Digitalization of industry 2022. TAdviser Overview

The concept of "Industry 4.0," which arose in the early 10s of our century in Germany, very quickly gained fame all over the world, despite the fact that each developed country had its own program for modernizing industries by translating them "into digital." In Russia, its principles were supported by regulators, suppliers and integrators of automation tools, and large production companies, and its name was widely used as a synonym for "digitalization of industry." Yes, and with the basic principles of the concept of "Industry 4.0" and participants in the Russian market, and industrial enterprises, and regulators agree.

There are only five of them. This is the organization of interaction between various production and business structures within the framework of the digital architecture of cluster-network chains, increasing the level of automation of production process management, the use of smart design and modeling practices, high resource efficiency and lean production, as well as continuous professional education of employees in order to adapt them to changes^[1].

To implement these principles, a wide range of digital tools and technologies are used: computer-aided design (CAD) systems, computer-aided engineering (CAE) systems, production automation (CAM) systems, production process management (MES) systems, product lifecycle management (PLM), integrated resource planning (ERP) systems, as well as analytical systems. Also, digitalization requires communication platforms, connection management tools, network equipment, communication systems, wired or wireless, various sensors, sensors and actuators.

The digitalization market for industry includes a huge number of segments that include software products, implementation costs, hardware complexes, communications/data centers and more, each of which has its own development vector, − said Pavel Fedosov, director of strategic projects at Zyfra Group of Companies, and adds that the volume of this complex market is several hundred billion rubles.

This market began to develop in Russia back in the mid-10s, after the imposition USA of sanctions against a number of large industrial enterprises, and therefore initially had a vector for import substitution.

However, import substitution is a long-term process, and its results, even at the moment, are insufficient, − comments Denis Khitrykh, director of the Center for Research and Development, Ph.D., MBA, MCD JSC, − in fact, only the first steps are being taken in this direction. That is why today the need comes to the fore for an early transition from an absolutely market industrial policy to a policy of ensuring technological sovereignty, reorienting to an internal manufacturer and finding our own modern solutions in various fields of science and technology.

2021 passed under the sign of easing restrictions associated with the coronavirus pandemic, as well as an increase in the number of projects implemented at enterprises in the spirit of the Industry 4.0 concept, notes Ekaterina Patyaka, Customer Relations Director of Selecty Group of Companies.

The growth dynamics of digitalization of industry as a whole was positive, − she states.

In this, most experts agree with her. Dmitry Ermilov, head of Automation of Industry, Korus Consulting Group of Companies, estimated the dynamics of market growth at 10%. Konstantin Kutukov, Marketing Director of PROF-IT Group, cited figures of 5-7%.

As a vendor of software and PAC for production process management, Zyfra Group notes the growth of this market by 10-15% in 2021, and according to our estimates, it is this segment of industrial software (not including system-wide, office and application software) that will be a key driver for the growth of the entire industry digitalization market, − comments Pavel Fedosov, director of strategic projects of this group of companies.

Sergei Kustov, Director of Chemistry and Petrochemistry, Maxima Telecom, identifies several more segments that have grown rapidly at enterprises in the chemical industry and timber industry: digital asset management solutions (MR, reliability management), modern in-memory DBMS. Boris Molchanov, technical director of AMT Group, added production robots, artificial intelligence, as well as prototyping in the format of digital twins.

We see growing interest in private pLTE communication networks, demand for cloud services, as well as increased demand for cybersecurity solutions. Production companies in 2021 began to more actively evaluate the effects of implementation, increased general awareness of the importance of digitalization, a large number of digital transformation programs appeared both at the level of an individual enterprise and at the state level, − said Pavel Fedosov, Zyfra Group of Companies.

As drivers of the growth of the market for solutions for the digitalization of industry in 2021, experts highlighted the growth of competition and the need to optimize costs, continued support from the state for digital transformation and labor productivity growth, increased requirements for managing the cost and quality of products, import substitution in the state and defense sector.

