SHOMI, Part 4: The Most Influential Technology Vendors in the Manufacturing Industry
Bob Parker, VP Research, Manufacturing Insights -- Manufacturing Business Technology, 5/6/2008 8:48:00 PM
Those of you that are familiar with Manufacturing Insights research themes will recognize the SHOMI (pronounced 'show me') acronym which is shorthand for the most influence technology vendors in the manufacturing industry – SAP, HP, Oracle, Microsoft, and IBM. These vendors are providing products to optimize operations through technologies like virtualization, web service based integration, collaborative decision making, and business network automation.
This is the fourth installment of a five-part series covering each of the vendors. This installment will cover Microsoft.
Microsoft – Enabling the People Ready Future
It wasn't too long ago that, when we spoke to large enterprise executives about Microsoft, the point of reference was negotiating the license agreement for desktop software. The relationship wasn't considered strategic in terms of assisting with corporate transactional applications or enterprise architecture. Microsoft deserves a lot of credit for making a concerted effort to change this and we hear praise for their efforts to help large enterprise clients get more out of their IT resources.
This effort really begins with the overarching theme of being 'People Ready'. Microsoft astutely came to understand that their central value proposition was to help companies from the desktop back to the data center. While their high performance clusters, server operating systems, and databases benefited from the advancing capability of the Intel processor class to be price/performance competitive, they still had stiff competition, not to mention the rapid adoption of Linux, in that market. At the desktop and back through the departmental networks, however, they were virtually unchallenged and adeptly defined and delivered what manufacturing customers wanted – better access, analysis, presentation, and sharing of corporate information.
Microsoft has done a very good job of recruiting independent software vendors to develop on .NET and use the associated content, integration, collaboration and data management tools while building its own portfolio of applications to offer. At the enterprise level a relationship with SAP produced the Duet application that linked the familiar Office personal productivity tools to SAP processes and data. A long running relationship with HP, particularly around collaborative business processes, has proven mutually beneficial.
Architecture - .NETting it out
Microsoft continues to make inroads into the corporate data center. The most recent significant announcement was the full beta release of its Hyper-V virtualization technology that will be part of the Server 2008 product. The offering is a bit late to market, but will continue to add to Microsoft's credibility in providing scalable data center capabilities for all segments of the market.
Similarly, the .NET application deployment infrastructure including SQL Server, BizTalk Server, and other products has proven viable in the enterprise although largely for complementary software products rather than core transaction backbones. Of course, Microsoft has its own Dynamics line of applications which include products suited for the various segments of the small and mid sized enterprise market. Its CRM module in particular, with its Outlook based interface, is a very competitive product.
Ultimately, 95% of decisions in business require human intervention to interpret analysis and take action. Microsoft's dominance at the desktop provides a unique opportunity to provide the collaborative part of decision environments. Familiar Office tools like Excel, Word, and Outlook provide familiar user interfaces and can be combined with the unified communications products to connect the right people at the right time.
Microsoft has even talked about offering a high performance cluster product geared to managing large spreadsheets that could turn the ubiquitous spreadsheet into an inexpensive data warehouse and analytic application tool.
There aren't many companies that control more computing power than Microsoft. To support its consumer business (related to networked gaming via Xbox) and its burgeoning corporate offerings, the company has built out massive data centers. These resources represent an opportunity to host the common systems that members of a multi-enterprise business network would want to run. And the highly modular nature of its Dynamics AX product make it a great candidate to provide the pieces that are composed into those common applications.
Supply Chain – Connecting the Dots
Recognizing the dominance of the big ERP vendors in the supply chain space, and end-users reluctance to return to the best-of-breed IT strategies on the 1990’s, Microsoft’s approach to leverage their MS Office suite to enable higher people productivity is a good focus in our opinion. The ubiquitous nature of the Office applications makes them a relatively easily integrated set of tools for newer capabilities like event management and master data control.
