The wave of digital intelligence is coming, and multiple challenges such as supply chain fluctuations, iterations of regulatory policies, and disruptive innovations in technology are intertwined. Traditional automation systems, which were once regarded as stable and reliable by the industry, have gradually highlighted their shortcomings such as solid architecture, data silos, closed systems, and difficulty in upgrading. They have become invisible barriers that restrict enterprises from reducing costs, increasing efficiency, and agile development.
Against this background, a technological change from closed to open is accelerating.
A research report “Open vs. Closed: An $11.28 Million Decision Proposition Facing Industrial Leaders” recently released by Omdia, a global authoritative analysis organization, pointed out that using closed industrial automation systems, companies will face high hidden costs caused by operational inefficiency, downtime losses, compliance transformation and production delays, etc., which will continue to erode the core competitiveness of the company.
The hidden costs incurred by medium-sized enterprises are as high as US$11.28 million, accounting for 7.5% of their revenue; the losses of small manufacturing enterprises are even more prominent, with an average annual loss of up to 25% of operating income.
This in-depth survey covers oil and gas, food and beverage, water supply and sewage treatment, non-ferrous metals and other industries. It reveals the true cost behind closed systems and also points out how open industrial automation systems can help companies break through difficulties and reshape long-term competitive advantages.
The Sorrow of Costs: The “Closed Dilemma” Behind the Cost of Tens of Millions of Dollars
The hidden cost of US$11.28 million is not an example of a certain industry, but a concentrated expression of the inherent disadvantages of a closed system.
The report clearly sorts out the four core challenges that generate hidden costs, each of which accurately hits the pain points of current enterprise operations.
First, insufficient operational agility and resilience will result in a cost loss of US$6.1 million.
As product life cycles shorten, supply chain fluctuations increase, and regulatory requirements continue to change, production lines need to be frequently adjusted and restructured, resulting in an additional cost of US$4.9 million.
The report reveals that 77.4% of enterprises still use hardware closed systems. Such systems must undergo physical modifications to achieve functional changes. The addition of multiple supplier platforms makes system integration more difficult, resulting in modification costs of US$25,000 to US$50,000 per hour. For enterprises with revenue exceeding US$1 billion, the cost of transformation is as high as US$250,000 per hour.
At the same time, market and product demands have become increasingly diversified, making it difficult for manufacturers to efficiently respond to small batches and multi-batch orders, resulting in an order loss of approximately US$1.2 million.
Secondly, the cost related to optimization and efficiency amounted to US$2.28 million.
The report points out that most enterprises operate and maintain at least 2 and as many as 10 or more heterogeneous automation platforms. The maintenance requirements of different platforms vary significantly, which directly leads to enterprises’ high dependence on suppliers.
30% of maintenance issues require external professional support, and in the water and wastewater treatment sector this proportion is as high as 40%–59%.
The requirement of a closed system for proprietary technologies not only limits the deployment of predictive maintenance, but also significantly slows down the efficiency of problem solving.
Problems such as complex operation and maintenance, high downtime losses, and talent skill gaps are superimposed on each other, which jointly push up operating costs and become a burden that enterprises cannot ignore.
Third, the cost of quality failures and data maintenance reached US$1.2 million.
The hardware-specific data format of the closed system hinders unified analysis of data and real-time decision-making, while over-reliance on suppliers further limits system integration flexibility and data accessibility, ultimately causing quality failures and data maintenance costs, resulting in an annual loss of US$1.2 million.
The report also pointed out that hardware closed systems not only have high management costs, but also restrict the large-scale application of new generation digital technologies such as AI and digital twins.
Fourth, sustainability and compliance costs amounted to US$1.7 million.
In the context of accelerating industrial green transformation and increasingly stringent regulatory policies, companies must modernize and upgrade equipment to meet new emission standards and energy efficiency requirements.
To this end, mid-sized companies need to invest US$1.7 million per year in compliance hardware modifications and system integration.
However, the upgrade cost of hardware closed systems is high and the implementation cycle is long. Lagging in transformation not only exposes enterprises to the risk of fines, but also makes them passive in market competition, which directly hinders long-term development and the realization of cost reduction and efficiency improvement goals.
In addition, the lengthy design cycle of hardware closed systems is further exacerbating hidden losses.
It takes 3-5 months for an enterprise’s production line to go from design to approval, of which 35% of the time is spent on hardware component selection, and 30% of the time is used to ensure coordination between various components.
It takes 6 to 12 months for a new factory to replicate a mature production or process layout, of which 77% of the time and cost is spent on hardware procurement and installation. This time cost seriously weakens the company’s market response ability, causing it to fall into a vicious cycle of low efficiency, high cost, and slow innovation.
The report clearly states that for every quarter that companies delay addressing the cost issues caused by closed automation systems, they lose more than $1 million in value that could have been reinvested in development and innovation.
At a time when product life cycles are shortening, supply chains are fluctuating, and technical talent gaps are widening, agility and flexibility are no longer optional, but the way for enterprises to survive.
The way to break the situation: Open automation is a value engine that reduces costs and increases efficiency.
Faced with the heavy cost burden brought by closed systems, the core of enterprises to break the situation is to reconstruct the automation system architecture, and open, software-defined automation is the optimal solution to solve the problem from the source.
Its core value is not simply a technical upgrade, but a measurable and substantial improvement in the company’s core operations, effectively reducing or even eliminating the $11.28 million annual hidden cost of a closed system.
As a global leader in energy technology, Schneider Electric has been deeply involved in the field of industrial automation for a long time, and has an insight into the industry’s pain points and customer needs. Its EcoStruxure open automation platform (EAE) relies on core advantages such as software definition, open compatibility, and flexible adaptation to help enterprises calmly cope with the challenges of transformation and upgrading. It is a core tool for enterprises to break through isolation difficulties and achieve cost reduction and efficiency improvement.
Designed based on open standards, the architecture is flexible and adaptable.
EcoStruxure Open Automation Platform (EAE) decouples software and hardware, achieving complete separation of control logic and hardware infrastructure, allowing enterprises to freely choose and flexibly integrate multi-vendor systems, quickly respond to market changes, efficiently carry out small batch production, and fill the engineering skills gap.
Even if the supply chain is interrupted or specific hardware is discontinued, alternatives can be quickly replaced and the entire system can be quickly reconstructed to effectively ensure production continuity.
Break data silos and improve data decision-making capabilities.
With distributed architecture and open standards, EcoStruxure Open Automation Platform (EAE) can break the data barriers between traditional controllers without cumbersome configuration and programming, and seamlessly connect data from all business and operational systems.
This native data interconnection capability not only lays the foundation for enterprises to implement advanced applications such as predictive maintenance and digital twins, but also helps enterprises transform real-time data into executable decision-making basis, thereby optimizing operational strategies, improving productivity, and reducing scale costs.
Build an open ecosystem and actively evolve towards the future.
EcoStruxure Open Automation Platform (EAE) supports the deployment of unified software on different hardware, can seamlessly connect to emerging technologies such as AI, and supports the transformation of complex industrial processes and knowledge into reusable modules.
This kind of future-oriented architectural design allows enterprises to not have to worry about the risk of system obsolescence brought about by technological evolution, and can always take the initiative in technological changes, further enhancing the competitiveness and resilience of enterprises.
Industry practice: Open automation empowers the entire industry to reduce costs and increase efficiency
The value of technology must be tested in real industrial scenarios.
Today, companies in many industries have achieved quantifiable cost savings and efficiency improvements with the help of the EcoStruxure Open Automation Platform (EAE).
These companies started with pilot projects or new project testing, and then gradually expanded to multi-site or factory-wide deployment. While protecting existing investments, they also have complete data ownership, achieve more efficient quality control, and steadily embark on the path of value advancement from closed to open.
In the manufacturing field, Xuji Instrument Smart Factory uses EcoStruxure Open Automation Platform (EAE) as the core hub, connecting 5G networks, production line terminals and IDFE industrial digital fusion ecological software to build a real-time synchronized digital twin environment and realize digital management of the entire production process.
Relying on the EcoStruxure Open Automation Platform (EAE), it connects heterogeneous OT systems such as controllers, industrial computers, and robotic arms downwards to unify data collection, processing, and terminal reverse control; it synchronizes predictive maintenance data upwards to provide support for digital twins and present factory operation status in real time.
This digital transformation has brought about the remarkable results of shortening the delivery cycle by 60% and increasing the product qualification rate to 99.99%, which has significantly enhanced the market competitiveness of Xuji Instruments.
In the new energy industry, in a photovoltaic company and a lithium battery factory factory management system project, Schneider Electric deployed the EcoStruxure open automation platform (EAE) and the Modicon M590 dPAC digital controller to effectively solve the cumbersome data interaction problem between systems and achieve one-click distributed deployment of programs.
Among them, the lithium battery factory project successfully saved 15% of maintenance costs; by establishing a standard program library and equipment function blocks, the engineering efficiency was improved by 20%, while optimizing the troubleshooting efficiency, and integrating the energy management system AI algorithm to achieve energy saving and consumption reduction, achieving a double breakthrough of cost reduction and efficiency improvement.
In the municipal water industry, EcoStruxure Open Automation Platform (EAE) has been implemented in hundreds of application cases across the country, covering Shenzhen, Zhejiang, Fujian and other regions, among which the longest has been in stable continuous operation for four years.
In the renovation of a regional rainwater and sewage pumping station group in a very large city in East China, the EcoStruxure Open Automation Platform (EAE) achieved rapid integration of nearly 40 stations, completed centralized monitoring and intelligent connection of dispersed facilities, and significantly improved the response capabilities and overall resilience of regional flood control emergencies.
In a water plant with a daily processing capacity of 500,000 tons, EcoStruxure Open Automation Platform (EAE) realized “one engineering file and managed multiple CPU programs simultaneously”, which fundamentally changed the previous discrete model that required separate programming and maintenance of each control system, and significantly improved the overall operational efficiency of large water plants in terms of software deployment and management.
In a market environment full of uncertainty, change is the norm and a touchstone.
For enterprises, abandoning closed systems and choosing open, software-defined automation is not only a pragmatic move to reduce costs and increase efficiency, but also a key step in building long-term competitiveness and achieving steady development.
Facing the future, Schneider Electric will continue to embrace industry changes with an open mind, promote industrial progress with continuous innovation, and join hands with a wider range of ecological forces to build a more open and agile new industrial future.
