Transcript 2003 TDMS-RTAC Market Horizons Report

Market Horizons™ Report
Geospatial & Field Automation Solutions (GFAS) in the North
American Utilities Marketplace (2003-2007)
PART ONE
Executive Market Briefing
Ed Finamore
Senior Market Analyst
©2004 InfoNetrix LLC All Rights Reserved Worldwide
www.InfoNetrix.com
1-1
About This Report
InfoNetrix LLC, an independent technical research and consulting firm specialized in
utility automation and information technology (Utility Automation/IT) markets
conducted the research for this report. InfoNetrix reports are available for
subscription by any and all interested parties, foreign and domestic (except as
prohibited by law), in accordance with the pricing and terms set forth in the
prospectus, provided separately.
This report addresses Geospatial & Field Automation Solutions (GFAS) in the North
American Utilities Marketplace. Other reports in the Market Horizons™ Series
provide similar analyses of Real-time Automation & Controls (RTAC) in the North
American Electric Utilities Marketplace and Real-time Automation & Controls (RTAC)
in the North American Water/Wastewater Utilities Marketplace.
Please visit www.InfoNetrix.com for more information about these and other
InfoNetrix Advisory Services.
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-2
General Information & Notifications
PURPOSE
The information contained in this document is for the sole use of InfoNetrix clients and is not to
be distributed outside client organizations. No part of this publication may be reproduced,
transcribed, or transmitted in any form or by any means, electronic or mechanical, including
photocopying, recording, or by any electronic storage and retrieval system, without permission in
writing from the copyright owner.
DISCLAIMER
This publication has been prepared with care, however, no guarantee of accuracy,
completeness, or warranty of any kind is expressed or implied, nor shall InfoNetrix be liable to
any user of the publication or any portion(s) hereof for any direct or indirect damages, expenses,
costs or losses of any kind resulting from its use.
COUNTRY OF ORIGIN
United States of America
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-3
Research Standards & Methodology
The preparation of this report follows generally accepted standards of market
research practice and is based on principles of truthfulness and professionalism. A
reasonable and prudent effort has been made to ensure that factors and
circumstances having a material impact on any decision-making process derived
from, or impacted by, this report are included in the analyses and recommendations.
The representations of industry and market data and portrayals of the business
environment are based on market research conducted by experienced professionals
with broad knowledge and experience in the markets addressed.
The information upon which the findings and analyses contained in this report are
based was obtained through a combination of telephone interviews with key
suppliers and consultants and other individuals with extensive market knowledge
and experience, augmented by survey with a cross section of utility managers and
ongoing interactive research with over 1,000 utilities annually. Each telephone
interview/survey was guided by a specially designed questionnaire to obtain
pertinent data, insights and market perspectives. These interviews were augmented
by secondary research across a wide range of reliable public and proprietary
information sources pertinent to the study.
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-4
Research Reliability & Acceptance
The information presented in this report was gathered, recorded and analyzed with care and
precision. However, there will undoubtedly be differences between the findings presented and
actual results for various reasons and, because future events and circumstances frequently do
not occur as expected, those differences may be material.
For these and other reasons (including, but not necessarily limited to human error,
misinterpretations, misunderstandings and information sensitivities among respondents), the
resulting data will most likely not be completely accurate in all respects. Moreover, the forecasts
presented herein reflect judgments made as of the period during which this report was prepared.
As such, some aspects can be expected to change as a result of numerous direct and indirect
factors, which are beyond the scope of this report to accurately predict. For example, it assumes
that current events will continue to have the same effect on the marketplace in the future and
that the conventional wisdom of today will continue to be completely applicable to future market
conditions, which is at best, unlikely.
By accepting and using the information contained in this report, the user assumes all
responsibility for its use for any and all purposes as user may deem appropriate and agrees to
hold InfoNetrix, its principals and its staff harmless from any direct, indirect or consequential
damages resulting from, or in any way related to, such use(s). However, InfoNetrix actively
solicits and welcomes inquiries or other input regarding any errors, omissions or inconsistencies
discovered during the course of using this report. Please direct any such correspondence to
InfoNetrix Client Services.
(Detailed company contact information is provided on the web at: www.InfoNetrix.com.)
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-5
Market Horizons™ Report Contents
1. Executive Market Briefing
2.
