Vendor Assessment: MES Strategies Part 2 Selecting the Right MES Application EXCERPT Sponsored by: Apriso Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.988.7900 F.508.988.7881 www.idc-mi.com Pierfrancesco Manenti Nello Pepe Lorenzo Veronesi February 2011 IN THIS EXCERPT This document is an excerpt from the IDC Manufacturing Insights study: Business Strategy: MES Strategies Part 2 Selecting the Right MES Application (IDC Manufacturing Insights #MIOT01S, Oct 2010). It contains sections from Situation Overview, Figure 1, Figure 4, IT Suppliers and Essential Guidance. The original study outlines the existing MES applications available in the market that can support the modern view of MES as defined in IDC Manufacturing Insights' previous study Business Strategy: MES Strategies Part 1 Importance and Challenges of Real time Manufacturing Execution (IDC Manufacturing Insights #MICO01R9, May 2009). It also provides a competitive analysis of the top 7 MES vendors to the worldwide manufacturing industry, namely Apriso, AspenTech, Invensys Operations Management, Oracle, Rockwell Software, SAP/Visiprise, and Siemens. "Vendor Assessment: MES Strategies Part 2 Selecting the Right MES Application" Despite the importance of effective operations management, the vast majority of manufacturing companies are still basing their production execution practices on the traditional concept that sees factories and their related processes as isolated entities respective of the rest of the corporations. This practice of factory isolation is mirrored in the typical IT applications landscape that most manufacturers have in place today. In the past 10 years, although great effort has been spent on ERP systems and SCM applications, many companies adopted a low-profile IT strategy to support shop floor level business processes. This was typically plant centric and local, with minimal or no involvement of corporate IT. The result of this practice exacerbated by 10 years of relevant M&A and divesture activities is that an average manufacturing enterprise has an extremely diversified and disconnected IT applications landscape. The modern view of MES sees it as the natural link between the corporate-level IT backbone typically the ERP system and the February 2011, IDC Manufacturing Insights #MIOT01SE1
physical production assets located in each factory. In this view, MES tools are to be considered as corporatewide business applications integrated with other "peers" applications such as SCM and PLM and, of course, with the ERP system. Among the key business challenges and opportunities that modern MES approach is able to address, IDC Manufacturing Insights identified: Harmonization of global manufacturing operations Manufacturing intelligence Seamless integration with corporate business applications Connecting design and manufacturing operations Improvement of fixed assets utilization Compliance and environmental footprint reduction Manufacturing companies today thus have very good reasons to undertake a thorough transformation of their current operations management, aiming toward real-time manufacturing operations. The adoption of a modern MES application supports this view. IT Suppliers The MES Vendors Landscape The previously discussed unstructured practice of shop floor level IT adoption has widely prevented the growth of standardized and packaged MES applications, differently from what happened for ERP and other business applications. Additionally, the existence of "competing" applications to the MES space made vendors of end-to-end MES applications compressed between specialized vendors of specific functional areas (e.g., quality management, maintenance management, document control, laboratory management, supervisory control, etc.) and vendors of suite applications such as ERP, SCM, and PLM that included basic shop-floor functionalities. The consequence on the offering side was that the majority of MES vendors struggled to get out of their geographical, functional, or vertical niches. Indeed, a lot of vendors in the market today are small and local companies that focus their applications on specific industries and/or on few niche functionalities. The current market offering of MES applications, thus, sees a very fragmented scenario, with a large number of small players, most of which active in a single national or regional market and/or vertical industry segment. Page 2 #MIOT01SE1 2011 IDC Manufacturing Insights
MES Vendor Classification We can classify MES vendors into three main categories according to their heritage and approach to MES applications: Bottom-up MES vendors Grown up from shop-floor devices and supervisory software, these companies offer a wide range of applications at ISA-95 Levels 1 and 2. Over time, they have extended and sometimes stretched their Level 2 software applications such as supervisory control and data acquisition (SCADA) or human machine interface (HMI) to cover manufacturing operations and control requirements at ISA-95 Level 3. The value that these vendors can bring to the industry resides in their manufacturing roots and their ability in handling complex shop-floor requirements characterized by large amounts of real-time data. The threat refers to the fact that, in some cases, vendors belonging to this category are still plant oriented and might still be far from MESA-11 view. The reason for that resides in the fact that those vendors are doing most of their business with Levels 1 and 2 shop-floor devices and supervisory software, often relegating MES applications as a "nice to have" option in their product portfolio capabilities. Top-down MES vendors Vendors in this area are typically large corporate or conglomerates rooted in enterprise application, particularly ERP. Having been finished many years ago with the hype of ERP implementations, most of those vendors started