Smart electric motor: Evaluation of business potential for digitalisation in the large electric motor industry

Abstract

Digitalisation is seen to have contributed to the demise of 50% of the Fortune 500 companies since 2000. The large electric motor segment is not immune to this changing business landscape and must evolve to survive. This sector is experiencing declining revenues as traditional hardware‐sales‐focused business models have proved inadequate to address a reduction in profitability. New business models that exploit new digital value streams are to leverage the value from emerging technologies of the Industrial Internet of Things, Big Data and the associated emerging predictive analytics. These can be optimised via Cloud Computing and delivered utilising Platform as a Service software solutions to reduce cost and support scalability. The missing link in the justification chain for the installation of digitalisation packages on large electric motors is a model to determine if and which package sections return the most customer value and, therefore, sales opportunities for the supplier. In this context, this paper introduces the concept of the smart electric motor. The focus is on the oil and gas industry, where digitalisation is already deeply engrained in practice and shows how risk‐based decisions can deliver a profitable project through new business models and digitalised solutions to reinvigorate this traditional industry.