Soft PLC and the innovator’s dilemma
Analysts at IoT Analytics predict that the widespread adoption of the Soft PLC (software-based programmable logic controller) in the future will completely change the way industrial automation and factories work.
Previously, programmable logic controllers (PLC) were created on rigid hardware-based logic: logic circuits, triggers, counters, and relays. These PLCs are called Hard PLCs. Then came software PLCs based on PC-compatible computers or Soft PLCs. In addition to their main task of technological process control, Soft PLCs can solve several tasks simultaneously and use modern multi-core processor capabilities.
What is the innovator’s dilemma?
In 1997, Harvard Business School professor Clayton Christensen published his book “The Innovator’s Dilemma. When New Technologies Cause Great Firms to Fail”. In it, he described the essence of disruptive innovation and its impact on business. The innovator’s dilemma is “the phenomenon where people who invent something are the last to see what is behind it.”
The dilemma is associated with the concept of “reinventing the wheel”, when something is copied from someone’s work. For example, a bicycle had no pedals at first, then the wheels had different diameters, and only after some time and some changes it took on the form we are used to nowadays.
Disruptive innovations are innovations that change the balance of the market. At the same time, old products become uncompetitive simply because the parameters that used to be vital become unimportant. For example, in hard drives, competition in capacity has been replaced by competition in size, and after that by competition in reliability. Almost always, the last function of competition is the price.
Kodak is a notorious example of a previously successful company that has gone from complete dominance of its industry to bankruptcy due to digital disruptive innovation. In 1976, the company held 90 % of the global film sales market, and in 1975 it was the first to develop and patent the world’s first digital handheld camera. But fear of cannibalization of the existing highly profitable film business forced Kodak to postpone the development and commercialization of digital handheld cameras. This delay left the door open to cheaper Asian competitors and ultimately led Kodak to file for bankruptcy in 2012.
Short history of Soft PLC
The industrial world is also not immune to digital shocks and is now on the verge of a technological revolution. Today, industrial device management is mainly carried out using closed PLCs, which are called the “industrial black box”.
Advances in virtualization technologies, real-time Linux operating systems and low-cost but powerful peripherals allow companies to replace “industrial black boxes” with Soft PLCs that run on a standard or industrial PC. The introduction of Soft PLC represents a dramatic shift in the development of industrial automation.
Industrial control has come a long way from bulky, difficult-to-maintain relay systems of the 1960s to today’s high-speed PC-based PLCs. What began as a major effort to replace relay control quickly became the backbone of modern industrial control and automation.
The emergence of the Windows operating system in 1985 spawned the first wave of software PLCs. The engineering community quickly saw the benefits of combining PLC and HMI in one device. Several Windows-based control systems emerged in the 1990s, but none have achieved significant growth in the market. The “Blue Screen of Death” raised questions about reliability, and the lack of virtualization technologies made it difficult to efficiently run multiple workloads (such as HMI and management) on a single device.
Fast forward to 2021 and see Soft PLC solve many of the early problems. Modern Soft PLCs are significantly more reliable, powerful, and flexible than in the past. They now pose a real threat to “industrial black boxes”.
The innovator’s dilemma over Soft PLC
When disruptive technologies emerge, companies face the innovator’s dilemma. They have to choose between serving existing customers by making continuous improvements to existing products or serving new customers and developing products based on disruptive technologies.
Historically, hard PLCs used to meet most of the needs of the then-current market. They had high reliability, short cycle times, and allowed already trained engineers to maintain various systems.
Soft PLCs were initially aimed at meeting the needs of new customers with low requirements, but at the same time, they provided more flexible application possibilities at a much lower cost than Hard PLC.
With the development of technologies, the capabilities of Soft PLC have grown and come close to Hard PLC.
To further validate the argument that Soft PLCs are truly a revolutionary force in the market, analysts at IoT Analytics decided to look at the success of Beckhoff (manufacturer of Soft PLCs) versus Rockwell Automation, a leading manufacturer of Hard PLCs.
Beckhoff’s CAGR averaged ~15 % from 2000 to 2019, compared to Rockwell’s 3 % over the same period. This difference in growth saw Beckhoff’s 2019 sales reaching 30 % of Rockwell’s sales. For comparison, in 2000, that figure was less than 5 %.
What can leading manufacturers do to avoid Kodak’s fate?
Christensen’s book tells us that leading manufacturers often go bankrupt if they focus only on improving their existing products instead of introducing new disruptive technologies. Competitors with products based on new technologies ultimately disrupt the business of leading manufacturers because new products can meet high consumer demands.
IoT Analytics conducted a market analysis and found that leading manufacturers are not ignoring the Soft PLC implementation trend. For example, manufacturers of industrial solutions ABB, Rockwell Automation, Schneider Electric and Siemens, in addition to Hard PLC, manufacture Soft PLC.
IoT Analytics analysts concluded that the risk of widespread replacement of Hard PLC by Soft PLC is unlikely. Even though Soft PLCs will approach or even surpass the characteristics of Hard PLCs over the next five years, they still must overcome a huge obstacle in the form of decision-makers. Executives are accustomed to using existing solutions on Hard PLC, so it will not be easy to implement changes.
Also, it’s worth noting that, no matter how effective a particular technology is, it is useless if employees don’t know how to use it. An employee at a major German manufacturer of industrial components revealed that they use Hard PLC from Siemens because engineers have already been trained to work with them, and they will work with what they know, even if this technology is more expensive.
Despite these obstacles, IoT Analytics analysts expect an increase in the share of automation systems based on Soft PLC. It should double from 3.5 % of the total industrial controller market to 7 % by 2025.
