The manufacturing industry is undergoing a renaissance, and shedding its stereotype as a technology laggard as it pursues the promise of new AI technologies and the need to be relevant to a new generation of technology-native workers. But is the ecosystem built for widespread innovation toward a digital-first paradigm? Not until the industry solves one persistent pest of every technology revolution: vendor lock-in.  

A New-Age Problem Stalks an Age-Old Industry 

It’s a tale we’ve seen before whenever a wave of digitization moves into a new segment of the business landscape. Tenured vendors enter the arena last after resisting the new technologies, but then become enamored with the idea that they can use their brand-new applications and proprietary interfaces, coupled with their long-standing and near-monopolistic leadership, to create competitive moats, and drive what they call customer retention — and what customers fear as “vendor lock-in.” This strategy relies on those vendors maintaining control of customer data, and forming draconian partnerships where the larger, established players leverage customer access as a means to control innovation and partner flexibility. This vendor strategy is attractive to the established players in the market; we’ve seen it (most recently with large cloud providers), but it traces its roots all the way back to cellular service providers and, for the historians among us, mainframe computer vendors. 

We’re at risk of seeing that strategy rear its ugly head in manufacturing today. The biggest players in the manufacturing industry have been around for hundreds of years, often running with their preferred vendors for decades. Their partnerships are locked in, sometimes to the point of suffocation. Capital equipment lasts for decades, and thus so do the vendor relationships around it, reducing the opportunity for innovative technology and new ideas to make their way onto the factory floor. 

Now consider Industry 4.0: the digital, connected, and data-driven ideal that manufacturers set their sights on just ten years ago, and an ideal that few have reached. According to a recent report that surveyed 500 manufacturing decision-makers, AI investment is on the rise despite three-quarters of respondents also noting they cannot quantify the technology’s benefits. While there’s no way to identify a causal relationship between vendor lock-in and manufacturers’ doubts about AI’s impact, I am confident that the siloed nature of solutions is at least partly to blame. The industrial sector must bid farewell to the status quo, or the optimal benefits of Industry 4.0 will never be realized. They must understand that their long-term value and viability does not come from trying to lock in their customers, but instead from setting them free to capture the value of new innovation. 

The Future is Interconnected   

The change is already underway, but success remains fragile. Manufacturing ecosystems have become more inter-connected and data-centric over the last three years in the aftermath of COVID-era supply chain obstacles. Now it’s time the equipment and software vendors that support this ecosystem lean into more collaboration and openness. By doing so, we can deliver value to our customers, rather than trying to dominate their relationships with the rest of the vendor ecosystem. 

Why? Because as we’ve seen in countless similar iterations in the past, access to data always wins. Customers will always see the value in being able to share data between systems and having the right to choose and change vendors as their own organizations evolve. This is why, in 2023, manufacturers are more likely to lean toward emerging tech vendors who understand the collaboration that goes into true innovation, especially at a time when tech budgets are under scrutiny. They’re the ones who will embrace open APIs to not only enable customer integrations within their existing environments, but to also let entirely new value be built around their offerings, regardless of whether or not they directly profit from these newer value streams. 

Our future is exciting when we see hints of a new software ecosystem developing; one with tools and systems built around free-flowing information and faster time-to-value, with snappier integrations. This will become the preferred landscape by generating platforms that will help maturing startups create value for their partners. This new ecosystem is what will enable emerging technologies such as generative AI to add massive value. This value will in turn impact the entire manufacturing ecosystem by creating a new driving force of the industry: adding value through collaboration and openness, rather than control and resistance to change. 

Ushering in a New Era 

Vendors that provide flexibility and the easiest connectivity options will be the ones that come out on top over the single-minded, rigid vendors. On the other side of the ecosystem, manufacturers that embrace these young but pioneering technology providers will pull ahead of the competition and realize true technological advancement. Together, these paradigm shifts will position the sector as a leader in innovation. 

Brian Fitzgerald is chief revenue officer at Augury.