Indeed, in the fall of 2021, the state took another important step towards overcoming the lag behind foreign competitors by the Russian industry and gaining import independence. In November 2021, the Government approved an order on the strategic direction of digital transformation of the manufacturing industry, coordinated with state programs and national projects and approved until 2030.

Large-scale digital transformation will focus on the implementation of Russian solutions in the field of information technology at enterprises. To do this, we will quadruple financial support for domestic projects in the field of industrial software, − Mikhail Mishustin noted, presenting this document at an operational meeting with deputy prime ministers.

The document aims at introducing AI technologies, robotics, the Internet of Things, augmented reality technologies, as well as new production and communication technologies. It provides for the launch of four ecosystem projects in the field of digitalization of industry: Smart Production, Digital Engineering, New Employment Model and Future Products.

The result of the first project should be an increase in labor productivity, a decrease in scrap, a reduction in the time of product launch on the market, as well as intensification of the use of production capacities through the introduction of Russian software, hardware and software systems and digital platforms. Thus, by 2024, the time of forced downtime of production capacities should be reduced by 45%, and the payback period for investments in manufacturing enterprises should − by 30%.

The second project provides for the creation of a national standardization and certification system based on virtual testing technologies, as well as universal marketplaces operating on the principle of "from the idea of ​ ​ − to the market" and increasing the share of enterprises using "digital twins." The third project is aimed at creating conditions for increasing the specific gravity of intellectual labor in production and the efficiency of the use of human capital in industry. The fourth − focuses enterprises on the production of products for the tasks of customers, an increase in the share of high-tech products provided under the service model and a reduction in the cost of its repairs, through the use of predictive analytics.

At the same time, despite the positive dynamics of the business of suppliers and integrators of industrial software in 2021, several barriers stood in the way of enterprises to the "digital" future. The first of them − a high level of depreciation of fixed assets. According to the Federal state Statistics Service, cited by Denis Khitrykh, director of the MCD Research and Development Center, in 2021 it amounted, for example, to more than 50% in the manufacturing industry.

Other factors restraining digitalization, according to Boris Molchanov, technical director of AMT Group, are the high cost of decisions and, as a result, insufficient financing of projects for the transition to digital, and the insufficient maturity of business processes existing at enterprises and, often, the lack of necessary competence and IT literacy of employees.

In addition, in 2021, large private companies that implement digital transformation programs actively purchased foreign industrial software.

Until recently, about 80% of production in Russia used software from Western companies, which at least means the risks of disconnecting from technical support and supplying new versions of software at any time, − says Pavel Fedosov, director of strategic projects at Zyfra Group of Companies.

Thus, by the beginning of 2022, the industry digitalization market showed positive dynamics: according to various estimates, it grew from 5 to 15%, including thanks to state support measures. However, large industrial enterprises-customers preferred foreign software tools to Russian ones and were clients of major international corporations. The consequence of this was the problems that such customers had to face after the start of the SVO.

CROC became the leader in the rating of the largest IT suppliers in industry, built on the basis of revenue from IT projects in this area in 2021. Its result compared to the previous year increased by 9.1% and reached 6.79 billion rubles. The top five largest IT suppliers for industrial enterprises also included Jet Infosystems, I-Teco, GK CIFRA and IBS Group of Companies. The total revenue of all participants in the rating exceeded 56 billion rubles.

After Russian President V.V. Putin announced the start of a special military operation in Ukraine, foreign software suppliers began to gradually suspend and then curtail business in the Russian market. According to the CSR, 56% of the 600 largest foreign companies represented in Russia, by the beginning of September, in one form or another, minimized their presence. Among them were strategically important solution suppliers for the Russian digitalization market: Autodesk, Siemens, Dassault Systems, Honeywell, Schneider Electric, ABB, General Electric, Yokogawa and many others.

The largest Russian industrial enterprises faced problems in maintaining uninterrupted functioning.

The urgent need for reliable domestic solutions came to the fore. This applies not only to software, but also to equipment, − says Dmitry Karamyshev, director of the mining solutions department of Reksoft.

