Mid-Market Squeeze: Where SDA Is Faltering

Software-Defined Automation (SDA) brings promises of faster engineering, reduced costs, and more flexibility in the face of supply chain squeezes, high inflation, and increasing labor shortages. Large manufacturers in the United States and Europe have faced pressure to increase automation flexibility from pressures coming from China and other lower cost regions, seeking to innovate out of a crisis. Small manufacturers are looking to adopt lowest cost solutions, and some vendors are providing their most basic SDA solutions as free software, which is enough to meet the needs of simpler automation projects. Meanwhile, mid-size manufacturers are most reluctant to switch. Their larger infrastructure compared to small companies disincentivizes agility, and their smaller scale compared to the multinational manufacturers means they must protect their capital assets and cannot risk pilots going wrong.

The middle market is disadvantaged in adopting SDA for a few reasons. Starting with capital base, large manufacturers may have a more expansive volume; however, that scale affords room for pilot projects of new technologies and exploring how best to optimize value. Small manufacturers, especially manufacturing startups, can build around the new, cheaper SDA technology, and explore with a designed for SDA production space. Mid-size manufacturers are hesitant to test out new systems, where a smaller, more critical installed base prevents willingness to experiment with new technologies, limiting adoption of SDA if it is present at all.

The story is similar for labor shortages and skill gaps. Large manufacturers have an established recruiting pipeline for new talent equipped to handle Information Technology (IT) workflows and thinking in manufacturing, as well as investing in retraining tools for employees not approaching retirement but still trained on Operational Technology (OT) workflows. Small manufacturers and startups will either sit by their own practices with their small employee count, or startups will likely be younger founders, equipped with IT skills already. Considering the middle manufacturer, the recruiting pipeline is smaller, the workforce is OT trained and aging, and unwilling to take on still nascent technology when they have seen previous attempts to overtake Programmable Logic Controllers (PLCs) falter (like the still limited Industrial Personal Computer (IPC)-based control market), and likely will stick with what has worked for the last 30+ years.

The workforce and education issues compound with a limited staff to attend the tradeshows where SDA technologies are shown off. While Hannover Messe in Germany may attract over 100,000 visitors worldwide, there are millions of manufacturing employees in Germany alone, so it is very easy to imagine a middle market player not looking to be the most innovative manufacturer completely missing education on SDA.

Reaching the middle market most effectively will take an overhaul on how industrial automation suppliers reach these manufacturers. Typically, these interactions are left to the system integrators, which will look at the situation and likely suggest a hardware-based, comfortable OT environment. While in the near term, this will be the most comfortable for the middle market, it is setting it up for long-term disservice. When the OT workforce is eroded and more flexible new manufacturers have begun to leverage low-cost SDA systems start surpassing them, the transformation will then come too late.

Therefore, it is necessary for industrial automation furnishers to reach these markets, moving away from the gigantic strategic accounts and helping middle manufacturers start small. Having a software-defined redundancy system is a good starting point. Identifying processes that are both non-critical and simple to automate with virtualized components is another steppingstone, much like what is being done by the large manufacturers.