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How software and digital transformations are changing industrial manufacturing?


Industrial manufacturing is one of the main industries where we serve clients, including a recent microservice migration project for a German automotive company and numerous Internet of Things (IoT) projects. Every so often, we like to look around the bigger industry and see what is happening and where the trends are, as this can inform how we try to work with clients in the future. 

The space is doing mostly well financially

We are seeing a trend line of industrial companies buying up software companies, likely in the name of digital transformation. This makes sense, too: in 2015, Jeffrey Immelt (former CEO of General Electric) said in a speech that “Industrial companies are in the information business whether they want to be or not.” We’ve seen that trend with our clients too; even if your main product or service is a physical, manufactured product, you still cannot compete without effective software development behind your processes. In 2016, the number of technology companies acquired by non-technology companies (682) outnumbered the number of tech companies acquired by other tech companies (655). 

If you can’t build it, buy it.

Meanwhile, the smart manufacturing platform market has a CAGR of 19.7%, and is expected to go from a $4B industry to a $10B+ industry in the next few years. 

How about the Internet of Things?

The Wall Street Journal recently said it is “changing the world,” and the growth in the sector -- especially among industrial manufacturing companies -- has been huge. We are also seeing more and more IoT usage in urban centers with the development of “smart cities.” The United Kingdom just introduced some security rules for IoT, which is the first big wave of regulations. It is not expected to slow growth in the area, but the regulatory environment around IoT will be an interesting trend to watch over the next 3-5 years.

Efficiency is the name of the game

One automaker was able to use software and tech to cut the time needed for new application deployment by 80% and reduce quality issues by 5%. So long as the gains and efficiency from software development and technology continue to make industrial manufacturing brands more and more competitive in-market, we will only see the use of traditional “tech stuff” rise in the manufacturing sector.

With the rise of technology, one of the biggest challenges is to be efficient in following industry trends. In the long term, this is a strategic decision to get the best possible technology.  Maybe you will need to do more with the Internet of Things for the next few months, but then after that, you might have road map needs about augmented reality or machine learning. With outsourced software development you can address those challenges. Anyhow, you have to have a reliable partner to outsource software development. 

To find out more about how to select the best software development partner for your digital transformation, download our checklist here:

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