Key IT systems, on which, for example, production planning and its management depend, and in some places production lines and other technological equipment, are left unaccompanied by vendors.

Many production companies turned to their own developments, others began to search for ready-made solutions. Both faced various challenges. The former experienced a shortage of competencies in their IT departments, others faced the need to refine or harmonize external solutions, − recalls Alexey Semenov, head of integration projects. Isource

Ekaterina Patyaka, Customer Relations Director of Selecty Group of Companies, notes that against the background of the departure or suspension of the system work of foreign suppliers, manufacturers of domestic software with their own solutions, which are close to foreign ones, began to enter the market more actively.

To maintain the continuity of business and production processes, many large industrial enterprises focused in the first half of the year on the purchase of IT equipment, components and spares.

The priority of the enterprises was observed not so much the development of new innovative and digital projects as the need to ensure the sustainability of the current business, − said Igor Zeldets, director of business development in the oil and gas and chemical industry of the IT company CROC.

In fact, according to experts, several priority tasks have appeared on the agenda of large production companies:

• Support of operating industrial automated systems of foreign production without vendor support;
• Assessment of all possible options for replacing such software;
• Development of internal competencies in terms of development and support of open source solutions;
• Change of business processes in terms of NSI maintenance, logistics, financial planning and accounting;
• Import substitution of industrial software;
• Development of domestic products in terms of architecture, functionality and integration capabilities.

Optimism for industrial enterprises and market participants in solutions for the digitalization of industry was given support measures adopted and announced by the state, said Pavel Fedosov, director of strategic projects at Zyfra Group of Companies.

First, the decree of the President of the Russian Federation "On measures to ensure the accelerated development of the information technology industry in the Russian Federation" came into force, which contains measures to support IT companies and their employees (tax preferences, grants, material support), − the expert recalls, - secondly, directives on digital transformation and import substitution for state-owned companies No. 3438p-P13 of April 14, 2021 are approved and actively implemented, the update of which introduces, among other things, personal responsibility for the failure to achieve a number of indicators, including import substitution. Thirdly, a decree was adopted to accelerate import substitution of software at critical infrastructure facilities.

Our analysis of the results of the work of industrial competence centers for replacing foreign solutions showed that on the agenda of industrial enterprises and their Russian suppliers there are issues of enhancing domestic solutions, scaling the developments of large companies and replacing the most critical systems (SCADA, MES, PLM). So all those companies that, long before the exodus of foreign players, began to invest in the development of Russian digital solutions are now receiving an additional incentive to develop and bring their products to the level of global analogues, − says Pavel Fedosov.

The main challenges and problems of this market are associated with updating the demand of large industrial enterprises for domestic industrial software for replacing solutions built on the products of global suppliers.

In June 2022, speaking at the conference "Digital Industry of Industrial Russia" (CIPR), Mikhail Mishustin, head of the Russian government, noted that only 23% of IT solutions used in industry are Russian. At the same time, as Dmitry Ermilov, head of Automation of Industry, KORUS Consulting Group, notes, today about 70-80% of foreign basic IT solutions can be replaced with domestic ones.

Import substitution of the remaining 20-30% is still in question, − he states and explains that these include either high-load ERP systems or systems related to industrial modeling and graphic design.

There are two options here: to abandon the use of the system as a whole, or to switch to a solution with limited functionality - it all depends on the specifics of the enterprise, − said an expert at KORUS Consulting Group.

A more serious challenge is the lack of Russian hardware solutions necessary for the deployment of the industrial Internet of Things at enterprises.

At the moment, there is no resource to quickly make modern hardware, chips - do not get domestic technologies. Industrial cannibalism and parallel imports have entered the arena, − says Olga Makova, director of the Reksoft Consulting Center for the Development of Digitalization Technologies.

At the same time, parallel imports require the creation of new supply chains, and this is not yet easy. According to Dmitry Karamyshev, director of the mining solutions department at Reksoft, today there are difficulties with logistics for the supply of server capacity and network equipment, on-board computers, various controllers and sensors used in the automation of production operations.

