In a recent LNS Research article, we defined the Industrial Energy Management (IEM) Framework, explaining the need for companies to align leadership, business processes, and technology around a common model of Operational Excellence.
In this article, we'll explain the various types of IEM software vendors in the marketplace today and the different approaches many of them take to optimizing procurement, use, and reporting of energy across operations.
Pure-Play Software Providers
This is perhaps the type of company that first comes to mind for many executives when they think of IEM software. Over the past ten years, there have been a number of venture funded start-up software firms that have developed solutions for IEM. Some of these companies have already been acquired by the other vendor types listed below, while others are still standalone or are attempting to develop a full Enterprise Sustainability Management (ESM) software suite.
To paint this space with broad brush strokes, most of these start-ups are cloud-based and focus on an enterprise-wide deployment of measuring, visualizing, and reporting on the use of energy. Although, there have been some vendors that focus on the procurement or process optimization spaces as well. The pure-play space is also often based on a “top-down” approach that may or may not be a good fit for industrial clients. Some of these pure-play companies that started in manufacturing have slowly moved to other areas like retail or commercial buildings, while other pure-plays are doubling down on the industrial space.
From our upcoming Solution Selection Guide, a sampling of the pure-play vendors that will be highlighted includes:
- FirstCarbon Solutions
- Hara Software
- PowerIT Solutions
Enterprise Software Providers
The enterprise software space has become more and more consolidated over the recent years with large ERP companies like SAP, Oracle, and Infor among others acquiring many smaller ERP competitors as well as acquiring complementary companies in many other areas of software outside of ERP. This has included Business Intelligence (BI), Mobility, and Cloud on the tech side and Product Lifecycle Management (PLM), Supply Chain Management (SCM), Human Capital Management (HCM), Manufacturing Operations Management (MOM), Service, and many more on the value chain side. More recently these acquisitions have also included ESM, which encompasses IEM, Environment Health and Safety (EH&S), Operational Risk Management (ORM), and Product Stewardship among others.
Over time, LNS expects to see enterprise software providers continue to build capabilities in IEM and ESM both through organic development as well acquisition. It should also be noted, by their very nature, almost all of the enterprise software vendors take a “top-down” approach to IEM.
From our upcoming Solution Selection Guide, a sampling of the enterprise software vendors that will be highlighted includes:
Industrial Automation Providers
Industrial automation providers have been helping industrial companies optimize the use of energy in plant operations for about as long as there have been plant operations. This optimization, however, has not always been through software applications. More often than not it has been through motors, drives, control systems and more.
Over the past 20 years, to varying degrees of success, many of the industrial automation companies have also developed industrial software offerings in the form of Manufacturing Execution Systems (MES), Enterprise Manufacturing Intelligence (EMI), and more. Over the past several years, many companies have added to this portfolio with IEM offerings. In many cases, this software also complements existing business units in the building automation space.
Although both industrial automation and enterprise software providers have made acquisitions in the space, they generally take very different approaches. Where the enterprise software providers generally aggregate information at the enterprise level from high-level data like meters and billing, industrial automation vendors are more likely to take a “bottom-up” approach using very detailed asset and sub-metered data to improve visibility and in some cases achieve closed-loop process optimization.
From our upcoming Solution Selection Guide, a sampling of the industrial automation Providers that will be highlighted includes:
- Schneider Electric
- Rockwell Automation
Energy Services Companies (ESCOs) and Consulting Companies
ESCOs and consulting companies generally take a services-based approach to IEM. Very often, the entry point is an energy audit or equipment upgrade that is paid for with energy savings. However, as is the case with every energy efficiency project, degradation of performance begins immediately after a project is complete. To help ensure benefits are achieved and maintained over the long term, many of these companies use IEM to monitor ongoing savings or achieve the ongoing commissioning of equipment with energy efficiency/optimization.
Some of the companies in this space have also either developed or were founded around capabilities in demand aggregation or demand response and are now adding on IEM capabilities. In each of these cases, IEM is a nice complement to the existing business, but as with all services-based businesses, software can sometimes come second. This can be the right approach for some industrial companies that like the economic model and service approach of an ESCO, however, some companies may desire to purchase through a more traditional model.
From our upcoming Solution Selection Guide, a sampling of the ESCOs and Consulting Companies that will be highlighted includes:
- Constellation Energy
- PE International
Then there are of course those companies that don’t fit nicely in the categories we work so hard to define. One company that comes immediately to mind in this regard is IHS, a company that is well known for data, expertise, and know-how (not necessarily software, although this is definitely changing). Nonetheless, IHS has invested heavily in ESM and subsequently the IEM space over the past 5-7 years and now has one of the industry’s leading portfolios.
Another company that comes to mind in this regard is OSIsoft. Most know this company as a data historian or “infrastructure” company. Again, although OSIsoft is not well-known as a software application provider, the data OSIsoft has access to and the reporting/visualization capabilities OSIsoft provides makes them a player in the space.
When it comes to these companies that don’t fit into traditional areas of the software space, to properly evaluate them requires looking both at existing relationships your company may have with the company in other areas, how well the software fits the particular needs of your company, and if the approach and culture of the two companies are a good fit.
From our upcoming Solution Selection Guide, a sampling of the other software vendors that will be highlighted includes:
So Who to Choose?
The differences in type and approach of software vendors in the IEM space can often be surprisingly large. Over the coming months LNS Research will post additional articles examining “Top–Down vs. Bottom-Up vs. Integration & Orchestration” and “Procure vs. Use vs. Report." For those of you looking for even more in-depth analysis of particular vendors, we will also be launching both a best practices guide and solution selection guide to help companies decipher these differences with more clarity and make better software decisions.
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