Study on Industry 4.0 Closed Automation Costs $11 Million Annually

Related Vendors

Schneider Electric Automation GmbH

FAULHABER Drive Systems

dataTec AG

Wuxi InfiMotion Technology Co., Ltd.

Many factories still operate with rigid automation systems that no longer fit fluctuating markets. A new Omdia study commissioned by Schneider Electric now reveals how much these systems slow down medium-sized companies—and why open, software-defined automation is gaining momentum.

Medium-sized industrial companies lose an average of 7.5% of their annual revenue because their systems respond too sluggishly. This is revealed in the report "Open vs. Closed: The $11.28M Question for Industrial Leaders". The analysis highlights how sums accumulate gradually through downtime, maintenance, retroactive compliance adjustments, and inefficient processes, reaching approximately $11.28 million per year. Large corporations are hit even harder, with losses exceeding $45 million. In smaller companies, the impact can even amount to a quarter of their annual revenue.

Many of the systems examined date back to a time when production environments operated more stably. Today, supply chains are faltering, products are changing more rapidly, ESG requirements are tightening, and there is a shortage of well-trained specialists. Nonetheless, 77% of systems still operate in a way that updates require physical intervention in the system. Every change involves hardware modifications, often resulting in long downtimes.

Rigid Technology Blocks Quick Responses

The study highlights the extent of the bottleneck. Companies typically operate two to ten different platforms, often even more. Each platform comes with its own interfaces and maintenance rules. Around 30% of disruptions can only be resolved by specialized service providers—a problem exacerbated by the skills shortage. At the same time, real-time data is lacking: 20 to 39% of critical information is not immediately available in half of the companies. This hinders predictive maintenance and slows down decision-making.

In total, companies primarily lose time as a result. Reconfigurations often take days or weeks; design cycles for new systems alone take three to five months just to receive approval. In case of changes, costs quickly rise to up to $50,000 per hour, and for large manufacturers, even up to $250,000. According to the study, the costs of lacking operational agility alone amount to over $6 million annually.

Open Systems Are Intended to Resolve the Investment Backlog

The report describes open, software-defined automation as a countermodel to the previously dominant hardware-dependent control technology. By decoupling logic from hardware, functions can be updated like software packages. Systems from different manufacturers integrate more easily, data flows seamlessly without isolated systems, and adjustments can be made without deep interventions in control cabinets or proprietary platforms.

The authors emphasize that open approaches are inspired by IT principles: standardized edge hardware, software-defined control, and interoperable protocols such as IEC 61499, OPC UA, or MQTT. The result: less effort for expansions, shorter downtimes, and more flexible production processes.

Some users are already reporting noticeable effects. According to the study, earlier pilot projects show faster commissioning, reduced error rates, and shorter launch cycles for new products. Companies reduce engineering time, replicate systems more easily, and gain continuous data streams that enable more precise decisions.

Up to One Million Loss per Quarter

The report concludes with a clear warning: any delay in modernizing closed systems continues to cost industrial companies money. On average, more than one million dollars is lost per quarter—budget that could otherwise be allocated to modernization, training, or capacity expansion. The study argues that rigid architectures are no longer suitable under today's conditions, and only open automation can provide companies with the necessary adaptability. (mc)