expanding their offerings toward functional areas outside the traditional space of transactional ERP systems. The path that most of them undertook generally by acquisition, sometimes by internal developments was initially focused on expanding their portfolio toward SCM applications, including production scheduling. Lately, they followed the strategy of entering into the product data management (PDM) and in some cases PLM space. More recently, some of them are undertaking a top-down expansion that encompasses the extension from their traditional location at ISA-95 Level 4 down toward including manufacturing operations functionalities at Level 3. The value that these vendors can bring to the industry is their vision of corporate MES applications and their capability of integrating MES with ERP. The threat similarly to what can be seen with the previous category is about their key business focus around other application areas. Additionally, they are used to manage 2011 IDC Manufacturing Insights #MIOT01SE1 Page 3
transactional applications that hardly fit the needs of real-time manufacturing. Inside-out MES vendors This is surely the largest category in terms of number of existing vendors. The majority of them are the above mentioned niche vendors, typically small and local companies, generally focused on specific industries only and/or on few niche functionalities. Most importantly, though, the average company in this group has not the critical mass needed for proper investments in R&D and marketing. However, a bunch of emerging worldwide companies with complete applications exist and are viable alternatives to the other categories. The value that these vendors can bring to the industry is their specialization and determination of targeting exactly the ISA-95 Level 3. Therefore, their applications are, in general, functionally deeper and more sophisticated when compared with those from the other two categories. The threat is about their implementation capability, particularly when they are called to support large worldwide implementations. In this respect, their partner ecosystem particularly the application skills availability from large IT service providers is an essential element to be considered. One of the worldwide leading vendors belonging to this category is Apriso, among many others. Figure 1 provides an overview of these three categories. Typically, bottom-up providers starting from controls, HMI, and SCADA are more focused on asset-oriented and brand-oriented value chains (AOVC and BOVC); in fact, process industries such as chemical, metal, pharmaceutical, and consumer-packaged goods (CPG) companies have stronger need for continuous process control. On the contrary, top-down providers that begun their MES journey from ERP have been historically addressing the technology-oriented and engineering-oriented value chains (TOVC and EOVC) within the discrete industry, covering sectors such as high-tech, aerospace, automotive, and industrial machinery. This happened because they leveraged on the product components data management capabilities of their ERP suites. However, both these categories are increasingly converging toward a vision encompassing the whole MES spectrum across all value chains, in line with what inside-out vendors offer. Page 4 #MIOT01SE1 2011 IDC Manufacturing Insights
FIGURE 1 MES Vendor Classification Source: IDC Manufacturing Insights, 2010 MES Vendors For the scope of the report, we interviewed several vendors. This excerpt focuses on one of these vendors, Apriso. Apriso Apriso is the only vendor in this group focused exclusively on manufacturing operations management. Apriso has developed its FlexNet solution through years of customer engagements and now has a global presence, both directly and through business partners. The company puts great emphasis on the capability of its MES application to manage large, multisite MES implementations, considering this to be one of its main differentiators. Where possible, Apriso is directly involved in customers' projects, complementing any shortage of available local skills. At the same time, particularly in 2011 IDC Manufacturing Insights #MIOT01SE1 Page 5
countries where the company doesn't have a direct presence, Apriso can leverage implementation support from its consulting partners, such as Accenture, HP, and IBM. Apriso is a relatively small company when compared with the other vendors serving this market, but the company size is, however, balanced by its focalized commitment to MES applications, as this is its core business. As a specialized MES vendor, Apriso supplies broad functional coverage along all ISA-95 and MESA-11 standards, with the goal of providing a unified solution for manufacturing operations. Apriso has recently announced partnerships with PLM providers Dassault Systèmes and PTC, in order to enhance its offering with digital manufacturing capabilities. Vendors Mapping In order to further deepen the analysis of MES vendors' landscape, IDC Manufacturing Insights mapped the vendors highlighting the differences in their value proposition (Figure 2). The vendors mapping we provide in this study is not intended to evaluate vendors against each other. There is not an absolute "winner" among the listed vendors, as each of them might fit better than others the specific needs of a single manufacturer. Rather, the map is intended as a guide for manufacturers willing to understand which vendor might better fit their specific needs. MES vendor positioning in the map is based on direct interactions with MES vendors, interviews with manufacturers currently using or implementing MES applications, and IDC Manufacturing Insights' understanding and viewpoint: Breadth It's a combination of weighted criteria that assesses the MES application capability of being deployed in large and complex implementations across multiple plants. It encompasses factors such as the availability of multiplant product features, the thorough understanding of MES-related business challenges by the vendor, the vendor financial stability, the economic relevance of MES business on total revenues, and the availability of a global partner ecosystem. The higher rank means that the product fits the needs of the most complex multiplant operational environments. The vendor is thus a viable option for worldwide deployments, long and complex implementations, and applications supporting significant evolution of scope and requirements overtime. The lower rank means that the application is suitable for single-plant operational environments, where there's a need to cover plant-specific requirements and where factory Page 6 #MIOT01SE1 2011 IDC Manufacturing Insights
