New Study Reveals $11.28 Million Annual Opportunity for Industrial Companies to Boost Competitiveness by Modernizing Closed Automation Systems

Key Terms

closed industrial systems technical

Closed industrial systems are manufacturing or processing setups where materials, fluids, gases, or waste are handled inside sealed equipment and piping so nothing escapes into the workplace or environment. Think of it like a sealed kitchen where all cooking smells and spills are contained rather than released into the house. For investors, these systems matter because they reduce regulatory and cleanup risks, can lower operating and liability costs, and often signal higher upfront capital spending but more predictable long‑term operations.

software-defined automation technical

Software-defined automation uses software to design, control and change automated processes and equipment instead of hardwiring rules into physical machines; think of it as using apps and cloud controls to reprogram a factory floor, data center or business workflow on the fly. For investors, it matters because it can let companies adapt faster, cut labor and operational costs, and scale more cheaply—potentially improving margins and growth prospects—while bringing implementation and security risks to manage.

proprietary architectures technical

Proprietary architectures are company-owned designs and structural plans for technology, systems or platforms that determine how products or services are built and operate. They matter to investors because they can create a durable edge — like a secret recipe or custom toolkit — that makes a business harder to copy, helps control costs, speeds up development, and can support higher or more stable future profits.

predictive maintenance technical

Predictive maintenance involves using data and technology to monitor equipment or machinery in real time, identifying potential problems before they cause failures or breakdowns. By predicting when maintenance is needed, it helps prevent costly repairs and downtime. For investors, it highlights how companies can reduce expenses, improve efficiency, and maintain reliable operations, which can positively impact financial performance.

real-time insights technical

Real-time insights are immediate, up-to-the-minute information and analysis about financial markets or data, allowing investors to see the latest developments as they happen. They help investors make quicker, more informed decisions, much like checking live traffic updates helps drivers choose the fastest route. Access to real-time insights can provide a competitive advantage by revealing opportunities or risks before others do.

data silos technical

Data silos are pockets of information that are stored separately within different departments or systems and not easily shared across an organization—imagine each team keeping its own locked filing cabinet rather than a common library. They matter to investors because siloed data can hide operational problems, slow decision-making, increase integration costs in deals, and make it harder to verify performance or comply with regulations, all of which can affect profitability and risk.

regulatory changes regulatory

Regulatory changes are updates or new rules from governments or oversight agencies that alter how companies must operate, report, sell products, or treat customers — imagine new traffic laws that change how everyone drives. They matter to investors because they can raise costs, open or close markets, change legal risks and profit potential, and therefore can quickly alter a company’s outlook, valuation and comparative advantage.

compliance retrofits regulatory

Compliance retrofits are upgrades or modifications made to existing facilities, equipment, or processes so they meet new laws, safety rules, or industry standards. Investors care because these changes can require significant spending, cause temporary shutdowns or delays, and affect a company’s ability to sell products or operate without fines; think of it like renovating a house to pass a new inspection—necessary work that changes future costs and value.

• Hidden cost penalties: closed industrial systems cost mid-sized industrial companies 7.5 per cent of revenue through downtime, inefficiencies, and compliance retrofits every year
• Rigid infrastructure slows response: 77 per cent of systems need physical updates; fragmented platforms increase complexity and delay action
• Open, software-defined automation offers a way forward: by decoupling software from hardware, it enables faster decisions, real-time insights, and competitive resilience

MISSISSAUGA, Ontario--(BUSINESS WIRE)-- Schneider Electric, a global energy technology leader, today unveiled new global research titled “Open vs. Closed: The $11.28 million Question for Industrial Leaders.” The report reveals that closed industrial automation systems are quietly eroding competitiveness, costing mid-sized organizations an average of 7.5 per cent of their revenue.

The research, conducted by Global Analysts firm Omdia, highlights how these costs stem from operational inefficiencies, downtime, compliance retrofits, and delayed production, issues often masked by the perceived reliability of legacy automation systems. For large enterprises, losses average $45.18 million, while smaller manufacturers face even steeper proportional impacts, losing up to 25 per cent of annual revenue.

Traditional, hardware-defined automation systems, built for static environments, struggle to meet today’s dynamic industrial demands. Their rigidity turns routine updates into costly technical projects, while proprietary architectures limit data access, reducing visibility and responsiveness.

