year. However, the new route to market through remote O&M will grow at 13%/yr. as will the additional revenues generated by smarter valves.

World High Performance Valve Revenues $ billions
Segment 2017 2025
Traditional route to market 30 42
New route to market 2 5
New smart revenues 1.5 6.5
Total 33.5 53.5
IIoT Impacted Market 3.5 11.5

High performance valves comprise 55% of the total market today but with IIoT and remote O&M will represent 60% of the market in 2025. High performance valves include those in

  • severe service
  • critical service
  • unique service

If general purpose valves are the foot soldiers of IIoT then high performance valves belong in the armoured division. Their performance is much more critical to the outcome of the battle to improve plant performance.

Not only can valve companies boost Capex revenues for smart valves and Opex revenues for service and parts but they can acquire process data to help them design better valve products for specific applications. This proliferation of information about valve performance will serve as a giant resource of valve white papers. Proof of lowest total cost of ownership will be automatic.

The valve companies who best leverage this process and valve performance knowledge will be the most profitable. Those focused on IIoT will achieve profit gains of 45% in the high-performance segment and 32% overall. While those who miss the boat will suffer profit decreases of 10%.

Valve % Profit in 2025 due to the Impact of IIoT and Remote O&M
 

High Performance Segment

Total
(general and high performance)

Factor IIoT focused Valve Companies Others IIoT focused Valve Companies Others
Increased Market Share 15 -15 10 -10
Smart Revenues 10 0 7 0
Increased Base Prices with Better Products 20 0 15 0
Profitability Impact 45 -15 32 -10

McIlvaine has coined the term Industrial Internet of Wisdom (IIoW). The rate of progress can be viewed as 1 x IIoT + 2 x IIoW.  Transmitting all this data to better manage assets is only 1/3 of the opportunity. 2/3 of the opportunity is the improvement of assets and operations. Valve companies will be the source of Valve IIoW but only if they understand the new market paths.

IIoT promises to revolutionize industry but only if it is accompanied by IIoW (Industrial Internet of Wisdom). Decisive classification of high performance valve applications, designs, and materials is critical to IIoT success. Analysis of performance and comparison of results is important.  Mcilvaine has four services to support Valve IIOW.

N031 Industrial IOT and Remote O&M

High Performance Valve Decisions

4S01 Berkshire Hathaway Energy Supplier and Utility Connect

N028 Industrial Valves: World Market