Studies & Reports
Report: Automation to see more third-party IIoT partnerships
By Manufacturing AUTOMATION
By Manufacturing AUTOMATION
October 1, 2018 – A new report by research firm Frost & Sullivan explores the industrial automation market landscape and predicts that automation vendors will develop more partnerships to drive growth in the sector. The study also found that more established interest in digitalization is leading to more bolt-on solutions in the Industrial Internet of Things (IIoT).
The report, titled “Global Industrial Automation Market Outlook, 2018,” highlights the IIoT offerings of major automation companies across the process, hybrid and discrete manufacturing industries, and compares their products and services.
By offering third-party-enabled IIoT-based products and solutions, industrial automation vendors have evolved to provide proprietary digital platforms via the Platform-as-a-Service (PaaS) business model, which offers the opportunity for customers to build, develop or customize applications in the cloud.
The trend of digitalization in end-user industries has prompted automation vendors to integrate the IIoT technologies they’ve invested in with conventional automation systems to give end users better control over the systems’ functionality.
“The advent of Industry 4.0 is disrupting the partnership ecosystem in industrial automation, with start-ups and independent software vendors partnering with automation vendors to develop digital capabilities and solutions,” says Rohit Karthikeyan, senior research analyst for industrial automation and process control at Frost & Sullivan. “Automation vendors will aim to standardize their portfolios through M&As and partnerships, and drive growth in their respective business segments. The consolidation of their IIoT portfolios will result in the upselling and cross-selling of automation solutions and create fresh revenue streams.”
In addition to maximizing market expansion opportunities, Frost & Sullivan says proactive automation vendors will also explore opportunities in a number of areas, including:
- Forging strategic partnerships with pure-play IIoT providers to add value to their existing offerings and becoming a single point of contact for end users.
- Diversifying into electrification products. Automation vendors have to focus on developing solutions that will enable traditional oil and gas companies to foray into the power business.
- Promoting open-source controllers. The introduction of app logic controllers (ALC) has bolstered the market because the system is driven by open-source programming, wherein end users can download and use an app to control a specific application. This, in turn, has created revenue streams for app developers, hardware providers and system integrators.
- Shifting from hardware to software and services. Vendors can ease clients’ shift to digital technologies by minimizing their investment risks by employing novel business models such as PaaS, pay-per-use and licensing.
“As the North American and European markets are in the midst of a downturn, vendors are focusing on the developing economies of Asia-Pacific, Africa and Latin America. Not only do these regions have a high number of greenfield projects, but they also enjoy significant government support,” says Karthikeyan. “More than 40 per cent of the end users in these markets are small- and medium-sized enterprises encouraging vendors to deliver cost-effective products and educate them on the value of IIoT-ready solutions in process optimization and control.”