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Early detection and prediction of mechanical malfunction of machinery by sound analysis

Periodic Reporting for period 1 - neuronSW (Early detection and prediction of mechanical malfunction of machinery by sound analysis)

Reporting period: 2018-02-01 to 2018-05-31

The loss of production, when critical machines brake is costly for any company. Tangible costs (lost capacity, lost production, direct labor, lost innovation, etc.) are directly hitting the financial performance. Current solutions do not solve the problem due to low digitalization. To implement predicting maintenance, companies must overcome challenges linked to the complexity of diagnosing mechanical malfunctions, especially considering that they are operating legacy systems and machinery which have no digital interface. And in fact, in Europe, 77% of machines have no digital interface or run on old, legacy systems and as a consequence are very hard to monitor. Precious measurement would require hundreds of sensors attached to all moving part - which would be expensive and technically infeasible. As a result, only 13% of companies have predictive maintenance systems.

Neuron Soundware (NeuronSW) is an innovative breakthrough solution combining advanced algorithms, machine learning and big data analysis to emulate the human auditory cortex enabling the early detection and prediction of mechanical malfunction of machinery. Through NeuronSW, manufacturers achieve intelligent audio diagnostics to monitor the key machinery equipment using the sound they generate.
The Phase 1 concluded that NeuronSW solution for industrial assets will be a SaaS provided via an IoT cloud platform rather than sold as standalone solution. This strategy has been decided on base of values that IoT platforms provide in the technical feasibility, but also from the commercialization perspective. NeuronSW was proven to be superior to the current state of art and competing solutions solution does not exist today, thus NSW would be the first one to commercialize it.

During Phase 1, the Minimum Viable Product (MVP) and product development plan was defined. The MVP has been narrowed down for the first key applications. Project resource and project risks were evaluated and a budget of €1.41 M was estimated.
Contacts were made and negations took place between NSW and key partners in regards to the product development phase, but also for the commercialization phase. During the product development, the focus area will also be IP Management, to secure the future commercial benefits. Pilot users for the validation during product development were secured by own means.

During Phase 1, the target market segment of large companies and more than 5.3 million companies, active in Manufacturing, Construction and Transportation was assessed. In our initial assessment, this target market will give substantial market opportunity for the commercialization steps after Phase 2, thus generating significant profit (€507 M) and providing an attractive ROI of 307 over 5 years. Market barriers were evaluated and a commercialization as well as a communication plan prepared.
During Phase 1, the impact of the new product development and commercialization on the company was better understood and aligned with the overall business and financial strategy. The NSW team is fully committed to develop final solution and the company is financially solid to cover the co-financing part of the Phase 2 project.

Overall, Phase 1 provided time and resources to research the market, and better understand the use cases. Also, dozens of discussions took place with potential stakeholders, based on which NSW was able to better define the objectives and the next steps. In summary, Phase 1 convinced the management of NSW to further pursue the idea and to prepare next steps towards the product development, to be conducted also with the help of Phase 2 of the Horizon 2020 grant scheme.
In our best estimate, Neuron Soundware will help owners/users/operators/repairmen to make better decisions about assets, thus it will reduce downtime and maintenance costs of companies by an estimated 20%. Considering that in manufacturing organizations maintenance related costs are estimated to be 25% of the overall operating costs, Neuron Soundware will reduce operating costs by 5% (25% x 20%). Therefore it can increase the gross profit (gross margin) by 5%. Considering a company with annual revenues of €36 million, this means a surplus of €1.8 million that can be reinvested to grow the business.
NeuronBox NB.6