Managing Automation - October 2008 - (Page 9)

ated Computer Services bought Indian SAP systems integrator Systech Integrators Inc. “Consolidation in this market has been going on for some time, but there’s definitely going to be much more of it,” said Sunil Talreja, vice president of IBM and open solutions at Sogeti USA, a systems integration subsidiary of Cap Gemini. Several factors are serving to intensify consolidation among systems integrators, experts said. For one thing, Indian integrators, which have been very successful and have built large cash reserves over the past few years by providing back-end programming-related services, are beginning to face increasing competition from low-cost providers from countries such as China, Malaysia, and Thailand, Talreja said. At the same time, the slowing U.S. economy is forcing Indian integrators to look elsewhere for growth opportunities. That’s what’s prompting integrators such as Infosys to go after European companies such as Axon. “They’re all trying to move up the value chain,” Talreja said. “They’ve come to the point of realization over the past year that they have to respond to competition coming from other economies.” While consolidation is likely to accelerate, small and mid-sized integrators such as Axon will be the primary targets, AMR’s Stiffler predicted. That’s because big deals can be too risky and expensive to pull off. It’s also because there aren’t many large systems integrators left. Even the number of mid-sized integrators is shrinking significantly. “Most acquisitions are likely to be of companies that are quite small because there are not a lot in the mid-market territory left to claim,” Stiffler said. The one exception, he said, might be large U.S. systems integrator Bearing Point, which has been rumored as a possible takeover target. However, the anticipated pickup in consolidation among integrators, in and of itself, isn’t likely to significantly reduce customer choice or drive up costs. The entry of new vendors from emerging, low-cost countries will keep competition high, Talreja predicted. In fact, Talreja said, consolidation may end up benefiting manufacturers. “They will be able to get a better, broader set of services from a single supplier in the future,” he said. “Before, they may have needed to use multiple suppliers for different parts of the software delivery and strategic processes. Now, they will be able to get more from a single source.” On the other hand, consolidation among systems integrators certainly won’t do anything to alleviate what, in some markets, is a severe and persistent skills shortage, which has kept some prices high. That’s been particularly true in the market for SAP implementation skills for hire, Stiffler said. “There’s a significant skill shortage right now in the SAP market,” Stiffler said. “Even basic core skills are in short supply, and that’s making for pretty inelastic pricing.” Scan M Back inMA MA OCTOBER 2007 A set out to discover whether the mobile enterprise had finally arrived. What we found was that wireless technology was indeed gaining traction in manufacturing companies. But the wide variety of technologies required different wireless networks with separate standards and communications protocols. IT departments had their hands full trying to centrally manage the deployments, a problem that was limiting wireless technology’s ability to play a strategic role. KINAXIS LAUNCHES PROGRAM TO LURE I2 CUSTOMERS L ess than a month after JDA Software announced in August its offer to purchase rival i2 Technologies for $346 million, supply chain software provider Kinaxis saw its opening and launched an incentive program it hopes will attract i2 customers uncertain about the company’s future as it is absorbed into JDA. Early in September, Kinaxis reacted to the latest deal in the steadily consolidating supply chain software market by offering current i2 customers an aggressive incentive to sign up for RapidResponse, Kinaxis’ on-demand service for supply chain planning, monitoring, and response. Under the program, Kinaxis will waive its standard fee for integrating RapidResponse with a company’s ERP system, which typically costs $100,000 to $200,000, according to officials. “We wanted to get our hat in the ring by making it simple for i2 customers to switch,” Randy Littleson said Randy Littleson, Kinaxis vice president of marketing, in an interview. By including the integration of RapidResponse with a company’s existing ERP backbone as part of its subscription charge, Kinaxis hopes to ease the transition for interested parties in its core vertical markets of high tech, electronics, industrial manufacturing, and aerospace and defense. The company also hopes that the reduced costs associated with on-demand software will appeal to enterprises currently charged with MA OCTOBER 2003 I t was a buyer’s market in enterprise software. But choosing the right product and vendor was a complicated and time-consuming task, involving large sums of money and high risk. But evaluating functionality, ongoing support, and vendor viability could lead manufacturers to the right software for their needs. MA presented successful strategies, as well as 10 considerations in evaluating enterprise systems and nine tips for negotiating software agreements. M A O C TO B E R 19 9 8 T he pressure to globalize manufacturing operations, deliver better customer service, reduce costs, and increase efficiency was forcing companies to tie their systems together to generate timely and accurate data. Converging shop floor and IT personnel into cross-functional teams was not easy. Each side brought its own perspective, agenda, and even jargon, but they had to collaborate in order to reach company-wide goals. M A O C TO B E R 19 9 3 T he computer industry was experiencing unprecedented upheaval as new technologies, networks, and operating systems were changing the computing landscape, according to computer industry executives attending PC Expo. Technological advances were making computing power cheaper and new marketing channels were rapidly turning the PC into a commodity product. Meanwhile, advances in multimedia, portability, and network architectures were delivering more power to the desktop. 9 October 2008

Table of Contents Feed for the Digital Edition of Managing Automation - October 2008

Managing Automation - October 2008 Contents Take 1 Systems Integration Market Braces for a Wave of Consolidation Kinaxis Launches Program to Lure i2 Customers Patent May Give Mobility a Needed Shot in the Arm New Group Aims at More Efficient Smart Devices Solar, Life Sciences Will Be the Next Frontier For Robots Notes Cover Story:�2009 Companies to Watch Special Report:�Siemens plus UGS: Is the Merger Working? Transformation:�Driving Energy Efficiency Integration: How Clean is Your Data Industries:�Fed Raises Red Flag on Chemicals Product Scan Advertiser Index Next

Managing Automation - October 2008

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