3.
4.
5.
Marketplace Characteristics
Market Drivers, Issues & Trends
Market Analysis & Future Outlook
Supplier Environment
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-6
Executive Market Briefing
•
•
•
•
•
•
•
•
Market Perspectives
Marketplace Structure & Composition
Prevailing Market Conditions
Market Analysis Synopsis
The 7 Signs of Market Evolution (7 Signs)
Future Market Outlook
Suppliers & Competition
Summary/Conclusions
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-7
Market Perspectives
"Everything that can be said has been
said, but we have to say it again
because no one was listening.”
- Andre Gide (French novelist)
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-8
Market Perspectives
Technology & Innovation
“You don't take technologies to market, you take products
to market. A technology reaches the marketplace if it
supports a product that provides utility and value."
- Alberto Leon-Garcia, IEEE Fellow & Professor, University of Toronto
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-9
Market Perspectives
Electric Utility Reliability Enforcement
“The Edison Electric Institute’s Board of Directors Friday unanimously
adopted a resolution declaring that the North American Electric
Reliability Council should take the lead in formalizing new electric
reliability standards.
Specifically, the resolution suggests prompt action by NERC to
implement a number of strategic initiatives to strengthen reliability,
including: readiness audits of control areas and reliability coordinators;
enhanced compliance performance reviews; vegetation management
surveys; and recommendations tracking.
The role of the Federal Energy Regulatory Commission should be one
of “supporting and providing oversight to the NERC initiatives,”
according to the resolution, which was adopted during the EEI board
meeting here Friday [Jan. 9, 2004].”
- Edison Electric Institute News Release in T&D World Magazine; 12 Jan 2004
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-10
Market Perspectives
Performance-based Regulation (PBR)
“The regulatory purview in the United States has shifted from stranded
assets and generation to the power grid and distribution reliability.
Regulators are becoming increasingly concerned with every issue
relating to the delivery of reliable power to customers…
…The increased regulatory concerns are contributing to a confounding
challenge for utilities — enhance reliability reporting while maintaining
or improving reliability levels. Recent technology advancements have
enabled utilities to more comprehensively report the disturbances on
their system, which has created an artificial decline in reliability
performance. The technologies have improved data gathering beyond
the paper methods of the past, leading to higher levels of reported
customer interruptions in frequency and duration.”
- Impact of Regulatory Policy on Reliability; Warren, Cheryl; National Grid USA Service Company;
(Article in T&D World Magazine; December 1, 2003)
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-11
Market Perspectives
Top GIS Technologies for Gas Distribution
…Pen Computing/Mobile Data was the top geospatial information system (GIS) technology in use by the
natural gas distribution industry in 2002, a report by the Geospatial Information and Technology
Association (GITA) says…
…Following pen computing on the top-10 technology list for gas distributors were global positioning
systems, Internet/intranet, wireless access, data exchange/OGIS, digital orthophotography,
nonproprietary programming and OLE/COM, document management/work flow, satellite imagery, and
spatial data in standard RDBMS…
…The report notes the debut in the top-10 technology list of satellite imagery. "This development
corresponds with a trend in GIT across all industries as the early problems with satellite launches have
been overcome, and this data source emerges as an accurate and cost-effective alternative for
landbase information," the report says. "This is especially true for gas distribution companies, whose
buried assets are generally not visible from aerial photography as are the overhead networks of electric
utilities.”…
…The report notes that "while integration with CIS still tops the list for gas companies, work
management/process automation has appeared in the second spot when it was not even in the
top 10 last year. Along with mobile data collection, this corresponds with the jump in pen
computing and mobile data to the top of the technologies list, reflecting a focus on automating
field processes this year.”…
Excerpts from Geospatial Technology Report 2002: A Survey of Organizations Implementing Geospatial Information Technologies (http://www.gita.org)
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-12
Market Perspectives
Water/Wastewater Asset Infrastructure
“Buried infrastructure often is the largest component of a community
water system’s asset inventory.Water systems maintain more than
1.8 million miles of distribution mains, of which 60 percent is less
than 6 inches in diameter. Nearly 80 percent of distribution mains are
less than 40 years old; 4 percent [over 70,000 miles] are more than
80 years old. The older pipe tends to be in larger systems. Systems
replaced over 50,000 miles of pipe in the past 5 years, at a cost of
over $5 billion.”
