As the year 2020 ended, LNS Research published a set of three Research Spotlights highlighting the three alternative architectural paths available for manufacturers around Industrial Transformation (IX). In the 3rd Spotlight we introduced the concept of Industrial Transformation Strategic Partners. As part of the run-up to the release of the LNS Research IX Strategic Partners Solution Selection Matrix™ let’s revisit our definition of IX Strategic Partners, highlight the criteria we use to evaluate these vendors, list the vendors, and conclude with advice to manufacturers.
Defining IX Strategic Partners
The LNS Research definition is:
IX Strategic Partners are those software vendors demonstrating a clear and broad-based strategy to be the primary vendor providing and/or integrating IX capabilities for industrial clients. These IX Strategic Partners seek to deliver the full LNS Research IX Reference Architecture for emerging technologies typically along with both business and operational systems and associated services (direct and partner serviced). Their goal is to support the complete transformation of industrial operations.
Survey after survey of IX has demonstrated that manufacturers are viewing transformation as more than just the implementation of new technologies. IX is about finding step-change improvements which typically demand the rearchitecting of business processes, and therefore, existing systems. Most manufacturers are rearchitecting/upgrading their business, operational or design systems, as part of their transformation initiatives. While the majority of IX Leaders are implementing IIoT technologies, they are also more likely than Followers to be implementing 13 of 13 other technologies queried.
Therefore, the definition of Strategic Partners is deliberately expansive to include both new digital (Industry 4.0) and legacy IT and OT (Industry 3.0) systems. This definition is supported by the LNS Research IX Strategic Initiatives and Enabling Technologies Framework. This Framework pictures for industrials the breadth of opportunity in front of an IX Program for business change through technologies (digital and traditional).
More than a Trusted Partner of Industry 3.0 Solutions
IX Strategic Partners may, or may not, be the same as your Key IT or OT suppliers today. LNS Research often hears from manufacturers that they regularly evaluate the offerings from ERP, PLM, or automation vendors first when they are considering new software acquisitions. Two reasons drive this:
The assumed simplicity of building on an existing monument system (presumably user management, analytics, customization, and integration will be easier in implementing systems from a single vendor).
The need to leverage “shelfware” (licenses purchased for volume discounts that have not yet been deployed) into operations.
But LNS Research sees key distinctions between IX Strategic Partners and relationships built with key IT and OT suppliers as outlined below.
Key Criteria for Evaluation
So, what are the key criteria in identifying an IX Supplier? LNS Research has seven elements in its evaluation criteria:
A clear and broad-based strategy to be the primary vendor providing and/or integrating IX capabilities for industrial clients. Ideally, vendors will have demonstrated a willingness to help customers find complete solutions including other companies’ digital products. Further, it must be the vendor’s strategy to play a key role in their customers’ transformation journey, not just contribute to it by selling software or SaaS services. We will be looking for references from manufacturers that are making these vendors core pillars of their transformation program similar to how CIOs have made ERP (SAP and Oracle in particular) a core pillar of their enterprise architectures over the last 10+ years.
Software focus as we are explicitly excluding IT and Management Consulting. These companies can play a key role in transformation, but we are evaluating software companies or software businesses within larger companies in this forthcoming Solution Selection Matrix.
A large “emerging technologies” product offering covering a substantial portion of the IX Reference Architecture – legacy, monolithic system vendors need not apply! LNS Research is looking for what we hear manufacturers are looking for: a broad set of digital technologies that can be applied to industrial operations including AI/ML, IX Analytics, RPA, IX Platform, Cloud, etc. These technologies can be stand-alone platforms/applications and/or embedded in the vendor’s overall offering. But vendors focused on being a best of breed supplier of particular portions of the IX Reference Architecture (Industrial Data Connectivity, IX Platform, IX Analytics only) would not fit the definition.
A broad range of IX use cases offered and industries served is critical given the diversity of use cases across IX. LNS Research has so far identified 35 use cases across 7 categories of capabilities. The average industrial has 12 distinct initiatives in their IX Program (Quality 4.0, Connected Worker, Digital Twins, Connected Assets). Large manufacturers often have multiple manufacturing models (A&D companies often have both mechanical and electronic assembly for example). Diversity in capabilities and offerings is critical. Realistically, the definition implies that vendors must serve functions beyond manufacturing, such as R&D, Supply Chain, and Quality to enable step-change.
A proven capability to leverage/upgrade legacy IT, OT, and/or Design Systems is required. LNS Research sees manufacturers innovating in any number of directions including deploying new manufacturing systems such as cobots, AGV’s, drones, 3D Printing, and automated visions systems. We do not expect software vendors to be selling these systems but rather helping manufacturers to integrate, manage, and leverage them. In other words, we will be looking for referenceable examples of vendors supporting and managing “cool” hardware technologies. Further, we will be looking for open integration strategies. Few manufacturers have only one vendor’s automation or IT system so a proven ability to integrate diverse systems is critical (very specifically - including hardware outside the vendor’s stack).
Strong services capabilities including IX Transformation consulting must be brought to bear to support a customer’s transformation journey. We are not requiring the companies to have these services in-house (most software companies are seeking to keep services to a specific percentage of overall revenue for valuation purposes). The key question: has the vendor built a referenceable network of internal and external partners to be able to support transformations consistently, regularly, and globally over time?
Long-term stability and a global presence are fundamental.
LNS Research recognizes that the definition and evaluation criteria have a bias towards large corporations. We accept this bias because of the conservative and globalized nature of manufacturing and the number of inquiries we get from manufacturers that are looking for an evaluation of the capabilities of their automation, ERP, or PLM system provider to support their transformation journey. In other words, we see an interest in the industrial sector to leverage their traditional partners IF they can. And on the flip side, we see great reluctance by manufacturers to become dependent on small vendors for their worldwide operations (and associated revenue streams).
Why it Should Matter to Manufacturers
IX is driving step-change improvement, with many companies already reporting “dramatic results”. And a few vendors are combining emerging and traditional IT and OT technologies to cover a wide range of IX Programs.
LNS Research would remind manufacturers that:
To execute an IX Program, three different architectures are available: Custom leveraging an IaaS partner, Best of Breed deploying a set of SaaS IX Application and Analytics solutions, and a Vendor Suite building around a PaaS solution from an IX Strategic Partner. For those pursuing a Vendor Suite strategy identifying the right short-list and final candidate for an IX Strategic Partner is critical.
LNS Research has defined the Industrial Transformation Framework to focus on solution and partner selection within the context of the organizations’ Business Objectives, Strategic Initiatives, and Operational Architecture. IX is challenging, and a structured IX Program increases the probability of success dramatically.
IX Leaders are often engaged in multiple technologies to assess what works for them and to fit different parts of the business. The choice of approach may not be an “either-or” choice but rather a question of balance between the choices, especially for the largest industrials.
The IX market is evolving rapidly. Agility in architecture is key to long-term success.
All entries in this Industrial Transformation blog represent the opinions of the authors based on their industry experience and their view of the information collected using the methods described in our Research Integrity. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.