Hannover Messe and the Industrial Automation Technology Stack
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NEWS
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Hannover Messe was a busy affair this year with the manufacturing ecosystem on full display and vendors keen to highlight their unique market position within it. The industrial automation marketplace was well represented, with nearly all key vendors having some form of presence at the show, either with their own stands or partnering with hyperscalers’ booths. ABI Research spoke with all of these vendors to identify key market trends and how companies are positioning themselves within the market.
The industrial automation pyramid represents the five different levels of automation within a factory (see ABI Research’s Industrial Automation: SCADA/HMI Software report (AN-5624)). This ABI Insight focuses on level 1 (sensing and manipulating: Programmable Logic Controllers (PLCs), Industrial PCs (IPCs), and Human-Machine Interfaces (HMIs)), level 2 (monitoring and supervising: Supervisory Control and Data Acquisition (SCADA) and HMI software), and level 3 (manufacturing operations: Manufacturing Execution Systems (MESs)). Key companies at each of these levels include:
- Level 1: ABB, Beckhoff, Bosch Rexroth, Emerson, Omron, Phoenix Contact, Pilz, Rockwell Automation, Siemens, Yokogawa
- Level 2: ABB, Advantech, AVEVA, Emerson, GE Digital, Hitachi Vantara, Honeywell, Inductive Automation, Mitsubishi Electric, Rockwell Automation, Schneider Electric, Siemens, Tatsoft, Yokogawa
- Level 3: Aegis Software, Apprentice.io, Critical Manufacturing, Dassault Systèmes, GE Digital, MTEK, Parsec Automation Corp, Plex Systems, Rockwell Automation, Siemens, Tulip
What Were the Key Takeaways for Levels 1, 2, and 3?
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IMPACT
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Level 1: The industrial automation hardware market appears to be split between vendors focusing on hardware and those focusing on the transition to more prevalent software solutions. Companies were either positioning their hardware as the main innovation point of their automation product lines, citing build quality and flexibility of rig as the most important developments, or instead focusing on the software side of the market, with notable examples including Siemen’s vPLC announcement being a driving innovation point for the company, alongside Beckhoff’s running of PLC software containerized on an IPC, supported by its use of ChatGPT to write PLC code.
Level 2: SCADA/HMI software vendors had less presence than the other two automation levels at Hannover Messe. Inductive Automation was the only vendor driving serious conversation and updates around its offering, highlighting new capabilities, such as a transition over to cloud deployments, while the rest of the providers were prioritizing other elements of their portfolios. This speaks to the lack of revolutionary innovation in this software space, with most vendors somewhat resting on their legacy solutions, and while new functionality and go-to-market requirements are being introduced to the industry, such as Software-as-a-Service (SaaS) and unlimited licensing models, low-code application use and development, and zero-downtime deployment, the SCADA/HMI software market is not being heralded as a key driving point of manufacturing automation improvement.
Level 3: Traditionally, larger MES vendors have been successful in targeting enterprise-level manufacturers due to their ability to support complex deployments at scale. These vendors have struggled to bring their solutions down to the Small and Medium Enterprise (SME) market where low costs and the need for specific functionality are most important. In the SME market, smaller technology vendors’ MES solutions have seen more success. At Hannover Messe, ABI Research identified that larger vendors are now looking to target the growing SME market and are designing their go-to-market strategy to do this. If implemented and communicated correctly, these new go-to-market styles will significantly enhance large MES vendors’ market shares in the MES market. Interestingly, smaller MES vendors appear to be somewhat taking for granted the traditional strength they have had in the SME space and are instead more heavily focusing on driving sales at the enterprise level.
How Can Technology Vendors Capitalize on These Trends?
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RECOMMENDATIONS
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Level 1: Hardware vendors will see the most success in identifying the correct balance of needs from manufacturers for hardware and software PLCs. Manufacturing verticals will likely require a different balance, and vendors will need to target product innovation accordingly to the needs of growing industries. For example, the most talked about manufacturing market at Hannover Messe was battery manufacturing, with many companies choosing to explain their solutions in the context of how it supports this vertical, a prime example being Siemens’ joint presentation on its work with FREYR Battery, further building on its work with Northvolt (ABI Research provides further research on Electric Vehicles (EVs) and the battery market in its Electric Vehicles Research Service). If level 1 technology vendors can identify whether battery manufacturing will demand a higher use of hardware or software-based PLCs, then they will be able to channel their innovation resources more effectively into equipping specific products with new and market-leading functionality. Companies that can do this across a broad range of manufacturing verticals will likely become leaders in the level 1 industrial automation market.
Level 2: SCADA/HMI software vendors have an excellent opportunity to capitalize on somewhat of an innovation lull in this software market. While many companies are choosing to drive MES and PLCs as their shining stars, vendors that prioritize strong functionality development and clear use case messaging around their products will see significant success. Vendors that are more on the pure play side of SCADA/HMI software offerings with less demanding overarching portfolios stand to benefit the most from strong overt messaging in the current market climate.
Level 3: Smaller vendors have the capacity to dislodge larger vendors with long histories with legacy enterprise customers and have built strong market trust over the years. Companies like Plex Systems already identified that a keyway to building its market base was through large incumbent firms, and following its acquisition by Rockwell Automation, was able to successfully leverage the company’s global commercial networks. Smaller MES providers should be working to build strong use cases, demonstratable Overall Equipment Effectiveness (OEE) improvement and ability to scale, alongside competitive and innovative functionality design to attract larger manufacturing clients.
From the state of the show floor at Hannover Messe, larger vendors don’t have the correct messaging in place to connect with smaller manufacturers, or the flexible sales architecture to properly engage them. These MES providers need to focus on offering best-of-breed modular solutions that can be delivered with minimal oversight, alongside changing the market narrative, and positioning themselves as flexible companies that can effectively manage smaller deployments at lower cost points. Companies must build a strong portfolio of case studies that highlight challenges that resonate with smaller firms. The needs of the likes of a Mercedes, BASF, or SABIC plant have very little similarity with what SMEs require from their MES deployment and functionality.
Critical Manufacturing and Aegis Software are examples of MES providers that are effectively straddling these two positions and benefiting from strong market growth as a result. Both have a number of enterprise deployments and yet still remain agile and cost-effective enough for SMEs to effectively leverage their software.
