Cambashi's insights into COVID-19's impact on industrial software and IoT

A look at COVID-19 pandemic's impact and the corresponding outlook in IIoT and industrial software.

Introduction

No-one can accurately predict the social and economic impact of the COVID-19 pandemic but, by combining economic scenarios with datasets and prior experience, we can assess its impact on the engineering, manufacturing, and industrial (‘Technical Applications’) software markets in general, and industrial IoT (IIoT) in particular.

In the short- to medium-term, the predicted impact on different industries is not uniform; in general, industries that depend on disposable income, such as those that are travel- or fashion-related, will be affected more than those that are vital, such as utilities and medically-related industries.

Other variations can be explained by the following Market Drivers:

1. The fragility of global supply chains will lead to Re-shoring and increased investment in industrial automation software
2. Increased investment in in Cost-saving applications with short-term payback
3. Increased drive for Digitization – but ‘Exotic’ applications harder to justify
4. The negative affect of Financial factors on certain industries
5. Proximity and Safety measures enforced by the crisis
6. The growth of Cloud-based applications as used to manage business disruption.

Winners and Losers - The impact of COVID-19 on IIoT/Connected Applications and Digital Transformation

Cambashi’s analysis of the Connected Applications (IIoT) market shows that the growth over the last few years has been very positive, and the effect of COVID is likely to be temporary.

Cambashi’s view is that most digital transformation projects will be ‘winners’ because many companies will accelerate digitalization to support flexibility in working arrangements and production location. Visionary companies will see the demand shock as an opportunity to invest in transformative digital technology such as BIM (‘Building Information Management’) and Autonomous Vehicle Fleets so as to reap the rewards in the upturn. On the other hand, some transformation initiatives – in industries badly affected by the demand shock and cash-flow issues – will suffer.

There will also be ‘winners’ where more emphasis is placed on efficiency and cost-saving investments that have a quick payback, such as selling Product as as Service, Predictive Maintenance and Lights-out Production. Use Cases likely to be ‘losers’ include Remote Exploration for Oil and Gas – due to the oil price, and investment in exotic transportation technology such as Autonomous Drone Taxis.

Connected Applications are often a key part of a Digital Transformation initiative involving an ecosystem of providers and adjacent technologies such as PLM, CAx, BIM and MOM. For example, the ‘Digital Twin’ concept – using CAE (Computer-Aided Engineering) and simulation technology – can be used to reconfigure a production line to meet operative distancing rules. Connected Applications, linked to sensors, provide the ‘real world’ data and link to the digital model.

Conclusion

The impact of the COVID-19 pandemic on Connected Applications (IIoT) will be serious but temporary; there will be Winners and Losers depending on how the business applications are affected by Market Drivers. Cambashi models this in granular detail to show the effect by industry, country and application and indicate where the Winners and Losers are likely to be. This is still projected to be a high growth sector and further research is planned to predict the shape and growth of the next phase. Given the complexity of the ecosystem, providers will need to understand how to position themselves in order to capitalize on new growth opportunities.

Footnote:

Cambashi continues to research this market – with the support of industry players – to analyze the new wave of IIoT and Connected Applications growth in 2021 and beyond.

Request a copy of the full White Paper, and further information here: https://cambashi.com/our-services/market-data/industrial-iot/