As a result, the impossibility of implementing digitalization projects for enterprises on time and within the framework of planned budgets, − the expert states and adds that additional funding, attracting resources and postponing are required to solve problems.

In addition, the United States begins to punish foreign companies, including Asian ones, for any technical support for Russia with a ban on the use of American technologies and the purchase of American high-tech goods, microcircuits, recalls Denis Khitrykh, director of the Research and Development Center of MCD JSC.

Konstantin Kutukov, Marketing Director of PROF-IT GROUP, also believes that the main restrictions that industrial enterprises are experiencing today are caused by the departure of Western vendors, the need to provide service to the existing infrastructure in these conditions, as well as the increased demand for specialists in the field of Russian technologies and software. And they are overcome by the transition to Russian technologies and parallel imports. In cases where this is impossible, he advises to conclude service contracts with specialized integrators with expertise in the field of products of departed vendors.

At the same time, it is clear that the transfer of all IT systems of large enterprises is not a matter of one day or even a year. And here they face the task of maintaining the IT infrastructure and production equipment in working order. And this requires the refinement and implementation of IT systems for asset accounting, as well as the provision of monitoring with the calculation and analysis of the resource compatibility of equipment units, notes Boris Molchanov, technical director of AMT GROUP.

The beginning of the SVO gave rise to turbulence in the personnel provision of the digital transformation of industry. The Ministry of Digital Development of the Russian Federation Maksut Shadayev, speaking at a parliamentary hour in the State Duma of the Russian Federation, estimated the number of IT specialists who have left the country since the beginning of 2022 at 100 thousand people, which is about 10% of all IT specialists in the country.

Selecty Group of Companies has increased the demand for professionals in the field of automated production control systems (ACS). The cost of these specialists in the labor market has almost doubled, − says Ekaterina Patyaka.

According to the expert, the outflow of valuable specialists abroad aggravated the shortage of qualified personnel. And foreign specialists, including from the countries of the former USSR, are not yet for the most part ready to move to work in Russia. As a result, an imbalance in supply and demand has formed in this segment of the labor market.

To solve this problem you need to approach globally, only so you can get a long-term effect, − says Ekaterina Patyaka. - It is necessary to carry out systematic training of new personnel and focus the attention of production managers and personnel on retraining opportunities.

Also, according to her, an active search for contractors for services for the selection of IT personnel and them, to outsourcing including among startups, should bring a positive effect to solve the personnel issue.

The state platform "Эффективность.рф," which was launched on October 5, 2022, should help manufacturing companies with a turnover of more than 400 million rubles and a foreign participation share of no more than 50% who do not have expensive IT specialists in the staff.

In continuation of the conversation about the features of the outgoing year, we asked experts about what trends originated and manifested themselves in these 12 months. Many of them will remain relevant in 2023. Among them there are trends related to doing business, and there are technological ones.

Pavel Fedosov, director of strategic projects of the Zyfra Group of Companies, called the formation of alliances of customers - large production companies based on industrial competence centers - the main trend in the domestic market for digitalization of industry in 2022.

The largest customers have already identified their import substitution needs (they formed the basis of the recently approved roadmap "New Industrial Software" and are estimated in the aggregate at about 200 billion rubles), − he notes and adds that after the start of SVO, the industry sees technological partners in domestic suppliers of advanced technologies. And the state, with its initiatives to support import substitution at KII facilities and replicate domestic decisions, in turn, acts as a guarantor of ensuring technological sovereignty.

Dmitry Karamyshev, Director of the Mining Solutions Department of Reksoft, highlighted several business trends reflecting a change in customer behavior in 2022.

Industrial enterprises began to invest more actively in the development of their own IT departments, develop solutions for their own production with an eye to their further development on the open market. In the mining industry, for example, these are systems for dispatching transport and accounting for the transportation of rock mass, − he said.

Ekaterina Patyaka, Customer Relations Director of Selecty Group, added to the list of business trends the introduction of Industry 4.0 technologies, the transition of a number of industrial enterprises to Russian software, as well as their turn towards Russian and Asian solution providers.

