Round Holes/Square Pegs: Artificial Barriers to Transformation Success

Transformation is challenging for industrial organizations. Manufacturers face genuine barriers to deploying new digital technologies specifically and realizing benefits from Industrial Transformation (IX). Software vendors face equally daunting obstacles in trying to help manufacturers achieve IX success. Software vendors face a myriad of hurdles in marketing, selling, and deploying software. IX is hard enough, but software marketing and procurement realities are getting in the way by creating additional, largely artificial barriers. Let's look at how software categorization and manufacturing budget practices reinforce the barriers to IX success. 

Square Pegs 

Every two years, LNS Research surveys the market about the state of technology generally and the depth of deployment of these software packages. We ask about ERP, CMMS, EQMS, EHS, WMS, etc., at the enterprise level and about Data Historians, HMI/SCADA, plant-level deployments of quality or CMMS, LIMS, MES, etc., at the operations level. These represent the major software categories manufacturers recognize and vendors are actively deploying. These are the words/labels that manufacturers are putting into their search engines to find potential vendors. These are the labels they are submitting in their budget requests internally.   Software vendors that don't neatly fit these existing categories but still offer significant value to manufacturers face a dilemma:  position themselves into an established category they do not really fit or spend significant marketing dollars trying to define a new category. Without success in one or the other, they face significant barriers to growth. They are the proverbial square pegs in a world of round holes, offering impactful software solutions that do not fit the categories manufacturers have been convinced they need to buy.    

Increasingly, we see this as problematic for manufacturers. Many are looking for "next generation" OT systems and digital technologies to deliver step change improvement to their industrial operations. However, the "next-gen" thinking leads them to look at other vendors in the same old software category. They are googling MES or data historians. Digital technologies lead to googling phrases like Artificial Intelligence or Big Data. Yet the key to breakthrough performance improvement may come from these square-peg vendors that don't neatly fit existing software categories.  

Square Pegs that Offer Significant Value 

Let's look at a few specific cases and why LNS Research believes these "artificial" constraints must be unlocked. 

L2L

L2L (formerly Leading to Lean) is delivering real value to its customers, who are particularly enthusiastic about its offering. LNS Research recognizes that their product offering includes the capabilities of Connected Frontline Worker and included them in our CFW Solution Selection Matrix. L2L clearly offers CMMS and manufacturing capabilities for manufacturers that have not yet deployed these solutions into the plant (this is a particular opportunity in many areas of Discrete manufacturing.)¹ All good, but the differentiating capability of L2L is the ability to handle unplanned events across a plant and the whole manufacturing network. They offer a core capability for the "dispatching" of whatever type of work/employee is required to handle things when the golden path is broken (safety, supply chain, quality, code red, etc.). L2L's CMMS capability is essentially a specific implementation of that dispatching capability (what do you do when equipment goes down). However, unexpected stuff happens regularly in manufacturing beyond equipment breakdowns. L2L has been effectively deployed to handle an extensive variety of the issues arising when stuff happens. 

The core challenge for L2L is that their unique differentiator is a square peg in a round software purchasing world. There is no software category for "handling work when unexpected stuff happens," and there is no clear buyer for that capability. Should they position themselves as offering MES, CFW, or CMMS? Should they try to create a new software category? 

This is not just an esoteric issue. The challenge for manufacturers is that they may need this L2L capability (what manufacturer does not have unexpected stuff happen?), but they would not know how to easily find them, yet. In fact, they may not even know to look!  

iBase-t

iBase-t is seen as an MES company serving the Aerospace and Defense (A&D) industry. Their MES message is focused on the "out-of-the-box" capabilities needed to serve that specific industry. The company is increasingly viewed as an enterprise solution in the industry interested in deploying a common system across all their plants – often across hundreds of plants and different business units. iBase-t may be one of the big winners as "rest of the fleet" becomes a key consideration in MES selections. They have already been selected for enterprise MES by Lockheed.  

This is all good, but the key differentiator for iBase-t is that they offer execution capabilities across Supplier Quality Management – typically an EQMS capability – and Maintenance, Repair, and Overhaul (MRO) capabilities. In a highly regulated industry like A&D, the combination of these capabilities can provide a strong means to ensure on-target quality, delivery, traceability, and compliance. Customers who have deployed iBase-t beyond the confines of production workers have realized significant savings.    

The core challenge for iBase-t is that their unique differentiators are a square peg in a round software purchasing world. No software category exists for "MES combined with MRO and supplier quality." MES is bought by manufacturing and deployed in the plant. The quality department typically buys Supplier Quality, which is generally installed at the enterprise. Meanwhile, MRO system procurement is driven by the MRO lead in the maintenance/services division, and it is often deployed within a manufacturing plant and other MRO sites (repair depots, airports, etc. - see budget challenges below). Should iBase-t also position itself as offering frontline capability when supplier quality and much of MRO are beyond what others call frontline operations today? Should they try to create a new software category? At LNS Research, we think iBase-t would be well served by following the Veeva model and positioning itself as the A&D Cloud for Operations, but that is also not a search term used frequently today.

