The latest report, titled Open vs. Closed: The $11.28M Question for Industrial Leaders and conducted by global analyst firm Omdia, reveals that mid-sized organisations lose an average of 7.5 per cent of annual revenue due to inefficiencies linked to legacy automation systems.
For large enterprises, losses were found to average at around $45.18 million, while smaller manufacturers face even steeper proportional impacts, with some losing up to 25 per cent of their yearly income.
According to the latest research, these costs stem from operational inefficiencies, downtime, compliance retrofits and delayed production – issues often masked by the perceived reliability of traditional hardware-defined systems.
Built for static environments, these systems often struggle to meet the demands of modern, dynamic operations. Their proprietary architectures limit data access and flexibility, turning routine updates into costly technical projects and reducing responsiveness, the researchers said.
According to the report, hardware complexity lies at the heart of the challenge, a most companies were found to operate across multiple platforms – often between two and ten or more – each with unique maintenance requirements.
This fragmentation drives vendor dependency, with 30 per cent of issues requiring specialist support, and exacerbates workforce pressures at a time of acute skills shortages. Siloed systems also hinder predictive maintenance and rapid issue resolution, leading to costly downtime and lost productivity.
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The report calls for urgent transformation, advocating for open, software-defined automation as a scalable solution fit for the future. By decoupling software from hardware, it suggests, manufacturers can integrate multi-vendor systems, adapt quickly to market shifts, produce small batches efficiently and close growing engineering skill gaps.
Schneider Electric said its customers are already seeing results through pilot projects and phased deployments, unlocking full data ownership, enhanced quality control and greater cost transparency while protecting existing investments.
“This research echoes what our customers tell us every day: industrial systems must adapt as fast as their markets,” Gwenaëlle Avice Huet, Executive Vice President of Industrial Automation at Schneider Electric, said in a statement. “It’s particularly encouraging that smaller enterprises, the backbone of our economy, stand to gain the most in annual savings that can be reinvested in innovation and growth.
"Open, software-defined automation is a proven solution that empowers industrial players of all sizes to build resilience, drive innovation and thrive amid rapidly shifting consumer demands, regulatory pressure and market volatility.”
The study identifies four key areas of annual cost impact: operational agility and resilience losses, optimisation and efficiency gaps, preventable quality failures and data limitations, and sustainability and compliance expenses. Modification costs for hardware systems can range from $25,000 to $50,000 per hour, rising to $250,000 per hour for billion-dollar enterprises.
Anna Ahrens, Principal Analyst at Omdia, said the findings underline the urgency of change: “In a world where product lifecycles shrink, supply chains fracture and talent gaps widen, agility and flexibility aren’t optional – they are survival. Every quarter a business delays addressing the cost of closed automation ecosystems is another $1 million-plus in lost value: money that could be reinvested in growth and innovation.”
The full report can be accessed here.
