Tag Archives: software innovation

The Broken Promises of Manufacturing Innovation

We received a lot of feedback, positive and negative, regarding our blog on market consolidation and manufacturing software.

It obviously struck a nerve, with strong feelings on both sides of the market consolidation and mergers issue.

The Truth about Market Consolidation

Market consolidation, with independent suppliers merging either through acquisition, partnerships or takeovers, is a business tool. Some mergers work – look at the success of the Disney and Pixar merger.

Others see a dark side to market consolidation, especially in the software and technology industry. Technology doesn’t blend easily – consider the failure of the AOL and Time Warner merger. Customer service, price point, and functionality are often sacrificed when two companies become one.

Manufacturing software mergers aren’t benefiting the industry. The results of these partnerships are often more toxic than “transformative.” Keep in mind the following as you consider a potential solution born out of a technology merger or partnership:

  • The high cost of an acquisition or merger. There is a cost to any merger – development costs for combining software systems, additional training and support expenses. Customers pay that cost with an increase in the product price or higher service charges. Suppliers spin the higher price as a “benefit” of access to additional functionality the customer didn’t want and will never use.
  • The death of innovation. Innovation fuels the manufacturing software and technology industry. Software suppliers should partner with customers to keep technology relevant. Companies that purchase new functionality, rather than innovating, put their customers at risk. Purchased capability will never be as successful or integrated as functionality built directly for the software. It’s a high-cost shortcut in product development.
  • The struggle for product support. The first victim in an acquisition or merger is product support. With the companies focused on integrating products and building a new revenue line, previous customers struggle to get the attention they need from the supplier. Even after the acquisition, there will be support questions as the new company determines how to support both older offerings and new products.

Fighting Back Against Market Consolidation

According to a recent article in the New York Times, those who bought into the promise of greater efficiency and customer benefit after business consolidation and mergers are now struggling with buyer’s remorse.

With consolidation, it is easier for companies to raise prices without risking the loss of customers and suppliers can collude on price without raising the ire of regulators. Entrepreneurs and start-up companies, the engine of innovation, find it increasingly difficult to enter a market dominated by a few businesses. When they do succeed in bringing a shot of innovation to a static product line, the company is gobbled up as an acquisition.

Business works best when there is competition. Companies should focus on developing their product to benefit customers rather than building out functionality through competitor acquisition.

If you want a manufacturing software solution fueled by innovation and internal development, rather than mergers and acquisition, look for an independent vendor with a product developed and supported in-house. They will work with you as a partner in ways larger corporations can’t. Massive software companies, stretched thin by an acquisition culture and focused on growing the revenue stream rather than a product, lack the dynamism and customer focus to work as a partner with manufacturers. They leave many of their customers burdened with high-costs, software complexity and innovation atrophy.

Want to know more, or see how a partnership culture in a manufacturing software supplier can solve problems and grow your business? Contact an Application Specialist at CIMx Software for more information.

Are You Getting the Whole Story from Your MES Vendor?

The decisions a vendor makes while building their system can have an impact on the viability and cost of your solution.  Learn how you can protect yourself from hidden costs and frustration.

By Kristin McLane, President of CIMx Software

Make versus Buy?  It is a question that has vexed many a manufacturer looking for the shop floor control and visibility an MES (Manufacturing Execution System) or paperless manufacturing system will provide.

Did you know the decisions a software vendor makes with their product can have a major impact on the cost and long-term viability of your purchase? Illustration by www.colourbox.com

Did you know the decisions a software vendor makes with their product can have a major impact on the cost and long-term viability of your purchase? Illustration by http://www.colourbox.com

Building your own software system, the “make” in this equation, has its advantages.  You can design the system you want, and if you have the patience, resources, and money to make it happen, that’s the system you will get.  But, it will be significantly more expensive and risky than other options, and you will need to invest time and resources to secure the long-term reliability and maintainability of the software.

Buying a software system means reaching out to vendors, researching options and how they will work with your workflow and shop floor, and purchasing the solution you need.  It is less expensive, and you have software support (at least, with reliable vendors you do), but it does require initial work, and training and preparation on the shop floor.