US EPA815-R-02-005A; Community Water System Survey 2000; Volume 1: Overview; Office
of Water (4607M); DEC 2002
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-13
Marketplace Structure & Composition
The North American (i.e., US &
Canada) Utilities Marketplace
comprises more than 11,000
utilities with the basic needs and
capabilities required to make them
suitable candidates for the
Geospatial & Field Automation
Solutions addressed by this report
Although there are well over
200,000 electric, gas and waterwastewater utilities, many lack the
sophistication and/or financial
resources for GFAS procurements
In general, a minority of the utilities
in each vertical market sector make
up the majority of GFAS buyers
PART 1: Executive
Market Briefing
North American Utility Market
(GFAS Candidates by Type)
5400
3400
1400
Electric Utilities
Gas Utilities (LDCs)
Water/Wastewater*
(*Estimated minimum Water/Wastewater market size)
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-14
Marketplace Structure & Composition
Electric (by Ownership Class)
•Over 3,500 Electric Utilities in US &
Canada
•Less than 10% account for over
75% of all automation spending
•No major composition changes
expected 2003-07
 A few IOU mergers per year
 Some REC consolidation
 General trend toward fewer
•Regulatory policy is set at federal
level in US; mainly at provincial level
in Canada
PART 1: Executive
Market Briefing
10000
1000
100
10
1
IOUs (US)
IOUs (CAN)
Pr ovincial ("Crow n" Com panie s )
Lg M UNI (US)
Sm MUNI (CAN)
REC (US Only)
Fe de ral
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-15
Marketplace Structure & Composition
Gas (by Ownership Class)
• 6,800 U.S. Oil & Gas Companies
10000
• 21 Major Energy Companies
1000
• 90 Intrastate Pipelines
• 70 Interstate Pipelines
100
• 1,400 Local Gas Utilities
10
• 300 Gas Marketers
• 120 Underground Gas Storage
Operators (415 Fields)
PART 1: Executive
Market Briefing
1
US Oil & Gas Com panie s
Major Ene r gy Com panie s
Inte rs tate P/Ls
Intr as tate P/Ls
Local Gas Utilitie s
Gas Mar k e te r s
U/G Stor age Ope rators
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-16
Marketplace Structure & Composition
Water/Wastewater Market Universe
• Over 160,000 U.S. Water Utilities:
 Community Water Systems
(CWS) serve 93% of US
Population (258.5 Million)
 Non-transient, Non-CWS serve
2-3% of US Population (6.8
Million)
 Transient, Non-CWS serve 5%
of US Population; (12.9 Million)
53,437
• PLUS:
 Over 37,000 Wastewater
Treatment & Collection Facilities
SOURCE
EPA Drinking Water & Ground Water Statistics for 2000,
EPA816-K-01-004; June 2001. Excludes systems in
Commonwealths & Trust areas.
PART 1: Executive
Market Briefing
18,720
89,258
21,107
16,255
Community Water Systems (CWS)
Non-transient, Non-CWS)
Transient, Non-CWS)
Wastewater Treatment Facilities
Wastewater Collection Systems
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-17
Prevailing Market Conditions
Electric Utilities
Principal Market Drivers
 Politics & Uncertainty
 Blackout Issues & Aftermath
 Security Concerns & Funds
 Do more with less mantra
 Interoperability & Standards
 Regulatory Bodies
 FERC (USA)
 Provincial (Canada)
 NERC (Both)
 Economic Stability
 Improved stakeholder
confidence
 Stabilizing municipal tax
base
 Rising demand for services
PART 1: Executive
Market Briefing
Key Issues & Trends
 Security & Reliability
 Continued Uncertainties
 Energy/Utility Stock Values
 Economic Recovery
 Investment Recovery (ROI)
 Holistic Solution Sets
 Simple, Intuitive, Easy-to-own
 Rapid & Measurable ROI
 Asset Management Drivers
 Aging Infrastructure
 Performance-based Regulation
 Other Regulatory & Legislative
Mandates (NERC-1200, etc.)
