Legacy industrial automation systems may be quietly draining millions from manufacturers each year, according to new research from Schneider Electric. The report, Open vs. Closed: The $11.28 Million Question for Industrial Leaders, shows that closed, hardware-defined automation systems are eroding competitiveness and inflating costs across mid-sized and large enterprises alike.
The study, conducted with Omdia, highlights that mid-sized firms lose an average of 7.5% of revenue to inefficiencies caused by rigid, siloed automation platforms. For large enterprises, losses average $45.18 million annually, while smaller manufacturers can lose up to 25% of revenue—potentially threatening their survival in increasingly dynamic markets.
Legacy Systems and Hidden Costs
Traditional industrial automation platforms are built for static environments and struggle with the demands of modern manufacturing. Their rigidity turns routine updates into expensive technical projects, while proprietary architectures create data silos and limit real-time visibility.
Key operational pain points include:
- Hardware Complexity: Most companies operate between two and 10+ distinct platforms, each with unique maintenance and vendor support needs. Nearly 30% of issues require specialized expertise, straining workforce efficiency amid skills shortages.
- Downtime and Lost Productivity: Siloed systems hinder predictive maintenance and rapid issue resolution, translating into costly production delays.
- Compliance and Quality Risks: Hardware inflexibility forces expensive retrofits to meet regulatory requirements, while limited data access prevents real-time quality control.
The Case for Open, Software-Defined Automation
Schneider Electric emphasizes that open, software-defined automation offers a scalable solution for modernizing legacy systems. Decoupling software from hardware allows multi-vendor integration, faster adaptation to market shifts, and smarter, data-driven decisions. Companies gain full data ownership, improved quality control, and greater operational transparency.
Pilot projects and asset-level trials already show measurable benefits, with firms expanding to full-plant or multi-site deployments to realize the full ROI of open automation.
“This research echoes what our customers tell us every day: industrial systems must adapt as fast as their markets,” said Gwenaëlle Avice Huet, EVP of Industrial Automation at Schneider Electric. “Smaller enterprises, in particular, stand to gain significant savings that can be reinvested in innovation and growth. Open, software-defined automation empowers industrial players to thrive amid market volatility and regulatory pressure.”
Cost Breakdown: Where Closed Systems Drain Value
According to the study, four key areas drive annual losses:
- Operational Agility and Resilience: $6.1M lost due to inflexible systems, with updates requiring physical modifications costing $25K–$50K/hour (up to $250K/hour for billion-dollar companies).
- Optimization and Efficiency: $2.28M lost from maintenance burdens, downtime, and talent gaps across 2–10 industrial systems on average.
- Quality Failures and Data Gaps: $1.2M lost due to proprietary systems creating data silos and limiting real-time insights.
- Sustainability and Compliance: $1.7M lost in regulatory retrofit costs and compliance inefficiencies.
Anna Ahrens, Principal Analyst at Omdia, warns: “Every quarter a business delays addressing closed automation ecosystems is another $1 million+ in lost value that could have been reinvested in growth and innovation.”
The research underscores a stark reality for manufacturers: flexibility, agility, and intelligent software-driven automation are no longer optional—they’re essential to maintain competitiveness, control costs, and future-proof industrial operations.