Again, this is not just an esoteric issue. What A&D manufacturer doesn't need supplier quality management? Most A&D systems integrators need MRO now in a world of performance-based logistics. The challenge for A&D manufacturers is that they may need this capability, but most in need would not know how to find them easily. In fact, once again, they may not even know they should be looking! 

Manufacturing Performance Optimization (MPO) Vendors 

As LNS Research has worked on characterizing the Advanced Analytics market, we have seen a stratification of vendors. One set of vendors generally aims their advanced analytics at the IT and data science teams (as C3 AI does with their "enterprise AI" message). Another set are focusing their solution on the requirements of operations personnel. These vendors are those that use a data model to represent the manufacturing and/or supply chain processes. Their data models usually include equipment, machines, and material flows. These vendors then apply advanced analytics to drive productivity, quality, and reliability improvements. They provide open-loop supervisory guidance to the factory floor. These MPO vendors offer a compelling combination of analytics insights and a roadmap to action. Essentially, these vendors provide manufacturing performance management and optimization capabilities. However, there is no well-recognized Manufacturing Performance Optimization (MPO) category to date. These companies deliver real value, but it is tough for manufacturers to find them because they don't know what to put into Google to identify potential solutions!?!? Most manufacturers are not even aware that there are 15+ companies actively delivering this operations-specific functionality.  

Let's look at a couple of vendors as examples: 

Oden Technologies 

According to their website, "Oden Technologies is an AI-powered manufacturing analytics provider." They are tailoring their AI and analytics capabilities towards operations personnel. If you had asked LNS Research to characterize Oden Technologies 4 years ago, we would have said they are an operational data infrastructure supplier. Two years ago, we would have characterized them as an Industrial Data Hub provider. However, as they keep adding manufacturing-specific capabilities above the data plumbing, we are convinced they have become a Manufacturing Performance Optimization provider. They are having notable success in specific manufacturing environments where they can bring their technology and domain know-how to bear on improving manufacturing with particular expertise in plastics, wire, paper, packaging, and building materials. Focusing on specific manufacturing operations such as extrusion (across multiple industries), Oden is delivering significant performance improvements for their customer base. 

Augury 

Augury started out deploying analytics around assets. In fact, they now offer specifically bundled functionality around Asset Health. LNS Research has studied how these systems have been implemented and noted that they deliver significant insight into machine and plant performance. They recently expanded their offering to include Process Health to look at manufacturing operations and workflows to provide insights into optimizing production work. Augury does not execute maintenance or production flows, so it is neither a full-blown APM nor an MES system. They are offering Manufacturing Performance Optimization, but few manufacturers know that such software offerings exist or that the span of Augury's system traverses maintenance and production departments (see budget challenges below).   

Once again, the core challenge for Augury and Oden is that their unique differentiator is a square peg in a round software purchasing world. There is no software category yet for "manufacturing performance optimization," and there is no clear buyer for that capability yet. Should they also position themselves as an MES offering? APM? CMMS? Should they try to create an MPO software category? 

They are not alone in facing these questions. Additional vendors that LNS Research sees as offering the MPO capabilities include:

• • • • • • • • Braincube 

              • MachineMetrics 

              • Quartic 

              • Sight Machine  

              • TwinThread 

              • ThinkIQ 

              • Uptake

These companies may have offerings that include other capabilities. Still, core to their raison d'être is the goal to improve manufacturing performance by providing new and powerful insights directly to operations personnel via advanced analytics. 

Again, what is most important is not to cry here for the vendors. The more significant issue is that many manufacturers that could use this type of functionality may not know they need it or that it even exists. It is hard to procure the right software if you don't know what all your options are, much less if the (list/search criteria/software) category is even "right." Software categories are a barrier to Industrial Transformation (IX) success for many manufacturers. 

Exacerbated By the Buying Structure and Budgets of Manufacturers

It is not only categorization that is getting in the way of transformation success. Budgets in virtually every medium to large organization are by department. Software companies have learned this and have sought to tailor their solutions to their target buyer and their budget. ERP is aimed at the finance department and its IT team. EQMS at the head of Quality. PLM at the Head of Engineering, etc. So, the budgets for software procurement encourage stove-piped applications and software purchases. Even in companies where the budget is highly centralized in the IT department, department heads must fight for allocation of that budget towards their department, so they are typically disinclined to look for cross-departmental synergies. 

