By offering third party enabled Industrial Internet of Things (IIoT)-based products and solutions, industrial automation vendors have evolved to provide proprietary digital platforms via the Product-as-a-Service (PaaS) business model a new report claims.
Frost & Sullivan has added up some numbers and concluded that the trend of digitalisation in end-user industries prompted automation vendors to invest in IIoT technologies across diverse applications, and they are now looking to integrate these technologies to complement conventional automation systems and give end users better control over the systems’ functionality.
Frost & Sullivan Senior Research Analyst Rohit Karthikeyan who penned the report said that Industry 4.0 was disrupting the partnership ecosystem in industrial automation, with start-ups and independent software vendors (ISVs) partnering with automation vendors to develop digital capabilities and solutions.
“Automation vendors will aim to standardise 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.”
Frost & Sullivan’s recent analysis, Global Industrial Automation Market Outlook, 2018, highlights the IIoT platform offerings of significant automation companies and compares their products and services. It underlines the role of start-ups with niche capabilities in operational and information technologies in 2017. The analysis also details the market landscape of the key participants in process automation, hybrid automation, and discrete automation markets.
“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 enjoy significant government support. 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 optimisation and control”, Karthikeyan said.
In addition to maximising market expansion opportunities, proactive automation vendors will also explore opportunities in:
- 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 & gas companies to foray into the power business.
- Promoting open-source controllers. The introduction of app logic controllers (ALC) has bolstered the market as 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 minimising their investment risks by employing novel business models such as PaaS, pay-per-use, and licensing.