Testing & Measurement: How Covid-19 is Forging New Directions

Like many other business segments, the testing and measurement (T&M) industry — an umbrella category for the providers of hardware and software that collect data about physical objects or processes — has been buffeted by Covid-19. But unlike businesses that suffered under pandemic-imposed restrictions, the T&M sector has experienced growth that was accelerating even before Covid-19. To understand where the industry is heading now and where its opportunities lie, Industrial Exchange recently gathered a group of T&M industry participants and experts.

Participants at the roundtable, moderated by Industrial Exchange CEO Jon Cooper, were:

  • Shely Aronov, Founder and CEO, InnerPlant, which integrates synthetic biology, sensor systems and data science to create living sensors.
  • Chris Bergman, Assistant Vice President, Dorilton Capital, a private equity firm investing in middle-market companies.
  • John Biagioni, President, Dynisco Plastics, a provider of sensing and polymer testing equipment.
  • Nikolaus Correll, Associate Professor, Department of Computer Science, University of Colorado
  • Shyarsh (Shy) Desai, Founder and President, WellAware, an industrial IoT data company.
  • James Logan, CEO, OneRain, a company of rainfall, water and weather monitoring, and CEO, High Sierra Electronics, which designs and manufactures environmental monitoring systems.
  • Joe Sieber, Director of Reporting and Analytics, Versa Integrity Group, a portfolio company of Dorilton Capital and a provider of inspection and maintenance repair services to offshore oil platforms and industrial, refining and chemical plants.
  • Saar Yoskovitz, Co-founder and CEO, Augury, an industrial AI company that monitors and diagnoses machines and provides actionable recommendations.

Their comments, edited for clarity and brevity, follow.

Jon Cooper: Let’s begin with lessons learned from the pandemic. How have corporate behaviors changed? John, your company has been shifting from being almost solely a hardware provider to providing services to a variety of sectors. Could you give us a sense of the type of value you’re providing now that you couldn’t before?

John Biagioni: We focus on small and medium industrial companies, not large companies that can afford DCS (distributed control systems). But smaller companies still need information for the daily work they do. We’ve had an IoT platform on Microsoft Azure services for a few years, so we were ready for remote work before Covid-19. We’ve seen that the information and insights derived from it, not about the actual device, is what’s valuable now, especially in the plastics markets we serve that are about 30 years behind everyone else in terms of technology adoption of technologies.

One thing we saw at our client companies during Covid-19 was that people who had the machinery knowledge couldn’t show up to work. Our tech support calls went through the roof. But by having our instruments connected to the cloud, I could dial into them, look at the environmental conditions around them, look at the parameter settings, and pretty much determine whether or not something was wrong. It was a huge benefit. We did a remote calibration in Venezuela and a remote installation in Ecuador, which never had been done before. I’m already collecting more information than the customer could ever use, so when they determine that they’re ready it, I’ll be prepared. I store 10 years’ worth of data as part of the subscription service.

For example, it’s amazing what people don’t understand. If you’re not an engineer, you might not know that electronics circuits are designed to run across a certain input voltage. When the voltage is above or below that range, bad things usually happen, but sometimes they don’t. Wouldn’t it be nice to know when you had a voltage event and survived, so that you could then do roadblock detection on the material that was made during the event and check it? Right now, no one knows when those things happen. But we see it. So there’s a lot of stuff that you can do once the T&M tools are out there and connected; we’re just scratching the surface.

Jon Cooper: Even as they enhance quality assurance and quality control, it seems as if your products also are moving up your customers’ value chain.

John Biagioni: The products are changing things in a couple of ways. First, is in testing, which is tied to standards that are developed for lab instrumentation. So we’ve developed the correlation between our online devices and the lab devices, which means you don’t have to wait an hour to know that you’ve had a bad process. That means huge gains in productivity and, eventually, a manufacturing world without waste. That’s the core to what we’re doing.

Saar Yoskovitz: We’ve found that Covid-19 led to a focus on agility, resilience and supply chain flexibility. So many manufacturers were in distress. Some had to squeeze as much as possible from, say, two production lines and then put the rest to sleep. Others, like toilet paper makers or pharmaceutical companies, saw double and triple the demand. So everyone had to be more agile and more productive while at the same time collaborate remotely because people were in quarantine or facilities were in lockdown. All these forces have been drivers of digital technologies.