Yet, LNS Research has found that automating or re-automating these organizational silos and workflows seldom delivers step change performance improvement. Research has clearly demonstrated that transformation success does not come from re-automating existing silos but "…rather it comes from process changes empowered by collaborative technologies." In fact, we are increasingly encouraging our more IX mature companies to use their IX budget to break down organizational budget silos and seek solutions that work to compress workflows across silos. 

Let's look at two examples. 

EQMS and EHS

EQMS is an enterprise quality management system sold to the head of Quality for enterprise deployment. Core capabilities are document control and quality process workflows. These systems are increasingly adding digital, analytics, and integration functionality. The market is growing, and most EQMS vendors are growing with it. LNS Research has been studying the market and its suppliers from our very beginning 12+ years ago.EHS is a system sold to Executive Environment, Health, and Safety (EHS) Leaders (Director/VP of Operations Center of Excellence). The system's core capabilities are document control but with other specific process workflows. These systems are also increasingly adding digital, analytics, and integration functionality. The market is growing, too, and most EHS vendors are growing with it. 

EQMS and EHS systems are highly aligned technically, so multiple vendors now offer significant footprints in both domains. What they have found, universally, is that while the technology is redundant, the buying behavior is not. There are two different sale cycles to two different buyers selling almost the same technology. In many organizations, the heads of these different departments are particularly disinclined to select systems based on what some other department has done for whatever organizational or personal reason. However, the corporation is not served by buying redundant technologies nor achieves the ability to leverage workflows and personnel across the domains. Risk assessment and monitoring are key components of both systems, yet having two systems within one company creates a barrier to managing that risk seamlessly. 

If, instead of focusing on each specific silo, your organization is seeking step change improvement that comes from process changes empowered by collaborative technologies, LNS Research would suggest that you look at vendors that offer both sets of functionality, including Honeywell Connected Life Safety Services (previously known as Sparta Systems), ETQ, UL, ComplianceQuest, and Intellect. In fact, ETQ has just launched Learning Management capabilities – another technology closely aligned to EMS and EHS that has yet another distinct buyer – compounding the budget issue. 

PLM and MES

Product Lifecycle Management systems started as CAD design tools, then added model management, simulation, and other applications to accelerate the design process for manufacturers. These systems have also incorporated the tools that manufacturing engineering needs, including bill of materials management, bill of process, and work instruction management. All these applications are sold to the head of engineering/R&D under the PLM umbrella.   

Manufacturing Execution Systems provide visibility into, control over, and synchronization across manufacturing. MES leverages the bill of materials, bill of process, and work instructions to execute them in the plant. Telling operators what to do when, with what materials, and on what equipment. The budget for acquiring an MES system has historically come out of an individual plant's budget, with increasing enterprise deployments funded by corporate manufacturing (and/or IT). 

There is clear synergy here as MES systems execute the plans created by the manufacturing engineer in the PLM system. However, organizationally, these systems are bought by different departments and budgets. In many organizations, the heads of these different departments are particularly disinclined to select systems based on what some other department has done for whatever organizational or personal reason. But you cannot deliver on the vision of a comprehensive Digital Twin without tight linkages across those domains. You cannot optimize new product introduction without tight linkages across engineering and manufacturing. It is tough to optimize quality performance without tight linkages across those domains.  

It is interesting to see "digitally native" companies – without the departmental rigidity (yet) – often embrace one vendor for both manufacturing and engineering solutions. The websites and sales presentations of both Siemens and Dassault Systèmes have numerous case studies of companies that have embraced automation across organizational silos and the impact that it has had.  

Recommendations for Manufacturers 

LNS Research would encourage manufacturers to investigate all these software providers that do not easily fit into today's software categories. More generally, we have four recommendations for manufacturers:  

1. 1. 1. When evaluating IX technologies, cast a wide net.

         We can help you find these vendors that fit around traditional software categories and fill white spaces in Operational Architectures.

      2. Look beyond acronyms to your specific requirements. 

         Focus your requirements down to a fine point of what business problems you are trying to solve and search for solutions to those problems rather than the acronym du jour.

      3. Think beyond re-automating your existing organizational silos.

         Many software vendors are positioning themselves as "next generation" and Cloud Native. This is all good, but replacing an on-premises system with a Cloud solution doing the same thing with the same organizational, siloed footprint is not transformative. It MAY save you money over time. It MAY accelerate the adoption of new technology from the vendor. But cloud, for cloud's sake, is not transformative. Look for solutions that traverse departments and organizational silos.

      4. Stay tuned to LNS Research.

¹ LNS Research includes a single vendor in multiple Solution Selection Matrices (SSM) if the vendor’s offering includes multiple products or if a single product can compete in multiple software markets.