by Gary Mintchell | Jan 12, 2023 | Commentary, News
In the “I’m not surprised” category, the ARC Advisory Group conducts market studies in the industrial and manufacturing market. For the 23rd consecutive year it has calculated ABB as the global DCS market share leader.
In a Distributed Control System market worth more than $15 billion, the official ARC Advisory Group report confirms that ABB has maintained its number one position with a leading share of 19%, as it continues to support the acceleration of digital transformation across industry.
The report highlights energy transition and sustainability as key growth drivers for ABB. Growth also came for ABB thanks to the upturn in DCS segments across the pharmaceuticals and biotechnology which was generated by continued external investment in vaccines and medications.
by Gary Mintchell | Jan 5, 2023 | Automation, Business, Commentary, News
Siemens announced its intention to separate its three-billion euro motor and drive business into an independent entity last November. This move both impacts the motor and drives market in general and further reveals business strategies now undertaken by large automation and controls suppliers.
Blake Griffen, senior analyst at Interact Analysis, writes, “The new motor & drives business would be an amalgamation of 5 current Siemens businesses/divisions. Large drives, Sykatec, Weiss Spindeltechnologie, and the low voltage motors & geared motor divisions from Siemens Digital Industries.”
He notes that what is included in the spin-off and what is retained are both indicators of strategy. He begins by looking at a little history.
Since their announcement of Mindsphere in 2017, Siemens has taken explicit steps to refocus the company away from being a hardware manufacturer in favor of being software and services provider. The move away from lower margin hardware businesses has yielded results for the company in terms of profit margin. Since 2017, Siemens’ gross profit margin averaged 35.5% compared to 28.8% in the previous 5 years.
For those of us who are close observers, we have noticed similar moves by other companies such as Rockwell Automation, Emerson, Honeywell, and Schneider Electric. Perhaps even ABB. One astute executive told me when I observed how these companies now self-identify as software and automation companies that this is what “Wall Street” expects. Financial analysts clearly believe this is the path toward growth.
Back to the Siemens announcement. Griffen writes, “We were expecting Siemens’ low voltage drive portfolio, SINAMICS, to also be a part of the new business. However, from what we can tell by the information publicly available, the low voltage drive product line will be retained by Siemens.”
I’m not surprised, and I agree with his explanation. Low-voltage drives have so much intelligence and networking power these days, I believe they should be considered part of the control system. Writes Griffen:
The drive represents the closest ‘smart’ device to a motor. As such, the device can be a powerful enabler of many digitalization strategies. VFDs have long had the ability to sense changes in the electrical behavior of the motor it is controlling. Many drive vendors, including Siemens, have begun offering condition monitoring and predictive maintenance services which employ this ‘drive as a sensor’ mentality.
As a customer, should you be concerned about the direction of your supplier, you’d do well to consider these thoughts.
by Gary Mintchell | Dec 27, 2022 | Commentary, Events, Manufacturing IT, News, Operations Management
Knud Lasse Lueth, founder and leader of the firm IOT Analytics in Germany, wrote a comprehensive report on trends picked up at the SPS fair in Nuremberg in November. Note: I have an affiliation with the analyst firm as an advisor. I recommend visiting the web site to check out the full report.
Smart Production Solutions (or SPS), one of the leading industrial automation fairs, was back in action earlier this month. The event that took place from 8 November –10 November 2022 in Nürnberg, Germany, showcased once again the latest industrial automation developments. Despite a smaller crowd (44,000 visitors—roughly 30% less than pre-pandemic), the fairgrounds were buzzing and filled with senior executives from many leading industrial automation companies, software providers, and related companies. The conference remains a key show for industrial automation hardware and (increasingly) software. It is perhaps the most important fair for some European (especially German) industrial automation companies, such as Siemens, Beckhoff, or Phoenix Contact.
IoT Analytics had a team of three analysts on the ground. They visited approximately 75 booths and conducted over 50 individual interviews to get a handle on the latest industrial automation trends with a special focus on IT/OT convergence.
The main reason we are seeing interest and movement toward the convergence of IT and OT in the manufacturing space is because of IT technologies’ promise to significantly improve manufacturing. The market dynamics of an increasingly competitive world have “forced” OT, a traditionally less hi-tech sector, to consider these IT technologies. As a first step, IT/OT convergence can happen by creating the necessary (secure) interfaces between IT and OT systems.
10 IT/OT convergence trends visible at SPS 2022
1. IT-based containerization technology at the edge
2. Integration of IT and OT tools
3. Cloud-native (IT) tools for improved manufacturing operations
4. IT programming tools and languages for controllers
5. Virtual PLCs—containerized controllers
6. Digital twins to virtualize physical assets
7. Low-code tools
8. MQTT protocol connecting OT and IT
9. IT cybersecurity models for OT
10. IT approach for industrial software quality control
On another note: The team would like to give a shoutout to Schneider Electric for being one of the few companies at the fair that embraced sustainability by leading with a carbon-neutral booth completely made from recyclable materials (such as walls made of reusable wooden pallets).
by Gary Mintchell | Dec 14, 2022 | Business, Commentary, News
PwC issued its analysis of the current state of industrial manufacturing merger and acquisition (M&A) activity. Looking at the transition from 2022 to 2023, their analysts predict industrial manufacturing M&A will be strategically focused going into 2023.
