ARC Advisory Group Sees Rising Interest in Virtual Controllers, MES in the IT/OT Convergence, and Operational Resiliency

As a manufacturer, it’s easy to get overwhelmed by the abundance of technologies and strategies targeted at the industry to help improve operations and/or boost the bottom line. That’s why it can be helpful to get a state-of-the-state about what other manufacturers are doing. Such insights may not help you innovate or stand out from the crowd, but they can certainly let you know which way the wind is blowing to make sure you don’t fall behind.

At the 2025 ODVA annual meeting, Craig Resnick, vice president of consulting at ARC Advisory Group, highlighted several areas of interest from a research study ARC conducted with 600 end users across 16 industries. Three of Resnick’s highlights were of particular interest: the growing interest in virtual controllers, the role of MES in the IT/OT convergence, and the need for improved operational resiliency.

Virtual controllers

“If we had asked this question about virtual controllers a couple of years ago, the responses would have been totally different,” said Resnick, noting industry’s caution around new advances in critical technologies such as controllers.

Resnick revealed the survey results indicating about a third of respondents plan to use virtual PLCs for up to 25% of their applications by 2030. Another third of respondents said they could see using virtual controllers for nearly half of their control applications. Only about 10% of respondents said they had no plans to use virtual controllers by 2030.

Before COVID, many manufacturers would never allow production information to leave the plant nor allow a process to be monitored or controlled remotely. But this resistance faded when manufacturers couldn’t have full personnel present in plants to keep operations running.

As for how these controllers would be hosted by the manufacturers, Resnick said nearly all planned to host virtual controllers in on-premises edge computing devices.

Resnick repeated his surprise at these results about virtual PLCs, saying this change is “a relatively new phenomenon. It's something you’ll certainly want to keep your eye on, as this is not something we would have predicted even as recently as a few years ago.”

See links below to more info on virtual controllers.

IT/OT convergence

Are you sick of the IT/OT convergence topic yet? I know many in our audience are a bit over the term and the convergence process has certainly not been 50/50 in terms of ultimate influence. For example, while operations technology (OT) experts still have the last word on plant floor technologies, they increasingly have to consider how well those technologies can communicate and otherwise play nice with IT’s enterprise systems.

Craig Resnick, vice president of consulting at ARC Advisory Group.

Despite the overfamiliarity many OT professionals have with IT/OT convergence, Resnick noted one surprising development: manufacturing execution systems (MES) are being seen as a key technology not just on the OT side of the equation, but in IT as well.

He said IT increasingly sees the value in having a “single version of the truth” from MES to create a dashboard that not only visualizes what's happening on the plant floor but shows operations data in comparison to the business metrics they need to track.

Resnick said ARC is seeing increasing use of AI here to ensure plant floor data is converted into meaningful information that workers across the organization can understand based on their role.

This trend shows how manufacturing visualization is “advancing from traditional HMI/SCADA technologies and moving toward enterprise visualization,” he said.

ARC Group’s research also highlighted the extent of IT’s influence on industry’s digital transformation in terms of funding. According to Resnick, about 40% of respondents said their digital transformation funds are part of IT’s budget, with about 20% noting these funds are part of a general digital transformation budget, and another 20% noting these funds are connected to specific line of business budgets.

A third of respondents plan to use virtual PLCs for up to 25% of their applications by 2030. Another third said they could see using virtual controllers for nearly half of their control applications.

Operational resilience as a manufacturing strategy

The concept of operational resilience has been gaining a lot of attention over the past several years for two reasons: 1) the explosion of digital connections within manufacturing businesses and their partners as part of industry’s digital transformation has created more areas of potential disruption in the case of network outages; 2) supply chain disruptions due to climate change, pandemics, the growth of sophisticated cybersecurity threats targeting industry, and increasing geopolitical instability.

Providing an example of the need for improved operational resilience, Resnick pointed to Baxter, which makes about 60% of all IV fluid in the United States. He noted that the floods in western North Carolina in September 2024 following Hurricane Helene disrupted Baxter’s production operations, forcing hospitals to give patients Gatorade instead of IV fluid until other supply sources were established. Baxter’s 10 production lines were not fully restarted until January 2025.

Some of the questions Resnick said manufacturers need to be asking themselves to better plan for operational resilience include:

How can we not be so dependent on any single source?
What is the backup plan if we lose a source for any reason?

To better understand the scope and impact of operational resilience, Resnick pointed out how much attitudes in industry around remote connectivity changed during COVID. Before March 2020, many of ARC’s industry clients said they would never allow production information to leave the plant and that they would never allow a process to be monitored or controlled remotely, he said. But this resistance to remote control and monitoring faded when manufacturers couldn’t have full personnel present in plants to keep operations running.

“This helped many manufacturers recognize the benefit of being able to do secure remote monitoring and control,” said Resnick.

He added that the biggest risks for manufacturers without resiliency plans include: