Global spend on industrial software to hit £20.7bn in 2024

Posted on 16 Jan 2020 by Jonny Williamson

The market for industrial and manufacturing software applications is set to grow from £13.4bn (US$18bn) in 2019 to £20.7bn ($27bn) in 2024, according to new research - an increase of more than 50%.

The smart, connected factories of today run on data. To harness that resource, more and more manufactures are turning to to industrial software applications.

Industry 4.0 concept image. industrial software instruments in the factory with cyber and physical system icons ,Internet of things network,smart factory solutionApplications such as Electronic Resource Planning (ERP); Manufacturing Execution Systems (MES); Manufacturing Operations Management (MOM); Product Lifecycle Management (PLM); Inventory Management, Customer Relationship Management (CRM), and Demand Planning.

ERP systems currently account for more than 50% of the spend, according to new analysis ABI Research, providing businesses with a single solution to monitor activities on the production line, to understand the firm’s ability to fulfill orders as well as automate many back-office functions

MES software is expected to be the highest growing segment as manufacturers look to optimise the performance of individual machines and the production line. The spend on MES is forecast to grow by 13.5% year-on-year to be worth £1.8bn ($2.3bn) by 2024.

Industrial software vendor mix 

A diverse mix of vendors are targeting the industrial markets, with large established players such as Microsoft, Oracle, Salesforce, and SAP, and those with a heritage in industrial manufacturing such as ABB, GE (Digital), Hewlett Packard (Enterprise) and Honeywell.

The vendor mix includes others with an industrial focused software portfolio, such as Autodesk, Dassault Systèmes and Siemens, and start-ups like Katana and Archdesk, which are helping smaller manufacturers scale.

The software applications no longer just provide data regarding the current conditions. As a result of suppliers investing in AI and machine learning, the applications’ analytical capabilities can help manufacturers plan for future scenarios in their facilities and the wider operating environment.

“Supplier propositions are evolving. For example, ERP suppliers continue to add modules such as MES and MOM while inventory management providers are adding demand planning capabilities. Both are blurring segment definitions,” said Michael Larner, principal analyst at ABI Research.

Unstoppable rise of the digital factory

Automation Digital Transformation Smart Factory Manufacturing _155386817 STOCK IMAGEIn related news, technology investments in the industrial and manufacturing sector are set to skyrocket, jumping from £45.2bn ($59bn) in 2019 to £287bn ($375bn) in 2030.

Including hardware, that figure climbs to more than £1 trillion, according to data released in late 2019 by ABI Research.

The transformative digital shift of manufacturing is being driven by investments in technologies such as industrial internet of things (IIoT), artificial intelligence (AI), augmented reality (AR), robotics (AGVS, AMRs) and cloud-based simulation and modeling.

Intelligently connected hardware represents the largest share of revenue, growing from £153bn ($200bn) in 2019 to a staggering £612bn ($800bn) in 2030. However, ABI Research expects it to relinquish its leads as associated software and services take hold.

Data and analytics is the fastest growing segment in terms of investment, reaching more than £142bn ($185bn) in 2030, up from just £8.4bn ($11bn) in 2019.

“As the amount of custom code required to deploy new solutions on the factory floor drops, data and analytic service revenue growth in smart manufacturing will accelerate,” noted Ryan Martin, principal analyst for Industrial & Manufacturing at ABI Research.

Currently, there are 260 million digital factory connections, according to ABI Research, with 230 million of those connections made via a fixed line.

Industry 4.0 Smart Factory Wireless IoT Industrial Internet of Things StockBut, by 2023, a vast number of the 5.5 billion digital factory connections will be wireless, driven by the rise in newly connected endpoints, including sensors, mobile robots, advanced asset tracking (RTLS), condition-based monitoring, and predictive maintenance applications.

Machine tools such as 3D printers, computer numerical control (CNC) machines, lathes, mills, and industrial drills, alongside asset tracking and connected programmable logic controllers (PLCs) are forecast to experience the greatest growth over the coming decade.

The leading industries driving these investments are thought to be automotive, heavy machinery, food and drink, tobacco products, and electronics.

And, though Industry 4.0 is a global phenomenon, roughly half of the global investments will be concentrated in China and the US, followed by Germany and Japan.