NEWS n 5 SCHNEIDER ELECTRIC HAS RELEASED a report suggesting that closed industrial systems are eroding the competitiveness of mid-sized industrial companies, costing them an average of 7.5% of their annual revenues, through downtime, inefficiencies, compliance retrofits, and delayed production. The research, conducted for Schneider by Omdia, argues that these issues are often masked by the perceived reliability of legacy automation systems. For large enterprises, the losses can average $45.18m, while smaller manufacturers proportionally face even impacts, losing up to 25% of their annual revenues. For a mid-market company, with revenues of around $150m, the annual costs can amount to $11.28m, according to Schneider. The report – entitled Open vs Closed: The $11.28M Question for Industrial Leaders – argues that traditional, hardware-defined automation systems, built for static environments, are struggling to cope with today’s dynamic industrial demands. Their rigidity turns routine updates into costly technical projects, while proprietary architectures limit data access, reducing visibility and responsiveness. Some manufacturers are relying on more than ten different hardware platforms, each with its own unique maintenance needs. This fragmentation makes them dependent on a variety of equipment vendors, with 30% of their plant issues requiring specialised support. This strains workforce efficiency at a time when companies are facing skills shortages. Siloed systems also hinder predictive maintenance and fast resolution of issues, leading to costly downtime and lost productivity, says Schneider. These inefficiencies scale across operations, limiting agility. The research – based on interviews with executives in a variety of industries, and a survey of a further 320 www.drivesncontrols.com January 2026 people making plant-level decisions – highlights an urgent need for transformation. It suggests that open, softwaredefined automation offers a scalable, future-ready alternative that can modernise legacy systems, accelerate ROIs, and strengthen industrial competitiveness and resilience. By decoupling software from hardware, manufacturers gain the flexibility to integrate multi-vendor systems, adapt rapidly to market shifts, produce small batches efficiently, and close skills gaps. Real-time data becomes actionable, driving smarter decisions, boosting productivity, and cutting costs. Schneider says that some of its customers are already realising these benefits. Many start with pilot projects or asset-level trials, and then expand to full-plant or multi-site deployments, unlocking data ownership, improving quality control and cost transparency, while protecting their existing investments. “This research echoes what our customers tell us every day: industrial systems must adapt as fast as their markets,” says Schneider’s executive vice-president for industrial automation, Gwenaëlle Avice Huet. “It’s particularly encouraging that smaller enterprises, the backbone of our economy, stand to gain the most in annual savings that can be reinvested in innovation and growth. Open, software-defined automation is a proven solution that empowers industrial players of all sizes build resilience, drive innovation, and thrive amid rapidly shifting consumer demands, regulatory pressure and market volatility.” The Schneider/Omdia report breaks down the annual $11.28m bill for a mid-sized company into four key areas: n $6.1m in operational agility and resilience losses Inflexible hardware systems hinder responsiveness to market shifts, because 77.4% need physical modifications to implement functionality updates, while multiple vendor platforms create integration complexity. Modifications can cost $25,000–50,000 per hour, rising to $250,000 per hour for companies worth more than $1bn. n $2.28m in optimisation and efficiency costs Companies are running 2-10 different industrial systems on average; 29% having more than 10 hardware platforms, each with unique management requirements. This results in maintenance burdens, downtime and talent gaps. n $1.2m in preventable quality failures and costly data maintenance Proprietary systems create data silos and limit integration. Only 28% of companies can access real-time insights, and half report that 20–39% of their critical data isn’t available in real time. n $1.7m in sustainability and compliance costs Regulatory changes demand hardware retrofits, driving up compliance costs. “In response to mounting pressures, industrial leaders are deploying tactical solutions to sustain their core priorities of growth, competitiveness, and trust,” says Omdia’s principal analyst, Anna Ahrens. “In a world where product lifecycles shrink, supply chains fracture, and talent gaps widen, agility and flexibility aren’t optional. They are survival. Every quarter a business delays addressing the cost of closed automation ecosystems is another $1m+ in lost value: money that could be reinvested in growth and innovation.” The report can be downloaded from https://drivesncontrols.news/8a2b0pp0 “This research echoes what our customers tell us every day: industrial systems must adapt as fast as their markets” Closed automation systems ‘are costing companies up to 25%of their revenues’ Huet: open, software-based automation is a proven solution
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