 Utilities Returning to Core Business
 Shrinking Global Scope
 Diminished Generation Focus
 T&D and Reliability Focus
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-18
Prevailing Market Conditions
Gas Utilities
Principal Market Drivers
 Security Concerns & Funding
 Do more with less mantra
 Interoperability & Standards
 Regulatory Bodies
 FERC (USA)
 Provincial (Canada)
 AGA (Both)
 Economic Stability
 Gas price stability
 Replenished municipal
revenue base (tracks
general economic
conditions)
 Rising demand for services
PART 1: Executive
Market Briefing
Key Issues & Trends
 Security & Reliability
 Continued Uncertainties
 Economic Recovery
 Investment Recovery (ROI)
 Holistic Solution Sets
 Simple, Intuitive, Easy-to-own
solutions
 Rapid & Measurable ROI
 Asset Management Drivers
 Aging Infrastructure
 Regulatory & Legislative
Mandates (GASB-34, SOX, etc.)
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-19
Prevailing Market Conditions
Water/Wastewater Utilities
Principal Market Drivers
 Security & Funding Issues
 Do more with less mantra
 Interoperability & Standards
 Regulatory Bodies
 EPA (USA)
 Provincial (Canada)
 Homeland Security (USA)
 Economic Stability
 Privatization trends
 Replenished municipal
revenue base (tracks general
economic conditions)
PART 1: Executive
Market Briefing
Key Issues & Trends
 Security & Reliability
 Continued Uncertainties
 Privatization
 Economic Recovery
 Security compliance funding
 Holistic Solution Sets
 Simple, Intuitive, Easy-to-own
 Standard, COTS equipment
 Asset Management Drivers
 Aging Infrastructure
 Regulatory & Legislative
Mandates (GASB-34, SOX, etc.)
 Structure/Composition Changes
 Ongoing Utility Consolidation
 Slowed M&A activity
 Future of privatization remains
uncertain
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-20
Market Analysis Synopsis
Business & Economic Recovery
• Business & Economic Recovery
 Business Recovery
• Passing crises (California Power Crisis, FERC Miscues,
Enron Collapse, Accounting Scandals, Round-trip Trades,
etc.)
• Utilities returning to core business (mainly electric)
• Slowed rate of utility M&A activity
 Economic Recovery
•
•
•
•
National/regional economies getting back on positive track
Municipal tax coffers recovering faster than expected
I/T spending increasing again following a 2-year lull
Utility stock freefalls and liquidity problems diminished
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-21
Market Analysis Synopsis
Key Issues & Trends
• Cautious, more conservative projects - but more of them
 Future spending plans call for increasingly larger numbers of
more modest projects among large and small utilities alike
•
•
•
•
Less capital-intensive
Easy to define & justify using simple Cost-Benefits Analysis
Rapid ROI (usually in months)
Tangible short-term results
 Applications moving from platform investments into the field
• Utilities now focused on Application Execution Mode projects;
i.e., those capitalizing on past mega-$ platform investments
• Standardization & open designs have virtually eliminated forklift
replacements of major installations; now mostly incremental
 Security issues remain for web & wireless enablement but
will eventually be resolved due to broad impact across
multiple mass markets
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-22
Market Analysis Synopsis
Future Outlook (2003-2007)
•
•
•
AM/FM/GIS1: Strong growth among smaller utilities
 Increasing rate of adoption by smaller utilities
 Mostly incremental upgrades, expansion & enhancements by largest utilities
 Some replacement or rationalization opportunities with merged utilities
TIS2: Strong growth, mainly among larger utilities
 Continuing declines in conversion offset by increasing demand for
engineering and system integration services, including training and longterm support; increasing outsourcing opportunities among large utilities
FAS3: Very strong growth across all utility types
 Increasing emphasis on operational efficiency, worker productivity and
improved customer service
 Migration from pilot to full-scale deployments
 Principal vehicle for application execution objectives that deliver tangible
value, measurable benefits and rapid ROI
1- Automated Mapping/Facilities Management/Geographic Information Systems
2- Technical & Integration Services
PART 1: Executive
Market Briefing
3- Field Automation Solutions
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-23
Market Analysis Synopsis (Cont’d)
Future Outlook (2003-2007)
• Regulatory & legislative mandates will redefine market drivers:
 NERC-1200 Security Mandate
• Rules initially go into effect Jan 2004 for transmission entities
• Rules become more stringent and impact ALL entities buying or
selling power at the wholesale level in Jan 2005
 Sarbanes-Oxley Act
