Engineering analytics spend projected to rise to $27 billion by 2017: report
Engineering analytics (EA) that is predicted to make way for driverless highways in the near future is projected to have spending of up to $27 billion by 2017. EA has aided verticals such as the automotive, aerospace, healthcare, energy and industrial verticals and transformed the way their businesses operate, contributing to increased revenue and efficiency.
EA refers to the derivation of meaningful insights by processing information from physical machines. It has almost limitless applications and provides a significant opportunity for Original Equipment Manufacturers (OEMs), suppliers and service providers to differentiate themselves in the new connected-machine dominated technology era.
According to a report released by Zinnov, a globalization and market expansion consulting firm, in its latest Engineering Analytics Report 2013, said that EA spending can be classified into three categories.
Firstly engineering spending-represents the investments made by OEMs and Tier suppliers on addressing the potential opportunity, and comprises the biggest segment with nearly 60 per cent ($7.1 billion) of overall EA spending; secondly, analytics spending, referring to investments by OEMs and end customers on analytics infrastructure such as data warehousing, software licensing, software maintenance and analytics services and consulting ($3.7 billion); and lastly System Integration Services, which is the spending by end customers on system integration services of EA components ($1.8 billion).
This total spending, currently at $12.6 billion, is expected to increase to $27 billion by 2017 driven by an expanding EA market.
In comparison, the study revealed that EA-related benefits are currently estimated to be close to $250 billion and expected to rise to nearly $500 billion by 2017, primarily in the area of improved efficiency.
The industrial vertical forms the largest part of the EA spending due to large engineering and SI spending, with a total spend of $3.9 billion. This is followed by energy, which spends $3.2 billion; and automotive, which spends $2.1 billion. The healthcare and aerospace sectors currently spend $1.8 billion and $1.7 billion, respectively. However, the largest segment of the addressable EA market is energy, which is growing at CAGR of 22.4 percent, followed by industrial which is growing at 18 percent.
Nearly 55 percent of the overall EA spending by OEMs, suppliers and end customers is addressable by service providers. The addressable market, currently at $5.4 billion, is set to increase at a CAGR of 22.4 percent to $14.8 billion by 2017. System development comprises over half this market, at 57 percent, followed by system integration at 22 percent and managed services at 21 percent.
Product engineering service related activities within system development forms the largest part of the addressable market. Growth will be driven predominantly due to increased spending by OEMs and Tier-I suppliers as well as increased adoption by end customers.
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