According to the representative of TerraLink, the most relevant trends are cybersecurity, market analysis to study the possibilities of replacing Western IT products with import-independent analogues, as well as the development of domestic software products.

Trends have also been the transition from replacement of individual tools (CAD, CAE, EDA, etc.) to replacement at the platform level (PLM, ERP, MES), and in a very short time, and a change in customer behavior. According to Pavel Shcherbinin, Director of Strategic Marketing in Mechanical Engineering at ASCON, choosing domestic solutions for migration, customers, along with functionality, take into account the degree of import independence and security. The reference point for them is the presence of the product in the register of Russian software. Customers are also interested in what software components it contains - for engineering software, the geometric kernel is of critical importance, on which operating systems and DBMS it works, whether "native" work on Russian OS will be provided. For a number of industries, it is important that the product has an FSTEC certificate.

In general, the industry will gradually replace technological stacks for the development and production of products, − the expert concludes.

According to feedback from Isource customers cited by Philip Chistov, its marketing director, they highlight the following business trends:

• digitization and automation of procurement activities (RPA), implementation of smart contracts and big data;
• creation of unified corporate reference books for equipment and materials;
• creation and development of own software development centers;
• robotization and modernization of production facilities and warehouses;
• creating digital twins.

According to him, among Isource customers there is a significant increase in demand for solutions for automation of procurement and supply solutions − supplier relationship management systems, SRM (Supplier relationship management), as well as supply chain management, SCM (Supply chain management).

In addition, they have a significant need for comprehensive solutions where planning, purchasing, reporting, and supplier management functions are combined with quality control, inventory management systems, and financial services. The effect of their implementation is already visible: reducing procurement costs by up to 15% and reducing production costs by 5-15%.

Warehouse management systems, WMS, and a digital production control service are also becoming more and more popular, allowing the customer to remotely, using a television receiver and digital checklists, quickly monitor production at a new plant for himself, predict the timeliness and quality of supply.

As for the technologies that in 2022 confirmed their viability in transferring production companies to digital and became trendy, Rexoft included machine vision, neural networks, 3D modeling of developments using UAVs, organizational methods and gamification, as well as robotization and autonomous transport, in the TOP-5 for the mining industry.

However, other experts also called these technologies, but without industry binding. So, according to Maria Melkonyan, director of marketing at SATEL, in 2022 artificial neural networks, computer vision and machine learning are actively used at Russian industrial enterprises to reduce the share of defects in production.

And Boris Molchanov, technical director of AMT GROUP, added process virtualization, BIM modeling, artificial intelligence to the list of current technologies, which allow minimizing human participation in production processes. Also, according to him, the funds for typing and automation of business processes, including production level for transfer to MES and PLM systems, are in trend. And besides, according to him, in 2022, the introduction of industrial safety technologies, which reduce and eliminate risks when working using digital solutions, entered a new level of development.

Several more important trends that appeared and/or intensified their action in the digitalization market of the industry in 2022 were named by Konstantin Kutukov, Marketing Director of PROF-IT Group. These are:

• Information security and critical infrastructure protection.
• Production dispatching, industrial identification. Analysis and processing of production data, predictive analytics for management and production decision-making.
• Ensuring reliability of equipment operation by means of repair and maintenance automation (maintenance).
• Mobile services for employees, convenient access to HR data, interaction within the team.

According to Maxim Chernikov, Key Customer Manager of the RDTECH Industrial Solutions Center, digital technologies that do not require a large number of specialists and deep knowledge in the field of programming, such as: Low Code/No Code, TestOps ,/, are gaining great popularity after the start of SVO. And this AgileDevOps trend is not only Russian: according to data, by IDC 2026 more than 40% of enterprises will introduce technologies based on Low Code to create intelligent user applications, spending 33% less resources.