• Defines new financial reporting rules for corporations in wake of
Enron collapse and corporate accounting scandals
• Primarily an IT issue but will eventually have links in and out of
automation subsystems to validate operational data (Key
impact on investor-owned utilities)
 GASB-34 (Governmental Accounting Standards Board)
• Establishes a new financial reporting model for state and local
governments (Key impact on municipal utilities)
• Biggest change in the history of public-sector accounting
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-24
The 7 Signs of Market Evolution
The
SIGNS
of Market
Evolution
PART 1: Executive
Market Briefing
1. Regulatory Policy & Governance
2. Economics & Investment
3. Technology/Integration/Standardization
4. Data Integrity & System Security
5. Web & Wireless Solutions
6. Enterprise Asset Management (EAM)
7. Customer Care & Satisfaction
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-25
1: Regulatory Policy & Governance
Electric Utilities
• ELECTRIC UTILITIES
 Restructuring will continue despite
recent (2000-2002) setbacks
 US & Canadian markets will
continue to move toward SMD, but
no final plan expected before 2005
 ISO/RTO development will continue
to move forward slowly; some US
utilities (in SE) will likely be slow to
adopt
 NERC-1200 compliance will
profoundly change technological &
economic drivers
 GASB-34 & Sarbanes-Oxley
(SOx) compliance will have
potentially significant long-term
implications among municipallyowned and investor-owned utilities,
respectively
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-26
1: Regulatory Policy & Governance (Cont’d)
Gas Utilities
• GAS UTILITIES
 Ongoing retail deregulation
expected to have little if any
measurable impact on GFAS
spending
 Movement toward data
communications encryption
standard - AGA-12 - is ongoing
 GASB-34 compliance will have
potentially significant long-term
implications for municipallyowned gas utilities, especially as
regards asset management
initiatives
 Evolving safety regulations from
US DOT Office of Pipeline Safety
could create new compliance
requirements and potential
GFAS opportunities
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-27
1: Regulatory Policy & Governance (Cont’d)
Water/Wastewater Utilities
• WATER/WASTEWATER
 Compliance with new financial and
operations reporting mandates have
potentially significant long-term
implications for municipal (GASB34) and publicly-traded (SarbanesOxley) utilities
 Next steps toward securing critical
infrastructure from both physical
and cyber threats face potentially
severe funding issues following
depletion of EPA vulnerability
assessment funding by 2004
 Privatization has slowed - in some
cases reversed - due to absence of
promised benefits. Future of
privatization appears uncertain
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-28
2: Economics & Investment
• Electric Utilities
 Investments in T&D
previously stalled by FERC
miscues & mixed signals
beginning to move ahead
 Return to core business
• Gas Utilities
 Relatively stable investment
outlook but very dependent
on weather and gas prices
• Water/Wastewater Utilities
 Recovering economy will
replenish revenue shortfalls
 Un-funded mandates
(security, financial reporting,
etc.) remain unsolved
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-29
3: Technology/Integration/Standardization
• Technology role has diminished:
 Most market trends are
driven by regulatory and
economic initiatives
 Technical expertise now
second to business skills
• Demand for integration services…
 Limited utility resources
 Rising outsource mentality
• Standards adoption taking hold…
 Fewer forklift replacements
 Improved interoperability:
• Lower cost solutions
• More holistic approach
• Reduced O&M costs
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-30
4: Data Integrity & System Security
• Full impact of new cyber-security
implications & mandates yet to be
felt by utilities or suppliers
 NERC-1200 impact won’t be
fully realized until 2005
 AGA-12 data communication
encryption protocol underway
may have pervasive impact if
broadly adopted
 GASB-34 reporting and
Sarbanes-Oxley compliance
have subtle - but potentially
broad - RTAC implications
• Web & wireless applications still
moving forward despite concerns;
rising demand will require new
hardware/software solutions from
suppliers
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-31
5: Web & Wireless Solutions
• Web & wireless slowed in 2002-03
due to data vulnerability & security
concerns
• Expect both to move ahead as
better solutions emerge in 2004-07
• Specifically…
 Intuitive, browser-based HMIs
 More fiber use, especially at/in
electric utility substations
 Broader (digital) cellular
coverage
 Continued declines in use of
leased circuits
 IEEE 802.11x deployments (i.e.,
Bluetooth, ZigBee, etc.)