automation might pay an essential role in order to reach adequate plant yield. Functionality It's a combination of weighted criteria that assesses MES applications in terms of functionality depth. It encompasses factors such as the coverage of standard reference models such as MESA-11 and ISA-95, the vendor's industry expertise, and the availability and depth of MES functionalities, interoperability, and architecture. The higher rank means that the product covers all and every function that is requested to the factory shop floor for its target industries. The application is adequate for a comprehensive implementation, resulting in an end-to-end solution. The lower rank means that the product is simple and can be easily deployed to cover basic MES functionalities. The application is adequate for a focused implementation, often resulting in an advantageous "quick win." FIGURE 4 Vendors Mapping Source: IDC Manufacturing Insights, 2010 2011 IDC Manufacturing Insights #MIOT01SE1 Page 7
ESSENTIAL GUIDANCE Actions for Manufacturers to Consider Many manufacturing organizations, when selecting an application to improve their manufacturing execution, often wonder whether it is best to use a best-of-breed MES suite or simpler functions available from their favorite ERP, SCM, or PLM vendor or, better, a combination of all that. CIOs need to change their mindset and start considering the MES as a corporatewide business application. They should manage directly the selection, implementation, and maintenance of the manufacturing execution system it is as important as their ERP, SCM, PLM, and CRM systems. The common advice is for these companies to start first by clearly defining their business requirements and then making the consequent choices. Manufacturers should carefully select their MES vendor and implementation partner. That is a fundamental choice, which can have a deep impact on the value of their MES applications and, as a consequence, on the quality and effectiveness of their manufacturing operations. Main selection criteria can be synthesized as follows: Standard coverage. Standard reference models such as ISA-95 and MESA can help classify and prioritize those business requirements and thus are fundamental tools also during the selection process as a way to clearly compare functionalities from each single vendor in a standard way. Industry coverage. Address your choice on vendors that have a referenced presence in your industry and a demonstrable knowledge of your typical production environments. Customization. For some production contexts and in specific situations, a significantly higher degree of customization might be required. In these cases, do not underestimate the efforts and skills that such a complex task may require. Skill availability. Be sure that enough resources are available with the right skills, both inside your company and from vendors and implementation partners. This is not about technology, rather about MES culture and vision. Pricing models. Given the fragmented nature of MES vendors, you'll find very different pricing models. Top-down MES vendors typically follow the pricing model of ERP, which is driven by the number of seats or users. Bottom-up MES vendors, at the contrary, base their prices on the number of "tags" or "data points." Page 8 #MIOT01SE1 2011 IDC Manufacturing Insights
Other vendors adopt the concept of "data model" or "server" license thus driven by the number of plants or workshops. Anyway, most vendors will accept to provide a "corporate license agreement" to accommodate your specific needs and pricing issues. Platform-based implementation. We advise manufacturers to always rely on an MES product for their applications. Manufacturers will be able to implement their specific requirements avoiding common pitfalls of custom developments, such as lack of internationalization features, difficulties in integration, lack of expertise. Technology and integration. The basic technology of your candidate MES application is not a mere implementations issue. Be sure that technical elements are coherent with your company strategic framework and that technological choices are well suited to achieve the strategic goals your company is pursuing. LEARN MORE Related Research Vendor Assessment: MES Strategies Part 2 Selecting the Right MES Application (Doc # MIOT01S, October 2010) Business Strategy: MES Strategies Part 1 Importance and Challenges of Real time Manufacturing Execution (Doc# MICO01R9, May 2009) Copyright Notice Copyright 2011 IDC Manufacturing Insights. Reproduction without written permission is completely forbidden. External Publication of IDC Manufacturing Insights Information and Data: Any IDC Manufacturing Insights information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Manufacturing Insights Vice President. A draft of the proposed document should accompany any such request. IDC Manufacturing Insights reserves the right to deny approval of external usage for any reason. 2011 IDC Manufacturing Insights #MIOT01SE1 Page 9