Changes already seen in a wide range of other industries are starting to influence the industrial coatings market, too. Catalysed by digital transformation, the ability to use data to monitor industrial environments means coatings companies will increasingly offer wider services to complement the physical paint that will still remain at the core of their offering. By Brian Balmer, Industry Director, Performance Materials, Frost & Sullivan
Services will not replace coatings. A physical barrier to environmental hazards will remain essential. For the owner of any asset that needs protection, maintaining the performance of this barrier has always been a major undertaking.
The coatings industry is clearly moving away from a model based solely on producing litres of paint. Data monetisation, catalysed by digital transformation, will transform the industry and open pathways to potential new customers.
In this article, we explore three areas that indicate a strong future for “coatings as a service.”
Digital Transformation and X-as-a-Service
Figure 1 shows how the digital transformation of the paints and coatings industry will take place across seven domains. Frost & Sullivan’s latest research, Global Digital Transformation in Paints and Coatings, 2019, tracks the digital transformation of the global paints and coatings industry and seeks to identify future opportunities for further use of this technology across these seven domains.
The concept of “X as a Service” is gaining popularity in many industries. The benefits are often clearest in markets that previously required high capital outlays by the customer, from consumers buying a car (mobility as a service) to hospitals buying imaging equipment (radiology as a service). Both of these concepts are predicted to be relatively mainstream in 10 years.
With coatings, the paint itself is not a large capital outlay compared to the asset it will protect. But the daily task of ensuring that the coating is doing its job can be expensive. And if data can help reduce this burden, customers stand to benefit.
The need to build sensors, generate meaningful data, analyse it, and use the outputs to make improvements means that new partners and service providers will enter the coatings ecosystem. Nevertheless, the paint producers will remain at the centre. Many of the key developments are coming from these coatings producers. Projects are now running with the aim of using big data and AI to improve the efficacy of protection. By helping their customers implement better predictive maintenance schedules, these coating companies are well-positioned to offer coatings as a service.
Digital transformation trends have had a major impact on the decorative paint market. Augmented reality has revolutionised how they are marketed, using digital room visualizers. Visualizers for use at home will be combined with a digital revolution in retail stores as well.
The trend of enhancing paint retail stores with digital experiences began in Asia. In India, for example, Asian Paints has been developing this concept since 2008. The use of this concept will accelerate in the future as coating companies move towards the coating-as-a-service concept.
As customers use this service, rather than merely buying paint, retail stores will remain crucial as a centre for face-to-face discussions with the service team. This contrasts sharply with the general growth in online shopping—at the expense of retail stores—in most retail sectors.
Substantial changes in downstream industries such as marine are creating an enormous appetite for digital support from coatings companies as suppliers. Digital products and digital customers are often intertwined.
At the same time, coatings companies are beginning to generate large volumes of data on the performance of their coatings when they are used in the real world. This generation of data is poised to explode, but challenges remain on the hardware side. Over the next 20 years, there will be a massive increase in the use of connected sensors within coatings. When these sensors can be connected to a system that monitors the overall status of an asset, it will unlock enormous potential.
AkzoNobel’s Intertrac Vision digital tool is an excellent example of this. The tool uses a big data solution to help customers of the company’s marine coatings business. Data from sensors on the ships owned by these customers helps to optimise their use of coatings.
A key trend in the future will be accessing the data that could be generated within the coatings industry.
Paints are used in most instances to perform the important task of protecting an asset. Whilst the cost of coatings is relatively low, monitoring them requires a clear understanding of the customer’s assets.
A major trend for the future will involve the use of digital technology by coatings companies to build a revenue-generating service that will help customers further enhance the durability of their assets.
Before this can happen, however, there are several challenges to overcome, including:
- Connecting the physical (coatings and sensors) and digital (analytics) environments
- Combining many disparate sources of data in a way that will create more insights; for example, by implementing a data lake concept
Many aspects of digital transformation in coatings emphasise the importance of integrated thinking. Asian Paints is particularly strong in leveraging this concept. In March 2018, the company launched a new service model, PaintTotal, under which dealers offer services using their own set of resources. The company said the entire process is backed by a data architecture that funnels information to all sets of users. This emphasis on data architecture is just one aspect of how Asian Paints is building integrated thinking into its own digital transformation.
The concepts of data monetisation and coating as a service will impact all areas of the coatings industry, from protective coatings (asset management as a service) to architectural paint (delivering a new style to the customer’s home and not just a tin of paint). They will also allow coatings companies to cater to new customers.
If the example of other industries can be followed, these concepts could become mainstream in the next 10 years.
Brian Balmer is an Industry Director for performance materials research at Frost & Sullivan. He has 20 years of experience researching coatings and related materials markets.