 Possible expansion of BPL
(broadband over power lines)
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-32
6: Enterprise Asset Management (EAM)
• Asset Management is an emerging
central theme throughout the utility
marketplace, driven extensively by:
 Aging Infrastructure
• Critical assets nearing end of useful
life (~35-50 years)
• Reduced support staff & resources
• Reaching limits on manual methods
 Regulatory/Legislative Mandates
• Security & financial/operational
reporting requirements forcing
better record-keeping and improved
access to real-time operating data
 Utility Deregulation & Restructuring
• Placing new strains on aging
infrastructure as security, customer
growth and operational efficiency
demands evolve
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-33
7: Customer Care & Satisfaction
•Restructuring driving dramatic
increases in demand for Customer
Touch Point Systems/Applications:
 Outage Management
• Trouble Call
• Fault Detection/Isolation
• Service Restoration
 Work Management
•
•
•
•
W/O Scheduling
W/O Assignment
W/O Processing
W/O Tracking
 Workforce Management
• Crew Allocation
• Crew Dispatch/Recall
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-34
Future Market Outlook
Automation & I/T Trends
Impact & Importance of Automation & IT Initiatives Among Utilities
Proximity to core business
External Application
Development
Call Center
Operation
SCADA
Systems
Integration
Asset
Management
Mission-critical
Internet
PC Maintenance
Remote Metering
Potential business benefits achievable
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
SOURCE: DATAMONITOR
1-35
Future Market Outlook
GFAS Sector Trends: AM/FM/GIS Systems
• AM/FM/GIS Project Opportunity Outlook (2003-2007)
 Small Projects* - Modest to rapid increases
 Medium-sized Projects** - Rapid increases
 Large Projects*** - Modest increases
• AM/FM/GIS Average Selling Price (ASP)Trends
 Small Projects - Modest to rapid increases
 Medium-sized Projects - Modest increases
 Large Projects - Nominal to no increases
• AM/FM/GIS Market Value Outlook
 Small Projects - Rapid increases
 Medium-sized Projects - Rapid increases
 Large Projects - Modest increases
*Small Projects: <$200K
PART 1: Executive
Market Briefing
**Medium Projects: ≥$200K ≤ $1M
©2004 InfoNetrix LLC All Rights Reserved Worldwide
***Large Projects: >$1M
1-36
Future Market Outlook (Cont’d)
GFAS Sector Trends: TIS
• TIS Project Opportunity Outlook (2003-2007)
 Small Projects - Modest to rapid increases
 Medium-sized Projects - Rapid increases
 Large Projects - Modest to rapid increases
• TIS Average Selling Price (ASP)Trends
 Small Projects - Modest increases
 Medium-sized Projects - Modest increases
 Large Projects - Modest increases to flat
• TIS Market Values
 Small Projects - Modest to rapid increases
 Medium-sized Projects - Rapid increases
 Large Projects - Rapid increases
*Small Projects: <$200K
PART 1: Executive
Market Briefing
**Medium Projects: ≥$200K ≤ $1M
©2004 InfoNetrix LLC All Rights Reserved Worldwide
***Large Projects: >$1M
1-37
Future Market Outlook (Cont’d)
GFAS Sector Trends: FAS
• FAS Project Opportunity Outlook (2003-2007)
 Small Projects - Rapid increases
 Medium-sized Projects - Rapid increases
 Large Projects - Rapid increases
• FAS Average Selling Price (ASP)Trends
 Small Projects - Modest increases
 Medium-sized Projects - Modest increases
 Large Projects - Modest increases
• FAS Market Values
 Small Projects - Rapid increases
 Medium-sized Projects - Rapid increases
 Large Projects - Rapid increases
*Small Projects: <$200K
PART 1: Executive
Market Briefing
**Medium Projects: ≥$200K ≤ $1M
©2004 InfoNetrix LLC All Rights Reserved Worldwide
***Large Projects: >$1M
1-38
General Market Profile
GFAS Market Values
Annual Expenditures ($ Millions)
$10,000
$1,555.6
$1,000
$157.6
$179.4
$215.0
