Last but not least, Manufacturing becomes big business in the cloud.
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The Cloud Manufacturing market is certainly getting a lot of attention with new players (and older ERPs) getting in on the cloud phenomena. ERPs who have been cloud providers, but were not strong in manufacturing, are building their way in. And ERPs who had strong manufacturing capability on premise have developed cloud solutions. Plus, in the last few years there are new kids on the block. Competition is certainly heating up.
Zach Nelson, CEO of NetSuite, well known for e-commerce and wholesale distribution, made a strong declaration at their 2013 user conference, that NetSuite is “all in on manufacturing.” In fact, they have been diligently building a capability, bit by bit, for several years in order to make a strong declaration now.
Plex, the pioneer who bravely took the leap when no one else had, is really the leader here today. Not only are they all-cloud, but also they have the cloud culture, like NetSuite or Salesforece.com. It’s not a side business for them. CEO Jason Blessing, a veteran of other ERP companies, waxes on about the power of the cloud to support global operations—so important in manufacturing today. Depth and breadth count.
Epicor also declared at their user conference, Insights 2013, that their cloud services have significantly expanded. And now Epicor ERP is multi-tenant, like Epicor Express for smaller manufacturers that they announced several years ago.
QAD‘s on demand revenue continues to grow steeply—faster, it appears, than their on premise sales.
SAP muscled their way into cloud through several significant acquisitions and has ported and refined their megawatt manufacturing functionality to be accessible for the smaller company. Their ERP cloud sales and their push to create a huge partner network have been astounding.1
Infor, with probably the longest-standing manufacturing ERP customer base has, through both acquisition (Lawson Software) and significant re-architecting of other manufacturing solutions such as SyteLine, entered the cloud game today.
Newcomers, Kenandy and BizSlate, born on the cloud, are also beginning to make their presence felt.
And there are others….
Clouds in Manufacturing
Manufacturing Market Not for the Faint-Hearted
I don’t know which is harder: developing a scalable multi-tenant solution that can support hundreds of users simultaneously, world-wide, or building the code base for deep manufacturing. Doing both does take time. That is why these ‘evolutions’ are so interesting.
When Zach Nelson addressed NetSuite's customer base at SuiteWorld 2013, he discussed this evolution. “Historically, we have addressed outsourced manufacturing… Manufacturing can be incredibly complex, which is why manufacturing has been the last area to fall [i.e., for NetSuite to address]. Manufacturers tend to go global quickly. Even smaller manufacturers often need to manage suppliers in Asia and potentially a global distribution chain to the end-customer. This is where the cloud helps. We have built out NetSuite for Manufacturers over the last two years to solve this. It includes great new functionality in planning, shop floor control, routing, scheduling, operations, WIP management….”
Plex’s road was different. Already a deep functional manufacturing solution, they decided many years ago to go all in on cloud, which was extremely brave to do. Plant floor performance is the key, and right now as I am writing this and wondering why my web search is so slow today, we all see the point—could over-the-web manufacturing perform? We have written about this before for manufacturing and warehouse. To accomplish high performance takes some planning and technology beyond great software.2
Having evaluated probably every scheduling package in the universe (OK, planet Earth), I know the depth of expertise required to provide scheduling, quality engineering/design for manufacturing processes, and the specific business acumen and technology to develop each mode of manufacturing and make it perform. The old MRP runs don’t cut it. Users—even in the front office—want split-second timing to build scenarios, evaluate new plans, and make sure they’re feasible before they send them to the plant floor or to trading partners around the world who will build to their command.3
The deep manufacturing capabilities required before a solution can be declared ‘real’ are mentioned by my colleague Bill McBeath in his article, Manufacturing in the Cloud.
Lots of Competition—Hot Market
Where there is smoke, there is fire. Or in this case where there are buyers, there is a software provider. The terms of battle are pretty clear, but not all avowed manufacturing-in-the-cloud solutions will be a good fit for you. Domain expertise in the particulars of the shop floor and planning are certainly prerequisites for first consideration when looking for a Manufacturing ERP.
Of equal importance is industry expertise. And here is where the ERP players, many with their deep vertical expertise, need to be assessed. If your ERP provider has generic industry knowledge but no authentic depth, it can be a real handicap to the software’s ability to meet your process needs as well as a problem during implementation. Some players’ depth can be described thus: generic expertise—retail, authentic depth—lumber retailers. Or, generic expertise—wholesale distribution, authentic expertise—auto parts wholesale distribution. Process versus discrete industries is certainly a good opening line. But a little more scrutiny and more depth are required, such as: for petroleum industry only, or just for food and beverage. Both are process industries, but very different businesses—a world apart in terms of functional requirements. You see the point.
And not all cloud is the same. Multi-tenant is not the same as hosting. Cloud, in general, is a deployment strategy—a way for users to access their technology over the web versus staging their equipment on site. There are fundamentally two types of cloud (and lots of variants):
Hosting—your unique software license, their hardware data center services
Multi-tenant—shared, single code base and hardware
Beyond that there are variants in method as well as pricing. You can read more about these at SaaS Pricing.
The cost of hosting may be less than on premise, since you are getting some scale from a big data center operation. And the cost of multi-tenant should be less than hosting, since the solution provider only has to manage a single code base. Users should expect these cost savings to be passed on to them—pricing is a competitive issue.
Creating multi-tenant capability is not a trivial accomplishment. De facto, multi-tenant supports many customers. Thus, it must be consistent, real-time and never fail. There are critical technology infrastructure considerations, software architectural issues, and methods for monitoring and support that are unique to this environment. They all need to be evaluated. Many users are concerned about security. Of course this is important, but performance is the key.
Techniques that support configuration (rather than customizations) as well as how and when upgrades will occur must also be clarified. Again, it’s a different environment than ‘self’ management.
Who’s Not There?
Manufacturing has been a very thorny area to put in the cloud. But some providers are on the path forward.
AspenTech announced AspenOne’s web-based manufacturing solution that is a clean re-engineering of the solutions and creates a single user interface uniting many of the applications for manufacturing and engineering to a single UI. Lots of work at AspenTech during the last few years has seen positive growth for this company.
IQMS has stated they are ‘an on premise’ solution, but do have cloud solutions for vendor portals. (Most ERPs who support heavy lifting manufacturing do. NetSuite will release one next year.) HarrisData has mobile/tablet applications in the cloud. IFS, another avowed on premise provider, does have cloud-based mobile and scheduling (most ERPs do have mobile as a cloud app, at least.).
There will always be an on premise market. So, for the foreseeable future not having a multi-tenant offering may not be a handicap. But I wonder if cloud ultimately will impact the ERP market as the client server change impacted it in the last decade. Firms like SSA—who? or MAXCIM—who? were late, or did not arrive at the client server game at all. And nobody hears of them now. So there is a risk.
The other question technology firms should ask themselves: is our sales growth so great that cutting ourselves off from half the prospect-base is OK?
1. We will have more on SAP in Manufacturing in the next issue after their Manufacturing and Supply Chain conference. -- Return to article text above
2. Plex partners with Akamai for their internet platform accelerator technology (Dynamic Site Accelerator or Web Application Accelerator). Also, you may need a boost from better telco/internet infrastructure at your site. -- Return to article text above