Industrial software

Automation is becoming more and more software-intensive. Companies need to take heed of this trend, which requires a migration away from a business model focused on products toward a software-centric approach. Companies are already offering all sorts of automation-related software, including advanced process control, simulation and optimization to third-party HMI, plant asset management, production management (MES) and ERP integration packages.

Automation companies must decide whether they want to develop software-intensive products and services themselves or form partnerships with software manufacturers. As software becomes more ubiquitous in automation products, these software companies pose a threat to automation companies – indeed, the two may well become rivals. Companies can optimize information consistency only if data is accessible at all levels; only then is the cost of these technologies justified. MES companies, for instance, face a dilemma: developing software is expensive but they cannot lower costs by creating standard solutions, as each customer industry requires a unique software package.

Established providers must adapt or specialize in response to the trend toward information consistency. This offers a number of opportunities:

• Customers recognize the importance of software as well as hardware for information consistency
• New markets and applications exist for profitable consulting services for optimizing IT information flows, such as identifying breaks and inconsistencies and interface programming
• The demand for information consistency makes it possible to bundle products at the field level, for example offering sensor technology with a suitable bus connection

However, these opportunities also come with challenges:

• The trend toward software dominance at company and process control level requires a transformation from product-centric to software-centric business models; established providers must decide whether to establish themselves in this field or form partnerships with other players
• It is difficult for automation providers to cover their costs when selling pure software solutions; software is often just a differentiation feature with no direct price effect
• Software firms represent a risk in the form of competition