Are you ready for a revealing look at the paperless manufacturing software marketplace?
By Kristin McLane, President of CIMx Software
Every few years, market consolidation rattles the manufacturing software industry. Inevitably, to avoid supporting multiple software systems with similar functions, the mega-corporations behind market consolidation phase out solutions to offer “new” and improved solutions. They’ll praise the added capability and functionality as a benefit, while seeking additional service charges to implement the “upgrade.”
Last week, it happened again. Dassault purchased Apriso. Journalists and financial papers are right now writing about the benefits of the merger for the industry. Analysts ponder the implications for the manufacturing software market. Marketing teams are crafting new messages to highlight the benefits of the merger in preparation for the inevitable changes and additional costs to be passed along to customers.
All of these stories become a cacophony of noise assailing the public and fighting for attention. I see a missing angle to the story. Who talks about the current customer?
The combined resources and expertise of two software companies MIGHT present an opportunity out there for the world’s largest software vendors selling to the mega-manufacturing corporations (maybe). But most companies aren’t in that category. Few businesses have the cash and resources to spend millions, and the ability to wait months (or even years) for a new PLM system. Especially a PLM composed of multiple different systems. Having built software platforms for the last 20 years, software used in manufacturing industries from healthcare to aerospace, we know different systems aren’t easily merged. The underlying architecture makes a smooth transition impossible. Deriving benefit from this amalgamation will require the patience and resources of a mega-corporation.
So what does that mean for businesses without the mega-resources of the world’s largest manufacturing corporations? Alan and Brian Beaulieu of ITR Economics, a leading economic research and consulting firm, offer a clear and telling view of the business cycle. According to the business cycle, businesses purchase and implement infrastructure investments and equipment purchases BEFORE the Recovery and Growth phases of the business cycle, and during the Recession, a negative phase. Utilizing this model, the goal of a manufacturer should be to implement new software and systems as quickly as possible, to quickly enter the Recovery phase and before new orders arrive, ensuring you can meet increased demand. Long implementation cycles lead to missed opportunities for profit during the Recovery and Growth phases, and increased time in the negative phase of a business cycle.
If you follow this methodology, every day you avoid making the decision, you risk losing precious time to the up-cycle and increased profit. Every day you wait while “enhanced” functionality coming from multiple software vendors purchased in a merger get pieced together on your shop floor is another delay to the up-cycle. If production increases before the new and enhanced tools are ready, your business starts to get overwhelmed, and piecemeal processes are put in place so you can “get-by.” Any potential benefit you might have had is lost. You’ll end up having to unlearn inefficient processes.
This is the sad truth that is lost in the euphoric analysis after a merger. It’s the story not being told. New products and improved capabilities may (eventually) benefit the mega-corporations that can weather the inevitable struggles as a new system is developed, tested, refined and (finally) implemented. For most businesses any advantages will be hard, if not impossible to find, and there are dangers to be wary of in the marketplace.
Gartner makes a similar point in their article, “Dassault Systemes’ Planned Apriso Purchase to Bring MES and PLM Closer.” According to Gartner, with the combined capabilities of Delmia and Flexnet, companies could “… create more robust manufacturing processes with shorter innovation cycles without compromising quality…” once the system is in place and the functionality and software systems are integrated, a project that may cost millions of dollars in software and services, and require users to mold Delmia processes to their business.
Gartner goes on to recommend current Apriso customers, “… lock in current terms and conditions for software support for as long as possible,” and “… plan contingencies in case DS (Dassault) does not maintain satisfactory interfaces….” Furthermore, Gartner notes, “… the legacy of failed MES acquisitions across the entire market. Even the most seasoned of suitors often underestimates the complexity of delivering MES software.” Integrating complex software systems is not easy, and success isn’t guaranteed. And during the integration period there is a good chance many businesses (and customers) currently using the software will be left with a system that is no longer the primary concern of their software provider. Gartner has assessed mergers many times over the last 20 years – I remember at least 5 or 6 – and they offer good advice.
That’s the story often lost in the celebratory rush of marketing and publicity that follows a merger. It’s a story I’ve seen played out time and again. It’s why CIMx believes success is based on innovation, not acquisition. Our customers benefit with best-in-class paperless manufacturing software that makes a dramatic difference in the control and visibility of your shop floor, solving problems for manufacturers of any size and in any industry. Contact us and let’s see how we can help you.