At Manufacturing Insights, we see event management – particularly if it can be integrated into existing tools and/or platforms – as having enormous potential to transform supply chain business processes and dramatically improve efficiency and cost performance. Having visibility into events on the desktop certainly offers the potential for supply chain workers to be much more informed than they are today, with up-to-the-minute information about the things that each person prioritizes. To some degree this resonates with one of our 2008 supply chain predictions where we talk about getting ‘back to basics’. Customer service performance is typically problematic for most large businesses, and many of the problems can be traced back to poor communication or that a key piece of information did not get into the right person’s hands. The infrastructure certainly exists to facilitate this kind of communication, we just need the specific tools and connections.
Microsoft appears well positioned to make some traction in this space.
Master data management is another are of opportunity for Microsoft as it is a business process so poorly managed within most businesses. Particularly in consumer products where data synchronization efforts have laid bare some dreadful data accuracy and data governance problems that desktop tools linked with enterprise suites could go a long way to solving. Again, the ‘event management type’ approach could identify many of the process and communications problems that more often than no tare the underlying cause of data accuracy problems.
Product Lifecycle – Bringing People to the Product Process
Microsoft is the odd one in the SHOMI group, because they do not have a PLM-related offering per se. Microsoft focuses on "people enablement". It provides infrastructure and methods to aggregate different data sources from disparate systems and applications, and turn them into comprehensible information for better decision-making.
Again, the working definition and use of PLM is expanding to include many new (mostly non engineering) functions. It is no longer about CAD or manufacturing. PLM user communities deal with market-facing activities, compliance issues, service, supply chain, and others. Manufacturing Insights expects this trend to continue, as more functions seek to benefit from enterprise-level PLM.
These knowledge workers bring with them new skills, work habits and tools. Most importantly (at least for Microsoft) – the vast majority uses desktop tools from Microsoft.
CIOs want effective and secure role based collaboration. Issues include access, digital rights management, IP protection, and role-based optimization. SharePoint is proving to be a viable product line for these efforts.
Another CIO issue is how to drive productive innovation. Again, information is only effective if people use it and Microsoft is focused on enabling the semantic organization and contextual delivery of information.
So while Microsoft may not be perceived as a PLM tool vendor, the new PLM thinking and Microsoft's People Ready message align well. Microsoft is highly regarded in their ability to create human-centric applications, and the broader PLM footprint will benefit from its current software and from more innovation in human interaction and productivity tools. The important thing for Microsoft is to put independent software vendors to work on using what it has to offer.
Emerging agenda - Reaching Out to the Masses with the Fundamentals
Microsoft's strategy in emerging agenda topics doesn’t stray from Microsoft's past. If any vendor can reach the small and mid-sized markets, and the cost-conscious departments of large enterprises with RFID and sustainability programs, it's Microsoft. We already see Microsoft's approach to RFID moving forward, with BizTalk RFID, a host of RFID hardware partners, and an expanding base of System Integrator partners. Quite frankly, we'd be thrilled with RFID that is affordable for businesses of all sizes, because then we can raise our expectations again for multi-company collaborative RFID projects.
Microsoft is also banking on mass adoption with its approach to sustainability as well. The company started with an internal campaign in 2006 called the Microsoft Environmental Principles related to a host of corporate citizenship issues, and is just beginning to more fully articulate how its products (and packaging) support sustainable initiatives. Some of its messaging is very fundamental - collaborative software reduces the need for business travel and the physical transfer of documents, or Windows Vista offers users three preconfigured power plans that balance performance and power consumption. Dynamics isn't left out of the equation either, with Microsoft pointing to its ERP functionality as the foundation for making sustainability decisions. Given Microsoft's typical role of building mass adoption, we expect the company to wait till companies can better articulate what they want as part of a sustainability program.
Advice to Users – Minding the Forest and the Trees
We opened our discussion of Microsoft with praise for how far they had come in changing the nature of their relationship with enterprise class manufacturing firms, but there is still a long way to go. Microsoft understands its people-first position and has devised several high level relevant themes to help you improve your return on information technology. However, it remains challenged to reconcile this big picture view with an organization that remains rooted in volume product thinking and third party partnership management. Microsoft has a lot to offer to help you optimize your investments, but you will be best served by using a third party services firm to connect the dots.
What are your thoughts? Are there additional strengths or weaknesses in the Microsoft approach? Feel free to e-mail your comments and questions to bparker@manufacturing-insights.com.
