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The growing importance of software in the manufacturing sector


It’s not just manufacturing – it applies to all industries. But manufacturing is the sector that outside observers might expect to be the least affected by the digital world. 

Nothing could be further from the truth of course, especially now.

Some people might think that everything in a factory is entirely mechanical, and maybe just has some electrical components – with a chip or two for the industrial robots.

But increasingly, factories are becoming a hive of hi-tech activity, and the new buzz is almost entirely about the software. 

The plant might contain the same machinery, but much of it in the past had no use for software.

But now, all of the equipment – no matter how ancient – is being connected to the industrial internet of things using a variety of sensors and gateways.


Even the robotics and automation systems, which have always featured relatively significant amounts of computing, are about to be integrated with colossal, all-encompassing infrastructures the likes of which have never been seen before.

Such deep and wide-ranging computerisation – or digitalisation as it’s more often referred to – is inevitable because the technology is available, both in terms of hardware and software.

And the effective application of the technology – particularly the software – usually leads to improved productivity and higher quality.

In fact, according to IHS Markit, it’s essential for manufacturing companies to adopt what it calls “software-centric” solutions just to stay competitive.

IHS does acknowledge, however, that the IIoT ecosystem is particularly complex, with partnerships assuming a critical role in enabling vendors to offer complete solutions.

It says that, by and large, partnerships have become a necessity between information technology companies supporting cloud platforms and analytics on the one hand, and operation technology companies on the other that provide the deep-domain knowledge and hardware currently utilized by manufacturers.

But while partnerships are one route that companies can undertake, a handful of firms last year engaged in the active acquisition of software vendors, introducing new elements or augmenting existing parts to their own smart manufacturing portfolio.

These companies included industry leaders such as US-based GE Digital and Honeywell, as well as Siemens of Germany, particularly true for the areas of digitalization, where software is able to create digital twins of physical products, processes and plants; as well as for technologies to support cloud platforms and data analytics.

The key takeaway here, says IHS, is that manufacturing companies could see an acceleration in acquisitions and partnerships going forward, as automation companies fight over and target software vendors able to expand the smart manufacturing portfolios of the acquiring firms.

Moreover, as Deloitte has observed in one of its manufacturing surveys, there is a skills gap in the manufacturing sector.

Not only does this affect the mechanical engineering side – the operations technology, if you will – but, perhaps more crucially, there’s newly discovered need for information technology professionals.

Deloitte estimates that in the next eight years, 2 million jobs in the US manufacturing sector will go unfilled because there simply aren’t enough people with the right skills.

This means, says Deloitte, that “developing talent is essential” in an increasingly complex manufacturing environment where IT and OT are merging.

“Adding to the complexity if finding workers with the skills required to meet today’s advanced manufacturing requirements,” says Deloitte.