Schneider Electric, in partnership with global research firm Omdia, unveiled a landmark study on November 26, 2025, quantifying the hidden costs and lost competitiveness stemming from the use of closed industrial automation systems in the American region—costs that reach an estimated $11.28 million per year for mid-sized organizations. This comprehensive research, titled 'Open vs. Closed: The $11.28M Question for Industrial Leaders,' dives deep into the operational, financial, and strategic pitfalls of proprietary, hardware-bound automation platforms, which still dominate many U.S. manufacturing sites even as industry-wide digital transformation accelerates.

According to the study, closed systems—often lauded for their legacy reliability—mask a host of critical issues that quietly erode the bottom line. The report draws on extensive survey and financial modeling data to document how these platforms lead to 7.5% annual revenue losses for mid-sized manufacturers, and even greater proportional losses for small businesses (sometimes up to 25% of yearly income). For large U.S. manufacturers, the financial impact can reach an astonishing $45.18 million a year. The main sources of these losses are operational inefficiencies, extended downtime, expensive compliance retrofits, and sluggish response to market shifts—all rooted in the use of outdated, hardware-driven architectures.

One of the starkest findings is that most companies manage between two and over ten distinct automation platforms, each with unique maintenance and support demands. This complexity results in vendor lock-in, as about 30% of support cases require specialized external expertise, challenging workforce productivity at a time when the manufacturing sector faces acute skill shortages. The absence of system interoperability further hinders predictive maintenance, real-time insight, and rapid troubleshooting, causing prolonged downtime and lost output, which scale up the financial damage across plant networks.

The study breaks down the $11.28 million annual deficit into four key areas: $6.1 million in agility and resilience losses—costs associated with hardware inflexibility and the requirement for physical modifications (with large enterprises facing changeover costs as high as $250K per hour); $2.28 million in operational optimization inefficiencies, where downtime, multiple maintenance regimes, and specialized skill requirements compound costs; $1.2 million in preventable quality failures and inaccessible data, a byproduct of siloed, proprietary systems that only allow about 28% of organizations to achieve real-time data insights; and $1.7 million in escalating sustainability and compliance costs, as regulatory changes trigger expensive hardware retrofits instead of agile system reprogramming.

Schneider Electric and Omdia present open, software-defined automation as the critical way forward. By decoupling software from hardware and adopting an open-standards-based, vendor-neutral approach, manufacturers gain strategic advantages: streamlined multi-vendor integration, accelerated adaptation to market changes or batch requirements, and empowerment of operational teams instead of relying on diminishing pools of niche technical experts. The research highlights early adopters who start with small-scale pilots, then scale modernization efforts across plants, unlocking full data ownership, improved quality control, and transparent cost management. The transition is shown to protect existing investments while making manufacturing systems more future-proof and recession-resilient.

Gwenaëlle Avice Huet, Executive Vice President for Industrial Automation at Schneider Electric, notes that the greatest gains may accrue to smaller enterprises, which are most vulnerable to the constraints of closed systems but also stand to benefit most from savings that can be redirected into innovation and workforce development. Omdia principal analyst Anna Ahrens emphasized the urgent need for transformation, noting that 'every quarter a business delays addressing the cost of closed automation ecosystems is another $1M+ in lost value'—money that could be reinvested in R&D, expansion, and digital upskilling.

For American manufacturers, plant operators, technology vendors, and systems integrators, this research underscores the imperative to prioritize open automation architectures, not only as a technical upgrade but as a source of sustained profitability, agility, and market leadership in an increasingly volatile industrial landscape.

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