Schneider Electric has warned that mid-sized industrial companies are losing an average of $11.28 million a year as the hidden costs of closed automation systems erode productivity, flexibility, and competitiveness.
Research published by Omdia, commissioned by the energy technology group, found that companies reliant on proprietary, hardware-defined automation platforms forfeit an average of 7.5% of annual revenue through downtime, inefficiencies, retrofit requirements, and delayed production cycles. The impact is most acute among smaller manufacturers, which can lose as much as 25% of yearly revenue, while large enterprises see losses of about $45.18 million.
Legacy automation environments, often stitched together from multiple incompatible platforms, were designed for stable, predictable operating conditions. Schneider Electric argues that these systems have become a drag on industrial performance, as their rigidity pushes even routine upgrades into lengthy, engineering-heavy exercises. According to the study, 77% of systems require physical modification for functional updates, with modification costs ranging from $25,000 to $50,000 per hour, rising to $250,000 for companies with revenue above $1 billion.
The research points to an increasingly complex technology landscape. Most industrial companies operate between two and more than ten distinct automation platforms, a fragmentation that fuels vendor dependency and intensifies the effects of workforce shortages. Omdia found that 30% of troubleshooting issues require specialised technical support, while data silos across proprietary systems limit real-time visibility. Just 28% of companies can access real-time data insights, and half report that between 20% and 39% of critical data remains inaccessible in real time.
The report identifies four main cost categories, incurred annually: $6.1 million in operational agility and resilience losses, $2.28 million in optimisation and efficiency costs, $1.2 million in preventable quality failures and data-related costs, and $1.7 million in sustainability and compliance expenses. In combination, Omdia concludes that these burdens undermine the ability of industrial firms to respond to shifting market conditions, regulatory change, and supply-chain volatility.
Schneider Electric argues that open, software-defined automation offers a remedy. By decoupling software from hardware, manufacturers can integrate multi-vendor systems, scale production more flexibly, and generate real-time insight across operations. The company says customers that have begun modernisation projects, often starting with single-asset pilots, are already reporting productivity gains, improved quality control, and clearer cost transparency.
“Industrial systems must adapt as fast as their markets,” said Gwenaëlle Avice Huet, Executive Vice President, Industrial Automation, Schneider Electric. “It is particularly encouraging that smaller enterprises, the backbone of our economy, stand to gain the most, with annual savings that can be reinvested in innovation and growth.”
Anna Ahrens, Principal Analyst at Omdia, warned that companies postponing action face mounting competitive pressure. “In a world where product lifecycles shrink, supply chains fracture, and talent gaps widen, agility and flexibility are not optional. Every quarter a business delays addressing the cost of closed automation ecosystems is another $1 million-plus in lost value,” she said.
The study draws on interviews with 10 C-suite leaders across sectors including Oil and Gas, Food and Beverage, Water and Wastewater, and Metals, alongside a survey of 320 industrial participants conducted in September and October 2025.
