Social Networking Questions Inform System Selection

Power of the Profession January 15, 2019
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The selection of a manufacturing operations management system, or any supply chain execution system, can be a complicated process, but borrowing a few questions typically used in relationship building could improve your chance of success.

When it comes to technology solutions for manufacturing operations, there is no such thing as one-size-fits-all. The variety, uniqueness and complexity of manufacturing operations has been a challenge for enterprise vendors and until the last few decades was relegated to niche vendors, many of whom still survive and thrive as independent companies. The vendors that were born in the space started out as small players, identifying a particular need in a specific niche, where we find solutions from semiconductor manufacturing to poultry processing. Many of these vendors will remain small and focus on their niche, while some will grow organically and others will be acquired by larger organizations.

What happens to these solutions when they become part of a larger enterprise software company? Technology can be adapted/adopted to perform tasks outside of core competency areas, but maybe not as effectively. Common sense, right? You can learn a great deal about a solution by understanding not only where it originated, but also from the culture, expertise and strategy of the company that has acquired the solution. There is an analogy here to techniques used in social interaction. In my past life, I had a few occasions to attend workshops with speaker, trainer, consultant and author Boaz Rauchwerger. One of the first things he taught us was the five key questions for building relationships. Some of these questions could equally be applied when going through a manufacturing operations systems selection process, or, for that matter, just about any system selection:

  1. Where are you from, originally? An acquired vendor has its own history based on its decisions and expertise. Regardless of how well integrated with the new parent’s ecosystem, there is still a specific set of capabilities that the acquired system excels at. The farther your use case is from that core set, the less likely the solution will be sufficient, even if the new parent company has its own broader capabilities. For example, an enterprise vendor that supports numerous manufacturing industries acquires a manufacturing operations vendor specializing in continuous process manufacturing. Logically, this solution would not be valid in batch or discrete manufacturing operations, but that does not mean the solution will be marketed as process only.
  2. What brought you here? From a social perspective, we learn about the other person’s life journey. From a systems perspective, we learn what drove the acquiring company to this acquisition. Was this capability added to grow new business for the parent, or is this something to fill a deficiency in the parent’s portfolio? In either case, the “DNA” of the parent can impact product direction for the former niche company. A new growth strategy may drive the parent to dilute the solution to be more generic, or bolt on new features to support other industry use cases. These approaches are suboptimal and will result in a product too generic to meet the needs of a specific industry or overly complicated and expensive as an attempt to be one size fits all.
  3. Do you have a family? Admittedly, this is a stretch, but as enterprise vendors continue to acquire and acquire and acquire, their “families” get larger and larger. Like human families, these software application families present solidarity to the outside world, but may have internal battles that are not public. Integration is an obvious one, but there can be others. Here are a few examples that I have received from clients: 1. You get a quote from an enterprise vendor for a set of applications, and pricing models and maintenance plans are different for each application. 2. There are significant service charges in the vendor proposal for integration between products they own. 3. When moving from one application to another, the user interface changes dramatically, from HTML5 tiles to spreadsheet look and feel.
  4. What do you do? What is the core business of the parent company? Does the parent company’s focus and strategy align well with the focus and strategy of the acquired application company? One of the criteria used in the Gartner Magic Quadrant documents vendor rating is “Overall Viability.” This is often thought of in the guise of financial survivability for a software company, but in fact has a broader definition.

Overall viability: Includes an assessment of the vendor’s overall financial health, the financial and practical success of the relevant business unit, and the likelihood of that business unit continuing to invest in and offer the product within the vendor’s product portfolio.

The second phrase is key here. There are enterprise vendors that have acquired multiple manufacturing operations application vendors, then choose one or two and cannibalize the others for specific features that will be applied elsewhere. That can spell disaster if the application you have chosen is the one being cannibalized.

The manufacturing operations applications acquired by enterprise vendors typically begin to resemble their “parents.” Applications acquired by automation suppliers tend to be better at high-speed data collection, machine monitoring and overall equipment effectiveness. Applications acquired by enterprise resource planning vendors tend to be better at material and order management and applications acquired by produce lifecycle management vendors tend to be engineering focused. However, these are generalities. One way to know for sure is to drill down and ask these relationship questions. You can thank Boaz for me if you run into him.

 

 

Rick Franzosa

Senior Director, Analyst

Supply Chain Technology

@RealTimeRick

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