IoT Analytics
Assembly Line
Virtual PLCs: Can they become the industry norm by 2030?
For decades, PLCs have been a cornerstone of industrial automation. Since the 1960s, these small devices have executed control logic directly on the factory floor, ensuring seamless operation of robots, assembly lines, and other critical systems. To date, their core principles have largely remained unchanged: decentralized hardware spread across the factory floor, with control logic tightly coupled to vendor-specific devices. However, some large manufacturers are starting to challenge this paradigm. One notable example: automotive OEM Audi.
In 2022, Audi launched its Edge Cloud 4 Production (EC4P) initiative, a transformative project that seeks to centralize factory control. Instead of relying on multiple individual PLCs and industrial PCs, Audi’s EC4P seeks to consolidate control logic onto virtual PLCs (vPLCs) running in data centers miles from the factory floor. This shift from physical to virtualized control is a major departure from the status quo and signals a potential reimagining of industrial automation’s future (more on Audi and the EC4P initiative later in this article).
Virtualization technology a key enabler to software-hardware decoupling for factory control. Virtualization technology has revolutionized IT in the past years (e.g., data centers with servers running multiple virtual machines). IT/OT convergence is now bringing this technology to OT (e.g., virtual machines are now coming to OT devices such as Industrial PCs). As manufacturers prepare their future factories to be scalable, automated, and serviceable, PLC and PLC runtime vendors—like Germany-based industrial automation company Siemens or automation software provider CODESYS, among others—are taking cues from IT and have started offering vPLCs.
Vendors face the innovator’s dilemma due to hardware decoupling. Proprietary hardware-based PLCs have been highly profitable and a strong source of revenue for industrial automation vendors (such as Siemens, Rockwell Automation, ABB, Honeywell, Mitsubishi, or Schneider Electric) for years. Decoupling control logic (software) from hardware may shift the revenue model toward software alone, creating what the late Harvard professor and business consultant Clayton Christensen famously termed the “innovator’s dilemma”: Do vendors adopt the new, possibly profitable innovation at the risk of undermining their well-established and profitable hardware and software model? For years, vendors appeared largely hesitant to support this business model.
IT/OT convergence: The 27 themes that define the future of industrial integration
Convergence is driven by the need for a scalable, robust, and secure data exchange. IT systems manage business-critical operations, while OT systems control physical processes and generate key operational data. Companies are recognizing that converging these two domains is becoming essential as they seek to enhance operational efficiency and digital capabilities.
Industrial DataOps aims to enhance data quality by providing structure and context for accurate, logical data representation, ensuring usability by downstream applications. DataOps enables deeper alignment between data producers (e.g., sensors, machines, SCADA) and consumers (e.g., various IT applications, analytics applications).
OEM servitization strategies: Why Equipment as a Service hasn’t taken off yet
In 2020, IoT Analytics questioned whether we were witnessing the start of the machine-outcome decade (the 2020s), where assets are not purchased as capital expenditures (CapEx) but, instead, are paid for on an outcome basis as operational expenses (OpEx). Moving from CapEx to OpEx helps companies with limited access to capital access equipment without a large upfront investment, and assets with unpredictable usage could be more cost-effective since the companies would only pay for what they use.
According to our latest research on the topic—the 147-page Equipment as a Service Market Report 2024–2028—the concepts of “equipment as a service” and “pay-per-use” have not taken off as much as expected, even though the greater subscription economy has. IoT Analytics’ estimates the adoption of “as-a-service” models is less than 1%—meaning that less than 1% of equipment sales in 2023 (machines, electronics, electrical equipment, etc.) was achieved with EaaS contracts.