SIs bring automation advances to legacy systems

System integration insights

• Manufacturers focus on strategic areas while relying on system integrators (SIs) for complex automation, leading to broader SI engagements.
• SIs concentrate on specific industry verticals, adapting to diverse transformations and evolving market demands for specialized expertise.

While there are always industry vertical ups and downs, the overall U.S. system integration (SI) market has been booming over the past years. The pace of growth has slowed down a bit recently, providing many SIs with a welcome return to a sustainable pace.

Let’s look at the drivers of this dynamic technology services market, including those specific to systems integration. Let’s ponder what opportunities the current market state suggests, as well as what SIs might do to seize these opportunities.

While COVID-19 seems to be in the rear-view mirror, it was a cataclysmic global event. Several SI market drivers derive from this post-pandemic dynamic. For one, a commitment to supply-chain resiliency contributes to increased manufacturing re- and nearshoring.

The pandemic dramatically reduced the available labor pool. Labor constraints impacting manufacturers ended up setting the pace for automation projects and SI work engagements. At the same time, engineering managers are demanding broader solutions from management, often expanding a project’s scope. SIs themselves encounter a competitive labor market when recruiting and have had to become creative to get the work done. If there was such a thing as a “war for talent,” the pandemic intensified it.

Expanding opportunities

The relationship between goods makers and system integrators has expanded in recent years. Manufacturers most often opt to focus on key strategic areas. Some still assign automation of manufacturing processes – their secret sauce – to internal teams. For the rest they engage the experts: design firms, EPCs (engineering, procurement and construction) contractors, automation equipment providers and SIs.

Manufacturers do today what they only dreamt about in the past. Deploying computational power on the plant floor is what smart manufacturing is about. But again, it expands the scope of work SIs are asked to perform.

While interfaces are ever more friendly, integration remains a challenge due to an installed base of legacy equipment. One way SIs play an expanded role is as consultants to goods makers overwhelmed by a myriad of possibilities.

Besides specializing in operations, enterprise or supply chain automation, many SIs focus on the industry verticals in which they’re experienced. While all industries evolve, some see more dramatic transformations.

Seize the opportunity; some suggestions

System integration market fundamentals look solid for years to come and represent an opportunity. SIs should consider the following. Realistically assess company strengths and weaknesses to set a viable growth strategy with realistic targets. Not every SI company has the same capabilities nor the same ambitions.

Develop a broader perspective by joining CSIA and attending the annual conference to benchmark with peers and collaborate with vendor partners.

Regarding the most immediate challenges:

The talent shortage will persist. As a business driven by talent resources, SIs need to scale their workforce to leverage boom periods. SIs should reexamine their approaches to recruiting and onboarding. If STEM graduates are highly sought for, how can they be won over? Are there unidentified non-STEM resources available? Is remote / hybrid work fully embraced?

SIs having the competence and desire to grow quickly should explore the following options:

• Hire resources that help deliver on newer opportunities: digital transformation consulting, on-going services, software license management, cybersecurity and others.

• Experiment, understand and embrace new business models. Automation suppliers feature application subscription models. Can an SI leverage subscription models?

• In general, end users find it easier to contract for OPEX versus CAPEX funded projects. Can SIs adapt or expand their offers to leverage this?

Opportunity often entails risk. The automation market has benefited from exciting growth backed by solid fundamentals. Opportunities are abundant, but not all SIs will benefit. Some will fail to adapt to an evolving market and lose out. Others will move forward even if they, just like the rest of us, are a bit unsure of the final destination.

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