Schneider Electric has warned that manufacturers are losing millions each year by clinging to closed, hardware-bound automation systems, after new global research found that mid-sized industrial companies forfeit an average of $11.28 million annually — equivalent to 7.5% of revenue — through inefficiency, downtime, and costly compliance retrofits.
The study, published today in Nuremberg and conducted by the research group Omdia, argues that legacy, proprietary systems are eroding competitiveness at a time when production demands are becoming more volatile and supply chains more fragile. Large enterprises face even steeper losses, averaging $45.18 million a year, while the smallest manufacturers risk forfeiting up to 25% of their annual revenue.
According to the research, rigid, hardware-defined automation infrastructures are struggling to keep pace with faster production cycles and increasingly complex regulatory environments. More than three-quarters of the companies surveyed said system upgrades still require physical intervention, while most operate across multiple incompatible automation platforms, creating data silos and driving dependency on specialist vendors. Around 30% of technical issues now require niche expertise, exacerbating workforce pressures.
The report argues that these constraints not only impair predictive maintenance and delay decision-making, but also restrict access to real-time operational data. Only 28% of respondents said they have reliable real-time insights into core processes, and as much as 39% of critical data remains inaccessible across many sites.
Omdia identified four main areas where costs accumulate: lost agility and resilience ($6.1 million a year on average); operational inefficiency ($2.28 million); preventable quality failures and data-management issues ($1.2 million); and sustainability and compliance costs ($1.7 million). Modification expenses alone can reach $250,000 per hour for the largest companies.
Schneider Electric said the findings highlight a need for manufacturers to accelerate the shift towards open, software-defined automation — a model that decouples software from specialised hardware, allowing firms to integrate equipment from multiple vendors, modernise legacy assets, and respond more quickly to market shifts. The company said customers adopting open automation are already reporting efficiency gains, improved visibility, and stronger returns on investment, often starting with targeted pilots before expanding across entire plants or multi-site operations.
“Industrial systems must adapt as fast as their markets,” said Gwenaëlle Avice Huet, Executive Vice President for Industrial Automation at Schneider Electric. She added that smaller manufacturers, in particular, have the most to gain, as savings can be reinvested into innovation and growth. “Open, software-defined automation empowers industrial players of all sizes to build resilience, drive innovation, and thrive amid shifting consumer demands, regulatory pressure, and market volatility,” she said.
Anna Ahrens, Principal Analyst at Omdia, said leaders are turning to more flexible automation strategies to navigate tightening product lifecycles and widening skills shortages. “Agility and flexibility are no longer optional. They are survival,” she said, warning that each quarter of delay in addressing the costs of closed ecosystems equates to more than $1 million in lost value.
The research draws on interviews with 10 C-suite executives across energy, food and beverage, water, metals, and other manufacturing sectors, as well as a survey of 320 industrial participants carried out between September and October 2025.
