We predict that the next wave of innovation and M&A will focus on bringing monitoring capabilities together into a fully automated asset maintenance lifecycle.

The adoption of remote asset monitoring is accelerating and creating new opportunities for vendors, but platform convergence is poised to transform the category. In this GrowthBit, I’ll look at this dynamic ecosystem, explore the factors driving its expansion and examine two of the verticals we think will see the greatest growth in the near future.

A turning point for asset maintenance technology

For nearly two years, LLR has closely tracked the evolution of the asset maintenance ecosystem. Our portfolio already includes several companies that focus on elements of the maintenance workflow, which spans the asset lifecycle from issue identification to remediation.

Some of the most prominent product categories in this value chain include supervisory control and data acquisition (SCADA), asset performance management (APM), enterprise asset management and computerized maintenance management systems (EAM & CMMS) and field service management. These categories solve the pain points of asset-intensive industries and drive ROI by optimizing asset efficiency and longevity, meeting compliance standards and reporting best practices, improving safety and reducing capital, labor and maintenance costs.

But even more promising is the imminent convergence of these technologies. We predict that the next wave of innovation and M&A will focus on bringing monitoring capabilities together into a fully automated asset maintenance lifecycle.

When all these platforms and point solutions can talk to one another, the result is a system that proactively detects issues, dispatches a technician with proper context on the issue and necessary parts required, and records every event and outcome in a system of record that becomes more intelligent and effective over time. This is truly groundbreaking for industries that routinely manage thousands of assets.

Remote Asset Monitoring Value Chain

While this convergence will bring value to every asset-intensive industry — including manufacturing, commercial real estate management, and public infrastructure — we believe infrastructure and commercial real estate are two verticals offering some of the greatest opportunities for market growth.

Strengthening critical infrastructure

Critical infrastructure will be a major focus area for government investment. With new infrastructure coming online and aging infrastructure connecting for the first time, the need to connect, monitor and manage this asset network is crucial.

Water infrastructure has historically lagged other asset monitoring verticals but is gaining traction.

Water is both an asset-intensive utility and one in which assets are distributed, making it difficult to detect problems ahead of time. Many of these assets, such as lifts and pump stations, also tend to be unmanned, a monitoring and maintenance challenge exacerbated by the impact of COVID on workforce availability. Real-time asset monitoring enables essential workers to identify anomalies, log the data into the system of record and remediate the issue, thereby reducing the need for routine inspections and the risk of unplanned downtime.

While the need for remote management is urgent, much of the market is fragmented and underserved, with the majority being unvended or served by legacy SCADA systems. We see significant opportunity for advancing the monitoring of municipal water and wastewater infrastructure including collections infrastructure, lift stations, pipelines and other distributed infrastructure.

Energy infrastructure is similarly ripe for innovation. Utilities are investing billions in the electric grid to modernize aging systems, improve grid reliability and integrate new sources of renewable power. Moving to cleaner power sources while boosting reliability, resilience and security is a tall order that can’t be filled without comprehensive digital strategies to replace traditional asset management.

As with water, energy must function with fewer on-site workers. Remote monitoring solutions will help operations and maintenance providers across the power and utility value chain track the condition, voltage, temperature, vibration and maintenance status of critical assets, reduce costly, unplanned downtime and improve confidence and visibility in production.

We expect the next industry leaders in asset management to fully automate the equipment lifecycle, creating an ecosystem that can be monitored, controlled and audited in real time to improve capital planning and resource allocation and enhance asset longevity, performance and production.

Connecting the built environment

The addressable market for commercial real estate is more mature, but still offers significant room for growth. OEMs have begun to embed remote monitoring capabilities into their own equipment, including HVACs, elevators and freezers, but they struggle to connect these assets to networks and equipment outside of their own product lines. As a result, the real opportunity is in software, which has the potential to address the issue of visibility across a network of assets and systems.

Building operations include access control, air quality monitoring, energy management, maintenance and more. Each product category provides specific and valuable information, but the market lacks an aggregation layer that contextualizes siloed data to clarify the real-time condition status of critical equipment and prompt corrective action. At a time when skilled technicians are in short supply, service calls can take weeks, and supply chain disruptions are creating long wait times for spare parts, optimizing maintenance workflows and identifying problems sooner is a priority. Software that delivers this functionality will increase tenant satisfaction and owner profitability across all aspects of property management.

The path to growth for asset maintenance is vertical

Remote asset maintenance is poised for transformation as a rapidly maturing solution category that is moving towards end-to-end monitoring across the asset lifecycle. However, we are still only at the beginning of the journey toward integration and consolidation.

So far, companies that have tried to bring this level of convergence to multiple segments have bitten off more than they can chew and failed to deliver on the promise: GE Predix is one of the best known examples. However, those that focus on a vertical niche have seen success. At the growth stage, vertically specific product strategies are often the best way to deliver both the level of visibility and the specialized functionality that customers are looking for.

Here’s the bottom line.

We believe remote asset monitoring is trending toward convergence, and we believe the next wave of growth and innovation in remote asset monitoring will happen vertically. Connecting siloed data sources within specific verticals will unlock considerable value for asset-intensive industries. We see tremendous opportunities for companies that align themselves with promising verticals such as infrastructure and commercial real estate, focus on technology convergence through innovation and M&A, and create end-to-end solutions that deliver full automation and visibility across assets throughout the maintenance lifecycle.