According to the TAdviser project database, among the different classes of IT solutions in industrial companies, enterprise resource planning systems () ERP and systems () are most in demand electronic document management EDMS. It is these solutions in the TAdviser database that account for the largest number of projects completed in five key industrial industries - mechanical engineering, oil and gas, power and metallurgy.

For each class of IT systems implemented in certain industries, the TAdviser database allows you to identify the most popular solutions and vendors of these products. See the charts below for which companies are developing the systems most commonly deployed in key industries.

The year turned out to be difficult for the IT industry, in general, for the market of digitalization tools for enterprises, and for production companies, especially those related to mechanical engineering and the manufacturing industry. Some experts are not expecting growth. The results of 2022 will be difficult for the industry digitalization market, said Dmitry Karamyshev, director of the mining solutions department at Reksoft. According to him, this is due not only to the departure of foreign vendors, but also to the outflow of qualified IT specialists.

Konstantin Kutukov, director of PROF-IT Group, is also convinced that by the results of the year the volumes of the digitalization market in industry will decrease. The expert explains this by the suspension of a number of projects in the first half of the year, since for some companies the preservation of production and personnel came to the fore.

Boris Molchanov, technical director of AMT GROUP, predicts a slight decline in 2022 relative to forecasts. According to him, this year the priority task of enterprises was not so much development as the preservation of the continuity of existing business processes and the development of strategic plans for the use of alternative solutions, both for those planned for implementation and for migration from existing ones.

But the Zyfra Group of Companies believes that in the period from 2022 to 2025 the Russian market for digitalization of industry will grow significantly, despite the difficult geopolitical situation.

Digital transformation is already bringing significant effects for industry: many current and potential clients of our group of companies have already publicly announced this, − says Pavel Fedosov, director of strategic projects at Zyfra Group. − For each ruble invested, the client receives an effect of five rubles, which confirms the need for digitalization.

According to the expert, the industrial software industry, which has accelerated development and is currently 180 billion rubles. per year, according to forecasts, it will further grow by at least 10% annually. And the cumulative potential of the economic effect of the introduction of industrial software on a Russian scale is estimated at least a trillion rubles a year by 2025.

Ekaterina Patyaka, Customer Relations Director of Selecty Group, also notes very high growth rates in terms of digitalization. According to her, in 2022, the business of domestic software manufacturers is growing rapidly, startups in the field of industrial digitalization are actively developing, trade relations with Asian countries are deepening and expanding.

In the past three years, it has become more difficult to predict or make specific forecasts for the future, − says Ekaterina Patyaka. − Nevertheless, we expect that IT, as one of the powerful drivers of state and business development, will continue to gain momentum.

Many experts agree with her, who left without comment the results of the outgoing year. They expect a revival in the digitalization market of industry in 2023. Then, according to Dmitry Karamyshev, director of the mining solutions department of Reksoft, the companies will take practical steps for restructuring, and stabilization and growth of the number of projects will begin.

The main drivers of such growth will be deferred demand, the departure of global suppliers, the increase in the functionality of Russian products and solutions, vertical markets with high demand for digitalization.

Boris Molchanov, Technical Director of AMT Group, expects rapid development of such areas as IT outsourcing services and cloud technologies, as well as information security, which has been influenced by an increase in the number of external threats and changes in the regulatory framework, such as in terms of CII.

How will 2022 go down in the history of the digitalization market for industry? At least, ambiguous, at most, turning point? How is the year that Russian manufacturing companies and enterprises left their comfort zone, which global vendors have created for them for three decades?

Both market participants and their customers will remember it as a year of understanding the business value of IT specialists, especially in the field of software and Russian platforms and solutions. It will remain in memory like a year when Russian industry got a chance to gain independence, and domestic IT companies, perhaps for the first time in their history, faced a powerful surge in demand for their solutions.

In the next 3-4 years, Russian solutions in the field of digitalization of industry will close the key needs of enterprises. Next, we will be able to talk not only about IT substitution within the country, but also about exporting functionally developed solutions for various segments to new international markets, − Philip Chistov, Marketing Director of Isource, is convinced.

I really want to believe that it will be so.

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