Key Trends Reshaping Industrial Technology

<h2 style="text-align: justify;">Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?</h2>With over 35 years of experience in Research and Development, I have specialized in developing distributed systems and software applications across multiple domains, including Industrial Automation, Aerospace, Electrical Distribution, Building Systems, Industrial Electronics, Industrial Networks, and IoT systems. Throughout my career, I have built multiple products, established technology and product engineering teams, and contributed to R&D strategies for large corporations.I began my career developing distributed hardware for monitoring and control systems in India's Nuclear programs. A significant portion of my career was spent at Honeywell and Schneider Electric, where I initially worked on software, industrial distributed systems, and wireless networks. Later, I transitioned into architecting distributed systems that integrated Embedded Systems, Networks, Software, and Cloud technologies. This involved building engineering teams from the ground up, developing product supply chains, fostering R&D partnerships with internal and external stakeholders, and driving innovation within the company. My last role at Schneider Electric was leading the Indian R&D center, where I focused on new product development, building R&D capabilities, Co-innovating with customers, and collaborating with partner institutions. My expertise lies in building world-class product development teams, strengthening R&D capabilities, fostering co-innovation, and developing efficient R&D ecosystems. I have a deep understanding of technology strategy, products, and systems across Automation, Electrical Distribution, Industrial Networks, Security Systems, Lighting, and Aerospace.Currently, I run a consulting firm that helps companies develop new products in Edge Computing, Sensors, and Automation. We specialize in building prototype quantities of these products, assisting companies with supplier substitution, creating subassemblies from scratch, reverse engineering and upgrading legacy products, and facilitating new technology development and technology transfers. <h2 style="text-align: justify;">Q2. Which segments within the industrial technology market are experiencing the fastest growth, particularly in emerging regions? What technological advancements are driving this growth?</h2>Key Growth DriversSeveral underlying trends are driving growth across industrial technology segments:Increasing Electrification: A shift toward electric solutions across industries, coupled with efforts to ensure energy comes from sustainable and renewable sources.Automation & Digitization: Expanding automation and digital transformation of industrial processes and business systems. Remote & Autonomous Operations: Growing adoption of autonomous and remotely managed industrial and business systems.Ubiquitous Real-Time Connectivity: Advancements in 5G and wireless industrial networks enabling seamless, high-speed communication.Technological Advancements Enabling GrowthEnhanced Computing Power & Edge Intelligence<ul style="text-align: justify;"><li>The increasing affordability of computing power allows multiple processors to be embedded in every application, significantly enhancing capabilities</li><li>The availability of miniaturized, low-power sensors—driven by the mobile phone revolution—enables smarter and more energy-efficient systems</li><li>Advancements in semiconductor manufacturing allow higher transistor densities, packing more functions into smaller chips</li><li>Neural networks integrated into IoT chips are enabling real-time decision-making at the edge, reducing communication costs, power consumption, and latency</li></ul> Universal Connectivity & Real-Time Data Processing<ul style="text-align: justify;"><li>The near-universal availability of cellular networks, edge computing, and industrial wireless networks has revolutionized data movement and accessibility</li><li>This enables near real-time access to high-performance computing for analytics, optimization, and automated decision-making</li><li>Advances in machine learning and AI tools allow the rapid development of autonomous agents for optimization, enhanced customer response, and system management</li><li>Cloud computing platforms like AWS, Azure, and Google Cloud provide industrial applications with scalable storage and processing power</li></ul> Next-Generation Power Electronics<ul style="text-align: justify;"><li>Semiconductor advancements in Silicon Carbide (SiC) and Gallium Nitride (GaN) are transforming power electronics</li><li>These technologies enable miniaturized power solutions with higher efficiency, better thermal management, and improved power storage</li></ul> Localized Production & Emerging Market ExpansionThere is a rising trend of localizing production in emerging regions, driven by:<ul style="text-align: justify;"><li>Regulatory changes in data management increasing demand for regional data centers</li><li>Growth in local supplier ecosystems supporting industrial expansion</li><li>Shifting customer preferences encouraging regional innovation</li></ul>Advancements in Additive Manufacturing (3D Printing) are accelerating rapid prototyping and mass customization, further driving localized production. <h2 style="text-align: justify;">Q3. What new smart grid technologies are companies like Siemens and ABB developing to improve grid resilience and renewable energy integration? How are these technologies being adopted in different markets?