Manufacturing Executive - September 2008 - (Page 38)

SOFTWARE is going on in the undergrowth.” Managing rapid growth is fundamental to Pentagon’s SaaS choice. Three years ago, the company posted a loss of €2.4 million and was near collapse. Now it is heading for a €4.8 million profit and was recently short-listed for four U.K. Chemical Industry Association Awards. “The legacy system we inherited has hindered our ability to produce online, real information to help us drive the business forward,” says Gill Jacks, the company’s financial director, “and we believe there will be significant savings using ness information level. When you dig deeper into manufacturing processes themselves, SaaS is still functioning at a very early stage. A move from software-as-a-service to manufacturing-asa-service (MaaS) is highly unlikely for a while. “The easiness is making us consider the SaaS model in other areas of the business,” says Kone’s Hiekkanen-Mäkelä. “We plan to take on other applications on the Salesforce.com platform and develop a set of integrated applications. How far we go into this is difficult to say. I can see that some manufacturing solutions and ERP solutions are so stable and long-term that you really want to secure that knowledge in-house.” “You don’t take your MRP application or your manufacturing execution application or inventory management application and say, ‘Let’s try SaaS.’ That’s not how it is adopted,” IDC’s L ykkegaard says. “The whole SaaS deliver y model is certainly spreading from area to area — into security, systems management, supply chain management — so it is moving closer and closer to the core of the manufacturing process. But when you get down to execution systems, CAD and CAM are very data-intensive, really workstation-heavy, and processor-intensive, so these might not be the best candidates for software-asa-service running over the Internet.” Adam Jura, the Sydney, Australia-based author of a new global report from Datamonitor, “Delivering Software as a Service to Manufacturing Companies,” stresses the need for greater vertical adaptability if the SaaS delivery model is ever going to penetrate deeper into manufacturing companies. “From a manufacturing point of view, production is the core competence and there is a general reluctance to relinquish components of that core competence to an external provider,” Jura says. “It is just not happening among internal processes much yet in a production environment. “That’s not to say it won’t in the future as manufacturers move away from fixed cost, legacy IT systems to subscription-based solutions,” Jura adds. “But you really do need to have, at some level, specific industry functionality and specific general functionality combined to make it work. It isn’t there yet. So ‘configuration, configuration, configuration’ should be the mantra. If you can choose a specific configuration to adapt the package to suit your manufacturing business processes, then you have an effective solution. “I think most European production environments will take three steps back before adopting an SaaS approach at this stage,” he concludes. s “We are looking to streamline our business processes to enable further improvement and drive our growth strategy.” — Nick Lindhop, Pentagon SaaS in the amount of effort currently involved in producing useful management information.” “But we are not being driven by financial issues, nor looking to take out fixed costs,” Lindhop adds. “We are looking to streamline our business processes to enable further improvement and drive our growth strategy.” So there are benefits both in practice and on the horizon for companies that are embarking on an SaaS journey, as long as they realise that real-life implementation can mean extensive internal preparation, possible process change and restructuring, extensive data consolidation, and probably a network refit before they can hope to make it work. SAAS TO MAAS? What’s more, a number of limitations are now emerging for SaaS in deeper manufacturing operations. The supplementary approach, such as bolt-on CRM, or the fast upgrade replacement, as in Pentagon’s case, are both operating at a busi- R ESOURCE CENTER ARTICLES: Software Delivery: ERP SaaS May Finally Be Ready for Prime Time www.managingautomation.com/erpsaas SAP Cites Functionality, Cost Structure in Modified On-Demand Product Rollout www.managingautomation.com/sapondemand COMPANIES MENTIONED: SAP www.managingautomation.com/sap3 Salesforce.com www.managingautomation.com/salesforce 38 September 2008 http://Salesforce.com http://www.managingautomation.com/erpsaas http://www.managingautomation.com/sapondemand http://www.managingautomation.com/sap3 http://Salesforce.com http://www.managingautomation.com/salesforce

Table of Contents Feed for the Digital Edition of Manufacturing Executive - September 2008

Manufacturing Executive - September 2008 Contents Editor's Letter Opinion By David Humphrey Starters Road Trip Part 1: Innovation or Efficiency? Part 2: The Innovation Gap Opinion By Lisa Bodell Special Report: Great Aspirations Supply Chain: The New Money Machine Product Design: Fruehauf Gets into High Gear with 3D CAD Business Intelligence: Food Distributor Turns Up the Heat on Manufacturers Software: Manufacturers Face SaaS Hurdles Dialogue Opinion By Pierfrancesco Manenti

Manufacturing Executive - September 2008

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