There is no right or wrong answer to the make versus buy question for you.  That said, MES and paperless manufacturing vendors also face the option to make versus buy, and their answer can have a major impact on the product they offer you.

The Genealogy of MES Functionality

Today, with the rapid rate of change in technology and manufacturing processes, MES and paperless manufacturing systems will need new functionality to maintain their competitive edge.  The vendor needs to decide how they will fill the hole in their product.

Some vendors “make” the functionality by writing new code and continuing to develop their product.  There are benefits to “make” for customers.  By developing the functionality in-house, vendors ensure the addition is tightly integrated with the core product, and it works seamlessly with the other product capability.  The functionality should be thoroughly tested before it is released to the public, giving you confidence in the results.  In addition, any installation, implementation, and training will be done by the people who wrote the software, which is always a benefit.

Other companies elect to “buy” the functionality.  They see a hole in their offering, and do exactly what a potential customer does – market research, find a company or product that fills the hole, and then purchase the solution.  The vendor adds necessary functionality in their product, but it is a budget-based, not an innovation-based solution.

The Benefits of an Innovation-based Solution

There are problems with “buy” based solutions in MES and paperless manufacturing software.  First off, any purchased solution must be, somehow, integrated with the main product.  This is not always an easy process, especially when solutions use different system architecture.  Many products, filled with pre-purchased functionality (they sometimes call them “modules”) end up with a maze of integration points that lead to additional complexity and risk when it is integrated.

Position yourself for success by making the right software purchase. Illustration by www.colourbox.com

Position yourself for success by making the right software purchase. Illustration by http://www.colourbox.com

It can lead to other problems as well.   In an MES system, every interaction has offsetting interactions throughout your production.  A non-conformance in one area has repercussions in notification, messaging, resolution, archiving, reporting, and more.  Without the right architectural approach, the loosely linked functionality is adjusted and readjusted each time you have a new requirement or you need to update the system.  Over time, the need to adjust the system to account for the genealogy of the individual systems that make up your software significantly increases the TCO (Total Cost of Ownership) of your system.  It becomes a confusing software mess that hinders production and adds cost.

Sure, the vendor may have found a quick and easy solution to their missing functionality, but you’ll be paying for that solution over the life of the software.  Have fun with that…

Behavior versus Transaction-based Software

This is a common problem for manufacturers that turn to their ERP vendor for an MES solution.

When we started in MES eighteen years ago, there were just half a dozen vendors on the market.  ERP systems were just being implemented in manufacturing, and MES focused on connecting the shop floor.

Over the next 10 years, ERP vendors searched for ways to expand their customer offerings and gain a critical edge on competition.  At the very heart of an ERP (any ERP) is the transaction.  The ERP focuses on documenting and managing the transactions that make up your business.  Because the ERP was a transaction-based system, it was far too complex for these vendors to integrate a simultaneous workflow-based system that is the foundation of an MES.  Vendors who tried to build their own MES usually delivered a template-based system (which uses transaction architecture) that requires significant training and will never mirror your existing workflow without customization.  Other vendors started buying MES and offering them as “add-ons” to their primary offering, the ERP.

All too often, a “buy” MES purchased by an ERP vendor is not likely to be integrated with the main platform.  Sure, they may have developed a plan for integration, but it isn’t going to be any better than another MES integrated to the ERP.  Since the vendor didn’t build the MES, they are going to have difficulty supporting it, and any additional functionality you’d like to add to the MES, or upgrades or updates, will be another purchase or a development struggle since MES is not their primary expertise.

This is why many companies don’t offer free product upgrades with new releases.

Consider where and how the system and functionality came from before making a purchase.  Are you talking to an ERP vendor about MES?  If your ERP vendor has an MES, chances are it’s a “buy” and not a “make.”  The vendor who built and developed the software will ensure better support, lower risk, lower project complexity, more software updates and upgrades, and a much lower overall TCO.

Be sure your vendor “makes,” and not “buys” the functionality you need for the shop floor.