Rockwell Automation makes shift to ‘as-a-service’ model

In the digital era, few companies are safe from disruption — even highly innovative organizations like industrial automation giant Rockwell Automation.

That’s why, in the summer of 2021, Chris Nardecchia, SVP and chief digital and information officer, set about enabling a transformation that would change Rockwell’s business before it lost ground to a new class of hungry competitors. To do so, Nardecchia and his team sought to incorporate “digital threads” into the company’s hardware and thereby expand its business model beyond manufacturing into software-as-a-service.

“We knew we had to reinvent ourselves and that our business model wasn’t going to be sustained with so many companies moving to software as a service. We had to become more like a software company,” says Nardecchia, who kicked off Rockwell’s business reinvention by establishing what he called an Enterprise Transformation Office.

The Milwaukee, Wisc.-headquartered company makes highly engineered hardware with embedded firmware that operates in hostile industrial environments for long periods of time. Its challenge was not the typical digital transformation from within, which was already under way at the time, but a shift of its product offerings from industrial control hardware to software-as-a-service priced with a subscription-based maintenance model its customers were adopting with other partners.

Blueprint for change

Rockwell’s transformation strategy was based on three pillars, the first of which involved evolving its focus from physical products sold in catalogs to business outcomes and experiences. The second pillar would require a wholesale change in customer experience — not only in the way Rockwell customers procured and used Rockwell’s equipment and services but in a far more tight-knit relationship to make industrial controls in a SaaS environment. Finally, the third and most challenging pillar, Nardecchia says, was to develop a new business operating model and subscription-based services.

Over the past few years, Rockwell and its traditional rivals, such as Siemens, Emerson, and Honeywell, have been up against formidable new competitors: the cloud hyperscalars themselves, including AWS, Google, and Microsoft, which has made available a slew of industry clouds and services tailored for manufacturing, among other verticals.