A handful of industrial manufacturing transformational deals (transactions exceeding $1 billion in deal value) in the fourth quarter of 2022 pushed the year to a strong finish — despite macroeconomic headwinds — and demonstrating growth over the previous quarter.
Overall, industrial manufacturing M&A deals declined in 2022 from historic levels in 2021. However, the 2022 level of deal activity is nevertheless above historical trends, specifically higher than 2019. M&A volume in the second half of 2022 appeared to illustrate a shift to investments in North America due to economic and geopolitical uncertainty and the desire for nearshoring of certain operations. This may continue to influence the M&A landscape into 2023, despite the strengthening of the US dollar.
Strategic focus areas and investment along with portfolio review and resulting divestitures are expected to support stable deal activity going into 2023.
by Gary Mintchell | Oct 18, 2022 | Commentary, News
This one shouldn’t surprise anyone. Hitachi Vantara commissioned a study by 451 Research to determine if there is a skills shortage that could inhibit industrial digital transformation.
Competing priorities and skills shortages in IoT, AI/ML data science and robotics undermine potential progress in IT/OT convergence and security.
Research found a lack of digital skills is jeopardizing industries’ digital transformation initiatives. The report “Industry 4.0: Maturity of Adoption and Its Impact on Sustainability and ESG”1 surveyed more than 600 IT and OT leaders engaged in Industry 4.0 initiatives across the manufacturing, transportation, and energy and utilities sectors.
- While 100% of companies surveyed are engaging in or planning digital transformation projects for their operations or supply chains, more than half of companies said they lacked sufficient skills in key areas.
- The most critical gaps cited are in data science (42%) defined as artificial intelligence, machine learning and analytics; IoT deployment and development (48%), or robotics deployment and operations (60%).
- Given the technology skills gap, at least 37% of respondents indicated that they had no plans to implement IoT-led initiatives.
- Once viewed as a potential barrier to Industry 4.0 and digital transformation initiatives, IT/OT convergence is happening with 95% of respondents saying the two departments collaborate adequately or better for IoT projects.
by Gary Mintchell | Oct 12, 2022 | Commentary, Manufacturing IT, News
Plex Systems, Siemens, Dassault Systèmes, and GE Digital are Leaders in ABI Research’s Manufacturing Execution System Competitive Ranking
I pass this news along as it came. I’m never sanguine about these studies. I don’t see much detail about companies studied. Often they are either clients of the analyst firm or pay a fee to be analyzed. I have no idea about this one.
Manufacturing Execution Systems (according to ABI) or Manufacturing Enterprise Solutions (according to the trade group MESA) comprise a variety of software solutions for manufacturing—usually discrete. Companies in the market may or may not provide the entire scope of products involved—inventory, routing, quality, laboratory, workflow, recipes, and much more.
Typically the market consists of smaller software companies, although much consolidation occurred some time ago as GE Digital, Rockwell Automation, Siemens, and companies that became AVEVA/Schneider Electric acquired MES companies. Rockwell has been on a recent buying spree as it picked up cloud capabilities with Plex.
The disclaimer from ABI Research—The new Manufacturing Execution System (MES) competitive assessment by global technology intelligence firm ABI Research provides an in-depth and unbiased examination of the MES solutions offered by 12 manufacturing execution system suppliers.
The companies evaluated and ranked are:
Market Leaders: Plex Systems, Siemens, Dassault Systèmes, and GE Digital
Mainstream: Apprentice.io, Tulip, Parsec Automation Corp., Aegis Software, Critical Manufacturing, Oracle, and Rockwell Automation
Follower: Emerson
Criteria
A total of 12 criteria were chosen for the analysis and segmented across innovation and implementation clusters. These include the solution’s comprehensiveness and offer of innovative functionality, the accessibility of the software, cloud functionality and data sharing capabilities, user experience found in low/no code functionality, the MES’s contribution to the manufacturer’s digital thread capabilities, and pricing guarantees. The report further evaluates MES vendor’s ability to deliver their MES globally, their experience in delivering the software to manufacturers, the company’s vertical market expertise and partnership place, and the MES offering’s ability to interoperate with other enterprise software.
Rationale for ranking:
- Plex Systems came out on top overall in the competitive ranking due to its innovative cloud-native MES design, rapid time to deployment, broad customer base, and strong pricing guarantees.
- Siemens came in second overall, due to its significant customer base and deployment experience in all manufacturing verticals. Both firms scored well across all criteria.
- Dassault Systèmes scored particularly well in the implementation criteria, ranking second, with a solid customer base and extensive global partnership network, serving nearly all industry verticals. Its lower innovation scoring kept it from taking one of the top spots overall.
- GE Digital, also a leader and fourth overall, scored strongly in both implementation and innovation, earning good marks for accessibility, user experience, and implementation time.
- “Apprentice.io and Tulip earned top spots of the mainstream vendors due to their innovative cloud-native MES solutions,” explains James Prestwood, Industrial and Manufacturing Principal Analyst at ABI Research.
“Overall, the Manufacturing Execution System (MES) software market is going through an evolutionary stage, with the on-premises legacy systems beginning to give way to a more agile cloud-based design. Leaders in the MES space are those able to adapt their offerings to this change and deliver flexible and fast-paced deployments.”
These findings are from the Manufacturing Execution Software competitor ranking report. This report is part of the company’s Industrial and Manufacturing Technology research service, which includes research, data, and ABI Insights.