Jon Cooper: Joe and Chris, your customers are mostly in the oil, gas and petrochemical business. And you’ve also developed a test and measurement service business to complement the general inspection business you operate. With Covid-19 and depressed oil prices, what kind of conversations have you been having with your customers? Are you seeing things in your apps that you otherwise wouldn’t see?

Joe Sieber: Actually, this past year has been really helpful for my group. Just one example: We developed mobile applications that permit multiple people at our client companies to sign reports and other documents so they don’t have to gather in one spot to sign a physical piece of paper.

Chris Bergman: There’s no denying that 2020 was a difficult time for the oil and gas industry. We saw a lot of folks pushing off maintenance as well as routine servicing activities, which is where we come into play. Obviously, those activities will come back, and customers are pushing us to do servicing more efficiently going forward. That will require us to use technology so we can reduce costs while also doing things faster and better. And a lot of that means figuring out what the customer truly values.

Jon Cooper: Chris, you help you portfolio companies decide whether to buy or build — and maybe a combination of the two — in order to deliver want customers want. What is your process for that?

Chris Bergman: The first element in the build or buy decision, obviously, is the financial return component. The second is the more strategic or skill-set part, which is a little bit less quantifiable, but nonetheless very important. We have identified a few specific technology initiatives that are being pushed forward, each of which has its own build-or-buy trade-off. Since we have a strong group of in-house people, there are many initiatives we will build. The main benefit of that is creating a highly differentiated and customizable solution that appeals to ever-changing customer needs. Obviously, the trade-off is that it costs time and money to create that, so the effort has to be profitable. What that really means is persuading the customer of the value so they are willing to go pay more for the service.

Jon Cooper: Shy, what data are you able to extract from your devices that your customers in the oil and gas industry are finding valuable?

Shy Desai: There are two components to what’s driving change. The first is the tremendous pressure for efficiency. With our remote monitoring, we’ve been able to help companies require fewer people to handle production or manage pipelines. We’ve also been able to reduce processing costs. For example, there are many cases where there may be over-injection or under-injection of a chemical. Our systems pick that up and we can control them remotely. Not only can we help lower unit costs, but our information cuts wastage and spillage. What we’ve done has been particularly helpful for smaller and mid-sized companies, which don’t have the DCS systems of big companies, as John noted.

That’s the economic part. The other are the ESG, or economic, social and governance aspects. We’re starting to say that a company’s chief compliance officer, or someone responsible for sustainability, should have access to much of the same dashboard data we already produce to reduce their carbon footprint, improve safety and address other ESG issues. Until last year, I felt that this area was lagging, but things are starting to pick up. I’m seeing companies related to water and power starting to realize they have a mission and they can be doing a lot more with the data we can give them.

Jon Cooper: James, your companies are part of a private equity firm, aren’t they, and does that firm have ESG policies or guidelines for its portfolio companies?

James Logan: Yes, my companies are part of Advanced Environmental Monitoring Holdings, or AE Monitoring, which is one of a family of companies of Union Park Capital, a Boston-based private equity group that specializes in lower middle market industrial technology companies. All the firm’s portfolio companies are working to meet the ESG requirements of our investors.

Joe Sieber: What’s interesting to me in talking about ESG is that we’re talking about things are aren’t well defined. In agriculture, for instance, there is a lot of talk about sustainability, but no one is saying what that is. You can’t improve what you can’t measure, and you can’t measure something if you don’t define what it is that you’re measuring. I believe that nothing’s really going to change really until we have the right data being integrated into the system, and that eventually will come.

Jon Cooper: Since we’re nearing the end of our discussion, I wanted to ask if there are any indicators of future economic conditions that might be inferred from the data coming out of your systems?

John Biagioni:  Well, fracking activity is increasing. I can guarantee you there’s more fracking going on right now than there was four months ago.

Shy Desai: We’ve definitely seen an uptick there, too. And we’re seeing a lot of middle market companies seeking newer technologies at better price points. So that’s a good validation of economic conditions improving. And let me add something about ESG. From a poll we did on a recent webinar, it sounded like most organizations are just getting going on ESG. It appears that reporting on ESG is very manual and broken, and it’s not clear who the decision-makers are. I’m sensing that over the next two to three years, T&M companies will be serving not just our traditional audience within a company, but also very different audiences within the enterprise.