</h2>The electric grid did not change much for over a century; power was generated at power stations, transmitted over high voltage lines, and then distributed at demand canters, finally ending up at our homes or industries, stepped down and metered and delivered to the consumer. It is one way, with little feedback back, meters are read manually, and control switches are used to stop or start the electricity flow. With the arrival of energy generation on consumer rooftops, power storage, and distributed renewable generation near load centres, the need to manage and deliver load dynamically has been driving the need for a responsive grid with sensors, dynamically changing and routing energy generation sources for cost optimization and ensuring availability, power flow in both directions for net metering and dynamically switching or limiting demand based on real-time pricing and consumer participation. This calls for a smarter grid driven by new technologies.These are driven by technologies that enable data gathering to enable decision making, software tools to enable operation staff to quickly locate and fix faults, energy storage technologies to ensure power availability round the clock, and demand side management. The technologies include:Smart metering: meters are enhanced with low-power wireless technologies facilitating automatic meter reading, ensuring flexible tariffs by controlling demand at user premises, and providing the option to route solar power generated over rooftops to be delivered on the grid and metered.<ul style="text-align: justify;"><li>Sensor Technologies driven by miniaturization, adopting IC manufacturing technologies with rise in application of nanotechnology and MEMS</li><li>Ubiquitous communication with long-range networks like LoRA or NB-IOT to gather sensor data and make it available for load management, billing, fault detection, and management, providing quick turnaround time for the consumer.</li><li>Power storage is driven by improved, cheaper renewable generation, better battery technologies, and improved electronic power components, which have increased resilience and availability at the edge. This also enables distributed microgrids with renewable energy generation at the edge.</li><li>Rise of AI/ML technologies and the ability to embed these and create complex software systems, optimization, improved utilization of assets, and creating resilient and self-healing grid systems. This also leads to better management of demand management, efficient utilization of power and faster responses to outages. </li></ul> <h2 style="text-align: justify;">Q4. With ongoing challenges in OT/IT integration, does the adoption of open-source standards like OPC-UA provide a competitive advantage over proprietary systems like Emerson’s DeltaV?</h2>Open-source standards provide significant advantages to customers, leading to the emergence of multiple open-source frameworks. Traditionally, automation has been structured into four organizational levels:Level 1 – Device and Controller LevelLevel 2 – Supervisory LevelLevel 3 – Operational LevelLevel 4 – Enterprise LevelIn traditional closed systems, these levels interoperate seamlessly when all components come from the same vendor. This is similar to Apple’s ecosystem, where different system components work well together as long as they belong to the same brand. While traditional vendors offer OPC-UA (Open Platform Communications Unified Architecture), its implementation is often limited and does not extend across all levels of automation.<h2 style="text-align: justify;">Advantages of Open Standards</h2>Enhanced Data AccessibilityAutomation systems act as repositories of operational data, but in closed systems, this data remains locked and difficult to access by external applications. Typically, open protocols for data sharing are restricted to operational levels, limiting flexibility. Open standards at all levels enable customers to integrate applications as needed, potentially reducing the number of automation layers. By making process-level data more accessible, open standards empower businesses to optimize operations efficiently.Interoperability and FlexibilityAn open system ensures interoperability between different components, allowing customers to select the most suitable applications for their needs. This flexibility extends to system maintenance and upgrades, as businesses can replace or enhance individual components without being constrained by vendor-specific limitations.Avoiding Vendor Lock-inClosed systems often lead to vendor lock-in, where businesses rely on a single provider for system improvements and evolution. This dependency can result in rising costs and hinder innovation, as companies cannot easily adopt emerging technologies. Open standards eliminate this barrier, enabling businesses to evolve their automation systems in response to industry advancements.Open Process AutomationOpen systems are primarily driven by customer demand. A notable example is Open Process Automation, championed by ExxonMobil. This initiative has led to the development of an open and interoperable framework that allows hardware and software from different vendors to integrate seamlessly. By fostering compatibility among various components, Open Process Automation prevents vendor lock-in and promotes innovation across the industry. Q5. What strategic partnerships have competitors like Honeywell and Johnson Controls formed that might influence their competitive positioning?Strategic partnerships to achieve different business objectives, a few of which are mentioned below.  