SHOMI, Part2: The most influential technology vendors in the manufacturing industry
Bob Parker, VP Research, Manufacturing Insights -- Manufacturing Business Technology, 4/30/2008 9:17:00 AM
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 second of five part series covering each of the vendors. This installment will cover HP.
Hewlett Packard – Becoming the Strategic Integrator
Only rival IBM sells more technology product to the manufacturing industry and HP is number one in a couple of segments. A large component of this revenue is hardware based – volume servers, laptops, desktops, and printers – but HP also has compelling software and services product lines for the industrial firm. HP maintains strong partnerships with all of the other SHOMI vendors except IBM and has worked particularly well with Microsoft.
HP's goal is to get a larger share of wallet with the enterprise level manufacturing buyer. They don't have the service depth of IBM, but they have a unique opportunity to move beyond the role of system integrator to strategic integrator. HP can assist in optimizing the commodity part of IT operations (desktops, servers, break/fix services) and, in doing so, help customers determine where best to invest the savings. Part of that process will be to help customers harvest value from existing information through improved decision making (where their Neoview product is well placed) and to use their strong vendor relationships to help customers navigate investments that extend their industry process platform. The objective, of course, is to generate more demand for infrastructure with a larger share of the customer's spending going to HP.
Architecture – Surrounding the Process Platform
HP has had two major initiatives under the umbrella of "improving business outcomes". One involves optimizing the infrastructure through what HP refers to as business technology optimization (BTO). The other involves providing the scalable underpinnings for large collaborative decision environments which HP refers to as business information optimization (BIO).
BTO was the long running conceptual basis for the product portfolio of HP acquired Mercury. HP has combined the Mercury capability with Open View network management to offer a unique set of products that assist in optimizing infrastructure performance. The product set is less comprehensive than the IBM Tivoli line or even the Computer Associates' collection, but is directed at the most critical issues (network management, application management) facing IT operations management today.
BIO has been supported by the recently announced Neoview product line which has its roots in the information processing engine of its Tandem server line. The competitive target appears to be the company where CEO Mark Hurd earned his technology executive cred - Teradata. After hiring several sales and marketing executives from the NCR spin out, HP has closed deals, although not full displacements, at Teradata lighthouse customers Wal-Mart and 3M. It remains to be seen if the Tandem product, built for on-line transaction processing (OLTP), will be viable for large scale data warehouses. Also, HP needs to either engender a community of partners to develop specific analytic applications or make a significant acquistion of an existing vendor – MicroStrategy comes to mind.
Relative to the Manufacturing Insights architectural reference model, BTO supports optimizing the delivery and the need for investment in collaborative decision environments. HP may have invented the web services concept (remember e-speak?), but remains neutral at the industry process platform level. Good partnerships with SAP and Oracle are part of the reason as well as a long standing relationship with recently acquired (by Oracle) middleware vendor, BEA. HP also has a high level of competency with Microsoft's .NET stack including industry reference models built on BizTalk (which interestingly has its roots as a Digital Equipment software product). If a customer insists, they will even help with deployments of IBM WebSphere.
When it comes to helping manufacturing firms incubate the development of multi-enterprise business network capability, HP may be at a disadvantage. Despite wins at large companies like Procter & Gamble, it remains to be seen if HP's computing centers have the horsepower to support a corporate cloud type offering. Similar to IBM's work with Google, HP may want to look to partner Microsoft to create an offering that assists customers in developing an approach to automating virtual ventures.
Supply Chain – Turning Data into Visibility
HP clearly views themselves as a company that can offer solutions for managing data and data complexity. As mentioned above, they have successfully closed deals for Neoview at preeminent global retailer Wal-Mart, for at least a partial replacement of the data warehouse. This Neoview platform provides powerful data archiving and warehousing capabilities and with the right applications partner, can move quite easily into supply chain analytics.
Effective and efficient management of data remains a growing problem for many supply chains, both in terms of the Sales and Operations Planning (S&OP) process and how often it can be run, as well as with the challenges of customer demand data and the requirement for some kind of demand signal repository (DSR). HPs integrated hardware/software platform for data warehousing, along with their captive Knightsbridge service capabilities, make them a potentially formidable competitor in the enterprise data management space.
Once companies get their data management/warehousing problems under control, it is a good bet that enhanced visibility capabilities will not be far behind. HP is clearly investing in the ability to deliver supply chain visibility, not just through leveraging data, but also through the adoption of newer technologies like RFID. They also have a strong competency with SAP, and APO in particular, which offers the opportunity to integrate planning effectively into their visibility vision.
Lastly, through their ongoing partnership with Microsoft and Intel, they have developed process reference models for collaboration including the supply chain. As Manufacturing Insights has opined extensively in our recent research, we see collaboration (particularly in the supply chain) as one of the real opportunities to improve efficiency and reduce costs. This is both across and within trading partners, where very often a lack of true visibility inhibits collaborative efforts due to poor communication and lack of access to key information.
Product Lifecycle – A Layered Approach
HP's view of PLM is very IT architecture centric. They see PLM as comprised of three layers: network, infrastructure and application. HP has significant presence, experience, and IT management tools in all three layers (primarily OpenView), so the value prop is to partner with HP for efficient integration, network management and optimization, and application performance monitoring. Manufacturing Insights research shows that demand for this stack is nominal at best.
HP's PLM appliance – preconfigured Siemens PLM software with HP hardware and software – is promoted as faster to implement and easier to integrate. Research certainly supports the desire for faster time to value and lower ownership costs, but the market is not convinced that an appliance approach is the answer.
On the other hand, HP is well respected in the industry for both IT expertise, and industry knowledge. The opportunity for HP lies in the growing complexity of the PLM ecosystem, PLM extends outside the four walls of the enterprise, bringing a slew of IT challenges: integration, monitoring performance & utilization, and ensuring role-based access and collaboration. Managing this complexity is ultimately where HP will find its PLM success.
Emerging Agenda – Pushing for Thought Leadership (Part 1)
Because of HP's high dependence on its services, building excellence in emerging agenda topics such as RFID and sustainability are critical to winning the strategy projects that can lead to substantial, longer-term engagements. When it comes to RFID, HP has a very strong story, built upon its substantial use of RFID internally as well as its deep supply chain expertise. As expected, HP's ability to deliver RFID is not about the technology specifically, but about its ability to identify the appropriate RFID partners and understand the customer's business challenge.
HP's sustainability strategy is similar, built on satisfying its own need to be more sustainable and wanting to be a trusted advisor with a services play. HP has been quick to recognize that sustainability is going to be part of many business processes, not just the energy efficiency of data centers and hardware. Like many hardware vendors, HP has offered an electronics recycling program, but we also see HP's Supply Chain efforts in sustainability, and HP's work appears to be related to good corporate citizenship, reducing hazardous materials in new design, and recycling. We expect HP to ramp up quickly and take an even stronger role in guiding companies in their sustainability decisions.
Advice to Users – Trust but Verify
If value is defined by the capabilities you deliver over the cost to deliver them, HP can certainly assist with both getting more utility out of the information you have and lowering your operating costs. HP's objectives are well aligned with your own – engage the business to create demand for more IT enabled performance improvement which translates to the need for more infrastructure. That is not to say that HP doesn't have a vested interest in selling more product and you need to make sure that the strategy you are engaging them to integrate is validated by a third party.
What are your thoughts? Are there additional strengths or weaknesses in the HP approach? Feel free to e-mail your comments and questions to bparker@manufacturing-insights.com.