At the core of the challenge is hardware complexity. Most companies operate across two to 10+ distinct platforms, each with unique maintenance needs. This fragmentation drives vendor dependency; 30 per cent of issues require specialized support, and this strains workforce efficiency due to niche technical expertise required at a time when companies are facing workforce and skills shortages. Siloed systems also hinder predictive maintenance and fast issue resolution, leading to costly downtime and lost productivity. These inefficiencies scale across operations, limiting agility.

The research highlights an urgent need for transformation. Open, software-defined automation offers a scalable, future-ready solution that modernizes legacy systems, accelerates ROI, and strengthens industrial competitiveness and resilience.

By decoupling software from hardware, manufacturers gain the flexibility to integrate multi-vendor systems, adapt quickly to market shifts, produce small batches efficiently, and close engineering skill gaps. Real-time data becomes actionable, driving smarter decisions, boosting productivity, and reducing costs at scale.

Schneider Electric customers are already realizing these benefits. Many begin with pilot projects or asset-level trials, then expand to full-plant or multi-site deployments, unlocking full data ownership, improved quality control, and greater cost transparency, while protecting existing investments.

“This research echoes what our customers tell us every day: industrial systems must adapt as fast as their markets,” said Gwenaëlle Avice Huet, Executive Vice President, Industrial Automation at Schneider Electric. “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 to build resilience, drive innovation, and thrive amid rapidly shifting consumer demands, regulatory pressure and market volatility.”

Key cost areas break down into four critical parts, annually:

• $6.1 million in operational agility and resilience losses. Inflexible hardware systems hinder responsiveness to market shifts, as 77.4 per cent require physical modifications for functionality updates, while multiple vendor platforms create integration complexity. Modification costs range from $25,000 to $50,000 per hour, rising to $250,000/hour for $1 billion+ companies.
• $2.28 million in optimization and efficiency costs. Maintenance burdens, downtime, and talent gaps as hardware complexity drives operational inefficiencies. Companies manage two to 10 different industrial systems on average; 29 per cent deploy 10+ hardware platforms, each with unique management requirements.
• $1.2 million in preventable quality failure and costly data maintenance. Proprietary systems create data silos and limit integration. Only 28 per cent of companies access real-time insights; half report that 20–39 per cent of critical data isn’t available in real time.
• $1.7 million in sustainability and compliance costs. Regulatory changes demand costly hardware retrofits, driving up compliance expenses.

“In response to mounting pressures, industrial leaders are deploying tactical solutions to sustain their core priorities of growth, competitiveness, and trust,” said Anna Ahrens, Principal Analyst at Omdia. “In a world where product lifecycles shrink, supply chains fracture, and talent gaps widen, agility and flexibility aren’t optional. They are surviving. Every quarter, a business delays addressing the cost of closed automation ecosystems is another $1 million+ in lost value, the money that could be reinvested in growth and innovation.”

About Schneider Electric

Schneider’s purpose is to create Impact by empowering all to make the most of our energy and resources, bridging progress and sustainability for all. At Schneider, we call this Life Is On. Our mission is to be the trusted partner in Sustainability and Efficiency. We are a global industrial technology leader bringing world-leading expertise in electrification, automation and digitisation to smart industries, resilient infrastructure, future-proof data centres, intelligent buildings, and intuitive homes. Anchored by our deep domain expertise, we provide integrated end-to-end lifecycle AI-enabled Industrial IoT solutions with connected products, automation, software and services, delivering digital twins to enable profitable growth for our customers. We are a people company with an ecosystem of 150,000 colleagues and more than a million partners operating in over 100 countries to ensure proximity to our customers and stakeholders. Learn more at se.ca or follow them on Instagram, X, Facebook, and LinkedIn at @SchneiderElectricCA. For media resources, visit Schneider Electric’s online newsroom, se.ca/newsroom.

About Omdia

Omdia, part of Informa TechTarget, Inc. (Nasdaq: TTGT), is a global technology research and advisory group. With deep expertise across technology markets, grounded in real conversations with industry leaders and supported by hundreds of thousands of data points, Omdia delivers market intelligence that gives clients a strategic edge. From R&D to ROI, the organization identifies high-impact opportunities and helps drive the technology industry forward. To learn more about Omdia, visit omdia.tech.informa.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20251202381802/en/

Jodi Smith-Meisner

Schneider Electric Canada

jodi.smithmeisner@se.com

Samiha Fariha

Schneider Electric Canada

1-647-268-6687

sfariha@golin.com

Source: Schneider Electric