As the "crown" of the industrial field in the digital economy era and the "brain and nerve of industrial manufacturing", industrial software has penetrated and applied

to almost all core links of the industrial field. At present, industrial enterprises above designated size in China have basically used industrial software to assist

production and decision-making, and even small and medium-sized industrial enterprises mostly use 1-2 types of industrial software. It is precisely like this that

industrial software was used as a specific means of supply interruption and "bottleneck" in the Sino US trade war. Its development is directly related to the survival

and development of Chinese enterprises, as well as the security and stability of the industrial chain supply chain.

In 2021, China's software and information technology service industry achieved a cumulative software business revenue of 9499.4 billion yuan, of which industrial

software accounted for 2.5%.

In terms of product lifecycle dimensions, the most common way in the industry is to divide industrial software into four categories: research and development

design,production and manufacturing, business management, and operation and maintenance services.

Design and development software: highest technical barrier

The development and design of industrial software, represented by CAE, CAD, and EDA, mainly aims to enhance the ability and efficiency of enterprises in the field

of product research and development.

This type of software has the characteristics of small size, high concentration, high development difficulty, long development cycle, and high capital demand. It is a

very important category in industrial software and also the weakest link in China. Domestic manufacturers have a market share of only about 5%, and most R&D and

design industrial software is only applied in areas with simple industrial mechanisms, single system functions, and low industry complexity.

Production and manufacturing: with the largest market size

Production and manufacturing software mainly collects, analyzes, and makes decisions during the production and manufacturing process of industrial products,

responsible for production management, material management, quality management, equipment management, energy consumption management, etc.

The manufacturing software market in industrial software has a large scale, with a production control software business completion volume of 68.5 billion yuan * in

2020, accounting for the highest proportion in the industrial software structure.

The scale of domestic manufacturers of DCS, SCADA, and PLC is relatively small, mainly concentrated in the mid to low end segmented markets. Although individual

products have good strength, there is a lack of overall digital solutions for intelligent factories. Currently, domestic MES companies have industry competitive

advantages in certain niche fields, but there is still a certain gap in technology depth and application promotion compared to foreign MES software products.

Business management: The fastest localization process.

The role of business management software is management and collaboration, with ERP being the most widely used software.

There is no difference in functionality between domestic and foreign industrial software for business management. However, due to the early establishment of

foreign manufacturers, the downstream customer volume is larger and the business is more complex. The software of international manufacturers is more suitable

for large and multinational enterprises. However, software from domestic manufacturers is more lightweight, with a smaller target customer base. The advantage is

that the project implementation cycle is also shorter, and there is less manpower to cooperate with the implementation.

Business management software has a high market share in the mid to low end market, and representative manufacturers such as Kingdee and UFIDA have emerged.

The market size of this software is close to 50 billion, and there is a lot of room for substitution in the high-end field.

Operation and maintenance services: promising prospects

Operation and maintenance service software is a system specialized in producing equipment for repair and maintenance. It originated in the aviation field and is

currently widely used in aviation, military, rail transit, engineering machinery and other fields.

Domestic software focuses more on data collection and monitoring, lacking assistance in data application and decision-making, and relying on foreign core

technologies for the underlying core. There is a certain gap between domestic MRO products, technology, functionality, and market share compared to foreign

products.

Why is Industrial Software Difficult

Driven by both market demand and policy support, China's industrial software industry has entered a fast lane, and there is still a huge gap from the development

demand of the manufacturing industry.

High difficulty in research and development, long cycle

Compared to general software, industrial software development is difficult, with complex system design, high technical barriers, high hardware costs, a shortage of

composite R&D talents, and high requirements for reliability. Therefore, the R&D cycle is long and the R&D iteration speed is slow.

It is estimated that the research and development cycle of large-scale industrial software generally takes 3-5 years, and it takes about 10 years to be recognized by

the market.

A survey in 2013 showed that developing a native mobile app takes about 18 weeks, and the current time will be even shorter.

Basic Science and Industrial Accumulation

Industrial software originated from industry and possesses software genes. Software engineers alone cannot write industrial software. The development of industrial

software requires cooperation between software engineers and experts in the industry, and requires deep integration of disciplines.

Chinese industrial software enterprises are mostly IT enterprises, lacking a solid industrial foundation and background. However, traditional industrial enterprises

prioritize "manufacturing" over "research and development design". Many industrial enterprises start from OEM, and they have high requirements for hardware such

as automation production and lack certain attention to software, which to some extent leads to insufficient independent innovation capabilities.

Building barriers through mergers and acquisitions

In the 1980s and 1990s, foreign industrial software went through a period of rising power and competition among lords. Through a large number of mergers and

acquisitions,itaccelerated the expansion of product lines, gradually forming a full industry chain supply loop from research and development design, production and

manufacturing to operation and maintenance management, and building entry barriers. This made it more difficult for domestic industrial software with point tools

as the main development model to enter the market.

Large talent gap

The research and development of industrial software is interdisciplinary and interdisciplinary, with high requirements for talents' interdisciplinary theoretical knowledge

and industrial practical experience. At present, China is facing a serious shortage of industrial software talents, and the serious shortage of industrial software teaching

staff is an undeniable fact.

Lack of unified standards

Lack of unified software standards makes it difficult for user enterprises to collaborate on data formats and interface standards when purchasing software from different

mainstream manufacturers in the upstream and downstream of the industry chain. Even through format standard conversion, there is a problem of losing important

feature information, making it difficult for domestic software to form a synergy and compete with foreign integrated platform software.