Industrial Software: Why SaaS

ABI Research estimates the industrial software market will grow from US$49.6 billion in 2021 to US$87.9 billion in 2026, at a 12.1% CAGR. At the same time, software-as-a-service (SaaS)-enabled solutions within the industrial software domain will grow from about 5-8% of the market today to 32% by the end of the forecast. This includes everything from ERP, CRM, and demand planning to CAD, PLM, and quality control.

Several years ago, cloud would not have been on the table, let alone SaaS and shared data models. In fact, many companies are still transitioning from perpetual licenses to a subscription model. But all this is starting to change with the need for cloud to enable distributed teams to collaborate in real time – and following the move to cloud is the evolution of new business models, most notably the move to SaaS.

Before and without SaaS, industrial software applications lived on-site, often in digital silos or in isolation. This architecture is a challenge when work is forced off-site. As a result of the pandemic, adoption of certain SaaS solutions has more than doubled in the last 12 months, driven by the need for better data continuity, collaboration, and regulatory compliance among internal and external stakeholders.

SaaS enables flexible collaboration, faster innovation, and greater productivity at a lower total cost of ownership. With a SaaS solution, there is no software to install, manage, or upgrade. Users simply open a web browser, log in, and get to work, and everyone has access to the latest version.

The same applications can be accessed across multiple devices, whether computer, smartphone, tablet, or HMD, enabling teams to collaborate on projects, documents, and designs in real-time with awareness of everyone else’s presence and changes, instead of working on copies of files checked out and downloaded from the server. This means more seamless collaboration and a better way for organizations to share knowledge and innovate. Leading vendors offering these solutions include Autodesk, Dassault Systèmes, PTC (Onshape, Arena), and Siemens.

SaaS is a foundational technology platform for these capabilities and its broader use in manufacturing is growing rapidly. Today, it is commonly associated with collaborative product development, but SaaS will transform other domains as well, including PLM, digital twins, and IoT platforms.

For example, consider the benefit of giving different cohorts of users access to the same data but through a different lens. For engineering, it may be to analyze OEE; for a field service technician, it may be to create or manage a work order. Accessing and managing the same shared data source allows more agile and concurrent workflows. So, in this case, the field service technician can work in real time with the engineering colleague. Increasingly, this scenario is expanding to include supply chain data to ensure parts are available as well as the environmental impact of each decision.

This isn’t to say that SaaS underpins all digital twins, but more likely than not, digital twins will be a logical offshoot of future industrial SaaS solutions. Furthermore, early adopters are finding SaaS greatly accelerates innovation in addition to ensuring confidence in terms of business continuity. While initial adoption of SaaS was out of necessity due to a lack of data access for distributed teams, now it is out of necessity for better productivity, collaboration, and risk control.