Ever since I joined the world of operations software, during the course of a sales pursuit, we would come across the “make versus buy” argument for purchasing ‘finished’ applications, versus having internal IT and engineering resources dedicated to building out a highly customized application, or using a ‘platform’ to build point solutions using the scarce resources of your subject matter experts.
Now this is not a new argument-I was on a complex software selection committee in the late 90’s, and we were going through the same exercise; how could a commercial, somewhat generic package, replace our 100% fit using an application that had undergone numerous updates, developers, and masters? At the end of the day, we selected a company that had “best fit” but provided us with a platform that could expand and continue to grow with us, and released precious IT resources that could better be utilized for other business purposes.
The same thing is true for industrial automation software–whether it’s a Manufacturing Execution System (MES), Batch Recipe Management System, or Enterprise Manufacturing Intelligence (EMI) portal, they all are subjected to the “make versus buy” argument or sometimes, the “repurposing” of existing applications to make do.
Let’s examine the reasoning, and I’ll give you 6 arguments for why a Commercial Off The Shelf (COTS) approach is better in the long run.
6 arguments for why a COTS approach is better in the long run:
1. “No one understands our business like we do.” True, but your business does change, whether it’s to adapt new technologies, respond to market momentum, or cope with management turnover–it doesn’t stand still. Practices you did 2 years ago may not be relevant today, but your homegrown software may not be able to fully utilize the newest platforms to incorporate your unique business properties.
2. “We’ve used this software package now for XX years. We’ve invested in it and think it’s the way forward.” Just because you have a knowledge base in a product doesn’t mean that in the long run, it’s right for you. How are its capabilities for integrating to other applications? Have you built it so that it’s open, can leverage new technologies like cloud hosting or mobility? Do you have enough staff fully dedicated and educated to incorporate changes? The larger enterprise software companies have invested millions of dollars to develop, improve and maintain their applications. How can you, as a processor or manufacturer, have that same dedication to an activity that is not a strategic part of your overall business?
3. Domain experience. Yes, you may know electronics, medical device manufacturing, or other type of manufacturing process. But first, there are always vendors that have the domain experience in your segment, a result of working with many similar companies. And second, at a certain level of abstraction, manufacturing processes or styles can be grouped into different categories, with associated solution providers having a wide coverage and/or specialty for some specific categories.
For example, Gartner came up with their Critical Capabilities Report for MES, in which they divide the processes into Continuous, Batch/Repetitive Flow and Complex Discrete, and then further Make to Order, Engineering to Order or Make to Stock. They then evaluate the ability of the different software providers to cover the requirements of each of the processes. The resulting matrix makes it very easy for companies to evaluate the different providers against their main use cases on a level playing field.
4. It’s much cheaper to buy it internally. There’s a terrible misconception with this type of argument, which considers internal costs as no costs. This is obviously not correct, and even if you have enough internal capacity, you need to consider the cost of opportunity – where should these resources be invested to maximize the return? Since you don’t have the economies of scale from working with different customers and projects, just have this in mind: internal developments end up costing between 2 to 20 times more than buying an existing solution from the market.
5. You aren’t a software company! Most companies that have legacy products feel a strong sense of community and accomplishments by building and sustaining an application that works for them. And it’s true, but it changes. Your needs today may be different than when you first built your app. Can you afford to continue to invest in an application that may at a certain moment of time have 100% fit, but because of the market, or technologies, or new needs of the organization, now falls short? Not being a software company means you don’t have the focus, investments, technology and domain expertise to make sure you have the utmost in the partnerships, vision, and most importantly, product development resources needed for sustainability. Pure-play software companies partner with their customers, and so, in the long run, you get your needs filled, with a sustainable platform for the future.
6. Vision and strategy. Where do you see the market for software heading? What new technologies will benefit you as a manufacturer? How can you efficiently use big data, analytics, IoT and AI (Artificial Intelligence) within your enterprise? A company that solely focuses on manufacturing software and the needs of the industry both today and in the future has the capability of bringing these technologies into your organization ‘organically.’ They also can offer you an ecosystem of third parties for consulting, architecting, implementation and support. These companies have done the hard work for you of qualifying and training these third parties, so they are essentially an extension of the software provider.
Final Discussion Point
Consider this, based on our experience: although we deploy our solution to both factories that have no existing MES or to factories replacing their MES, the majority of the ones doing replacement projects are trying to migrate from homegrown solutions which are no longer, or were never capable, of dealing with today’s business requirements.
In the long run, although it looks tempting to take your subject matter experts and capture their knowledge in custom tools and applications, you are locking yourself into applications that only fit a particular time period within your organization.
Buying a commercial off the shelf software product ensures that you have the ‘best practices’ of the industry encapsulated into a product that can grow with you, take advantage of the latest technologies, and reflect the best in class practices of your industry.