Can Automation Vendors Regain Their Strategic Relevance?
Today almost all of the major control systems suppliers are making massive investments in software. The question is whether these investments will actually allow the control systems vendors to compete against software intensive firms like SAP, Microsoft, Google or Oracle? Digital technology has embedded itself in all aspects of machinery. From the blender on the kitchen counter to the Boeing 787, microprocessor technology is the brains behind most every device in our daily lives. So in some respects a company that makes machinery, including the major control systems suppliers, already are to some degree, software companies. However there are major differences between software embedded in a device which must operate in absolute real-time and enterprise software designed for human interaction and which deals with information that has a time span of minutes, days, months years or even decades. This is not a new phenomenon - It first surfaced in the 1980’s as soon as digital technology started to infiltrate the world of process control. In the process control world the major automation vendors initially shied away from any operational software that was not embedded in the system other than the programming and display software applications. Firms like OSIsoft, Intellution, and Wonderware et al all sprung up to fill the gap between embedded process control and business systems providing data historians, supervisory control and manufacturing execution systems applications. Over the next 30 years the automation vendors steadily invested in moving up the automation hierarchy either acquiring or investing in vendors supervisory control, human interface and manufacturing execution systems applications. More and more commercial/consumer information technology like Microsoft operating systems, TCP/IP networking and ethernet technology became integrated into the automation platforms as the technologies costs decreased and robustness increased.
At the same a new class of business systems providers emerged - the Enterprise Software vendors like SAP and Oracle and Microsoft, who provided the business software that controlled “what” and “when” manufacturers made their products leaving the automation vendors with the “how” of manufacturing. These newcomers displaced the automation vendors who for many decades had a strategic relationship with the manufacturers, at least outside the accounting offices. Suddenly the likes of SAP and systems integrators like Accenture who were deploying the SAP-like solutions had the mindshare in the executive suite on how to run the business of manufacturing. To avoid commoditization automation vendors needed to once again become “strategic” to the business. Their reaction has to become “enterprise software” suppliers themselves. From Siemens acquisition of engineering software provider UGS to GE’s recent push to create “Brilliant Machines” it seems the automation vendors are investing hundreds of millions or even billions of dollars in software capabilities. The question most users should have is will these investments create new capabilities that they should invest in to improve their own competitive positions. To that end they will need to consider which vendors will actually be successful with their investments in software.