Home Will IIoT bolster industrial automation investments?

Will IIoT bolster industrial automation investments?

The Industrial Internet of Things (IIoT) is proving to be a game-changer in many fields, none more structurally than in the automation industry. And a recent study by Morgan Stanley reinforces bullish sentiment for future automation investment thanks to the huge potential of IIoT.

A new report co-authored by Automation World and Morgan Stanley predicts IIoT will be a significant driver of industry growth in the coming years. Over the next five years it expects IIoT-related spending will grow from around 8% to 18%. This growth underscored Morgan Stanley’s bullish outlook for automation investment in North America.

“We believe recent macro volatility has not significantly altered a bullish medium-and longer-term outlook for automation investment,” said the report.

“Over the medium term, the majority of suppliers we interviewed also continue to expect the automation industry to grow at a faster pace than global GDP,” Morgan Stanley said. “By geography, North America stood out as a top priority in our survey respondents’ medium-term investment plans.”

“Discrete automation is expected to see the greatest [IIoT-related] growth opportunities given faster upgrade/replacement cycles and lower penetration of software compared to the process industries,” the report said.

industrial automation

Traditional strategies most at risk from industrial automation

Traditional industrial manufacturing strategies will likely see major disruption due to the impact of cloud-based analytics and the entry of new non-traditional software and IT players.

“While automation players do compete effectively with the likes of Oracle and SAP in manufacturing execution system and asset management software, the increasing adoption of cloud-based data analytics opens up the potential for non-traditional IT and software competitors to enter the frame, such as GE’s Predix platform,” said Morgan Stanley.

The report also predicts that the traditional IT suppliers will see disruption in the centrality of programmable logic controllers (PLC) used to run machinery on factory assembly lines

“Our survey also highlights the risk that the high-margin PLC could become a less central component of the automation system longer term,” the report says.

The report highlighted Siemens, Schneider Electric and Rockwell Automation as companies leading the push into new automation territory through new technologies like IIoT.

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