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Schneider Electric, the global leader in energy technology, said Wednesday that mid-sized manufacturers are losing an average of 7.5 percent of their revenue due to closed industrial automation systems, according to new research.
The study, titled “Open vs. Closed: The $11.28M Question for Industrial Leaders”, highlights the hidden costs of traditional, hardware-dependent automation and urges companies to adopt open, software-defined alternatives.
Conducted by the global research firm Omdia, the report reveals that the financial impact of rigid industrial systems extends far beyond direct maintenance costs. Operational inefficiencies, unplanned downtime, delayed production, and expensive compliance retrofits quietly erode competitiveness. Large enterprises can lose an average of $45.18 million annually, while smaller manufacturers face even higher proportional losses, sometimes exceeding 25% of revenue.
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“Legacy automation systems were designed for static environments, not the rapidly shifting demands of today’s industrial landscape,” said Gwenaëlle Avice Huet, Executive Vice President of Industrial Automation at Schneider Electric. “These closed, hardware-defined systems make routine updates costly, limit access to critical data, and reduce operational responsiveness.”
A central driver of the problem is hardware complexity. Most manufacturers operate across two to 10 or more distinct automation platforms, each with unique maintenance requirements.
This fragmentation not only increases dependency on vendors, about 30 percent of system issues require specialised support, but also strains internal workforces already facing skills shortages. Siloed systems further hinder predictive maintenance and rapid problem resolution, compounding downtime and productivity losses.
The Omdia report breaks down the annual financial impact of closed automation into four key categories. Operational agility and resilience losses account for $6.1 million, as 77.4 percent of systems require physical modifications for functionality updates, and multi-vendor environments drive integration complexity. Modification costs range from $25,000 to $50,000 per hour, escalating to $250,000 per hour for billion-dollar enterprises.
Optimisation and efficiency costs total $2.28 million, driven by maintenance burdens, workforce gaps, and system inefficiencies. About 29 percent of companies manage more than 10 hardware platforms, each with separate management demands, slowing production and increasing labor costs. Preventable quality failures and costly data maintenance add $1.2 million annually, with proprietary systems creating data silos and restricting integration.
Only 28 percent of companies can access real-time insights, and nearly half report that 20–39 percent of critical data is unavailable in real time. Compliance and sustainability costs contribute an additional $1.7 million, as regulatory changes require hardware retrofits and drive up expenses.
Anna Ahrens, principal analyst at Omdia, emphasized that the financial consequences of closed automation are not static. “In a world where product lifecycles shrink, supply chains fracture, and talent gaps widen, agility and flexibility aren’t optional—they are survival,” she said. “Every quarter a business delays addressing the cost of closed automation ecosystems is another $1 million-plus in lost value that could be reinvested in growth and innovation.”
Schneider Electric positions open, software-defined automation as a solution capable of modernising legacy systems while boosting flexibility and return on investment. By decoupling software from hardware, manufacturers can integrate multi-vendor platforms, respond quickly to market shifts, optimize small-batch production, and close engineering skill gaps. Real-time data becomes actionable, driving smarter decision-making and productivity improvements across the enterprise.
Several Schneider Electric customers have already seen tangible benefits. Pilot projects or asset-level trials often evolve into full-plant or multi-site deployments, allowing companies to gain full data ownership, improve quality control, and achieve greater cost transparency without abandoning prior investments.
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Huet noted that smaller enterprises, often overlooked in automation discussions, could see the largest proportional savings. “These are the backbone of the economy,” she said. “Open, software-defined automation empowers industrial players of all sizes to build resilience, drive innovation, and thrive amid shifting consumer demand, regulatory pressure, and market volatility.”
The findings underscore a broader industry trend: rigid, closed automation systems, once perceived as reliable, are increasingly a liability in a landscape defined by rapid technological change and market uncertainty. Experts say that companies unwilling to modernise risk falling behind competitors that embrace more flexible, software-driven approaches.
For mid-sized manufacturers, the message is clear: every day that closed systems remain in place, millions in potential savings are lost—funds that could otherwise be reinvested in growth, innovation, and competitive advantage.