$298.1
$472.7
$390.4
$100
$10
$1
2002
PART 1: Executive
Market Briefing
2003
2004
2005
2006
2007
©2004 InfoNetrix LLC All Rights Reserved Worldwide
2003-07
1-39
General Market Profile
Market Composition & Contributions
Annual Expenditures ($Millions)
$500
$123.3
$450
$400
$97.5
$350
$156.7
$73.5
$300
$127.6
$250
$54.8
$200
$37.7
$150
$43.4
$37.4
$100
$89.0
$43.3
$92.7
$82.6
$53.3
$106.9
$165.3
$135.6
$192.7
$50
$0
2002
2003
AM/FM/GIS Systems
PART 1: Executive
Market Briefing
2004
2005
2006
Technical & Integration Services
©2004 InfoNetrix LLC All Rights Reserved Worldwide
2007
Field Automation Solutions
1-40
Suppliers & Competition
Market Leadership: AM/FM/GIS
Others
Autodesk
• The Top 4 AM/FM/GIS
Suppliers represent about 6575% of the AM/FM/GIS
Sector:
 Autodesk
ESRI
 ESRI
 GE Energy
Intergraph
PART 1: Executive
Market Briefing
GE Energy
 Intergraph
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-41
Suppliers & Competition
Market Leadership: TIS
• The Top 6 TIS Suppliers
represent about 40-50% of the
TIS Segment:
Others
ASI
Avineon
 ASI-Analytical Surveys
 Avineon
 Enspiria Solutions
 ESRI (via partners)
 KEMA
Enspiria
ESRI
Rolta
KEMA
 Rolta
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-42
Suppliers & Competition
Market Leadership: FAS
• The Top 7 FAS Suppliers
represent about 60-70% of
the FAS Segment:
Axiom
Others
CES Intl
 Axiom/Mobility
 CES International
CGI
Viryanet
MDSI
GE Energy
LogicaCMG
 CGI
 GE Energy
 LogicaCMG
 MDSI
 Viryanet
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-43
Summary/Conclusions
Supplier Challenges & Critical Success Factors
Supplier Challenges
 Asset Management tools
that deliver financially
 Communications solutions
that are innovative yet
affordable and reliable
 System solutions that
embrace regulatory
mandate compliance
• Facility & Cyber-security
• Financial Reporting
 Economic uncertainty
 Utility market restructuring
Critical Success Factors
 Price & Tangible ROI/CBA
 Open standards, open
integration & interoperability
 Reputation & Reliability
 Ability to augment good products
with exemplary support
 Products that embrace standards
& interoperability
 Holistic, simple, intuitive solution
sets
• Deregulation
• Privatization
• M&A activity
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-44
Summary/Conclusions
Utility Challenges & Critical Success Factors
Utility Challenges









Cyber-security issues
Asset Management issues
Communications transitions
Staffing deficiencies
Regulatory compliance
Reduced staff & resources
M&A activity
Accommodate restructuring
Performance-based
regulation (PBR) compliance
 Focus on core business
PART 1: Executive
Market Briefing
Critical Success Factors
 Return to core business
 Embrace standards, COTS
equipment & interoperability
 PBR compliance
 Deliver tangible ROI
 Meet regulatory compliance
requirements
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-45
Summary/Conclusions
Short-term & Long-term Assessments
•
•
•
Short-term (2003-04):
 Rise of automation/IT role in operational reliability & security
 Rapid, sustainable growth in all 3 GFAS segments
 Increasing emphasis on outage management, work management
and mobile workforce processes
Long-term (2004-07):
 Increasing investments in field application execution
 Escalation of geospatial technologies into enterprise IT
 Increasing emphasis on standards and interoperability at device,
data and enterprise levels
Key Utility Wants, Needs & Expectations:
 Intuitive; easy-to-own, operate & support solutions
 Properly supported business cases (with ROI/CBA)
 Solutions that address rising Asset Management objectives
 Clear, viable migration paths to new solution sets
 Attention to compliance with regulatory mandates
PART 1: Executive
Market Briefing
©2004 InfoNetrix LLC All Rights Reserved Worldwide
1-46