Technology PartnershipsStrategic partnerships with technology providers enable companies to enhance product development and improve operational efficiencies. These partnerships help businesses stay ahead of the competition by integrating cutting-edge technologies such as Artificial Intelligence (AI), Machine Learning (ML), and advanced semiconductor solutions.Examples:<ul style="text-align: justify;"><li>AI/ML collaborations for predictive analytics and automation</li><li>Partnerships for specialized materials and subassemblies</li><li>Software to enhance operational efficiencies like enterprise resource planning (ERP)</li></ul>Supply Chain and Logistics PartnershipsCompanies enter into supplier agreements and manufacturing collaborations to ensure supply chain continuity and resilience. These help businesses expand their global footprint, improve logistics, and mitigate risks such as material shortages.Examples:<ul style="text-align: justify;"><li>Post-COVID semiconductor shortage prompted supplier partnerships</li><li>Manufacturing tie-ups for global scalability, which reduce capital outlay</li><li>Distribution arrangements to enhance market reach</li></ul> Customer Partnerships for Market ExpansionCompanies collaborate with customers to co-develop first-of-a-kind technologies or implement new solutions. These partnerships drive innovation and create tailored solutions that cater to specific customer needs.\Examples:<ul style="text-align: justify;"><li>OEM collaborations to design industry-specific automation solutions</li><li>Co-development of smart building technologies</li><li>Pilot projects that evolve into market-ready solutions</li></ul> Interoperability PartnershipsBusinesses work together to ensure seamless integration between their products and services, providing customers with comprehensive, tested, and verified solutions. This enhances market accessibility and adoption by offering end-to-end compatibility.Examples:<ul style="text-align: justify;"><li>Software and hardware integration to enable smart manufacturing</li><li>Cloud computing partnerships for connected infrastructure</li><li>AI-driven analytics platforms that integrate with enterprise solutions</li></ul>Both Honeywell and Johnson Controls have engaged in strategic partnerships across these categories:Technology: Collaborations with Microsoft and IBM Watson AI to enhance building automation and analytics. Honeywell’s partnership with SAP enables seamless ERP integration, reducing deployment efforts for customers.Supply Chain: Partnerships with refiners and manufacturing firms to deliver well-integrated automation solutions, ensuring consistent supply chain operations.Customer Solutions: Joint efforts with industrial clients to develop and pilot cutting-edge technologies before scaling to broader markets.Interoperability: Integration with smart building systems and IoT-driven platforms to enhance efficiency and user experience.Strategic partnerships empower companies to accelerate innovation, expand market presence, and enhance product differentiation. They enable businesses to leverage emerging technologies, enter new markets, and offer holistic solutions across industries such as autonomous vehicles, renewable energy, and data centres. By collaborating effectively, companies position themselves as leaders in a rapidly evolving technological landscape. <h2 style="text-align: justify;">Q6. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?</h2>Investors seek to understand market opportunities, key emerging trends, technology and product differentiation, and customer adoption. Their key questions typically focus on the following areas:Market Position and Key Customers<ul style="text-align: justify;"><li>Assess the company’s market positioning and key customer segments</li><li>Identify major customers and understand their impact on the business</li><li>Evaluate the company's unique competitive edge and strategy for market expansion</li></ul> Technology and IP Differentiation<ul style="text-align: justify;"><li>Analyze the technology behind the product or solution and how it stands out from competitors</li><li>Assess the solution’s structure, adherence to industry standards, and regulatory compliance</li><li>Evaluate its scalability across multiple markets and ease of extension by system integrators</li><li>Understand how the company supports system integrators, manages partnerships, and fosters ecosystem growth</li><li>Review the company’s intellectual property (IP) portfolio and its strategic advantages</li></ul> Internal Capabilities and Infrastructure<ul style="text-align: justify;"><li>Examine internal human capital and organizational capabilities</li><li>Identify potential scalability challenges and infrastructure bottlenecks</li></ul> Key Risks and Potential Disruptions<ul style="text-align: justify;"><li>Assess critical risks that could impact business continuity and growth</li><li>Identify potential industry or technology disruptions</li></ul> Partnership Ecosystem<ul style="text-align: justify;"><li>Evaluate the company's approach to building and maintaining strategic partnerships and alliances</li><li>Identify key areas where partnerships provide competitive advantages</li></ul>   <h2 style="text-align: justify;">Expert Summary</h2>Having worked in research and development for more than 35 years, Premraj Krishnakutty was the chief of Schneider Electric's R&D in India. He oversaw more than 1500 engineers and support personnel in a variety of fields, including industrial automation, aerospace, and the internet of things. Leading technological strategy and product development at Schneider Electric, important responsibilities at Honeywell, and groundbreaking work in India's nuclear projects are some of his career highlights. His current company, which focusses on knowledge transfer, supplier innovation, and prototyping, is a consulting organisation that specialises in Edge Computing, Sensors, and Automation.

Premium Insights

Industrials