Sidney Hill, Jr.: Time to do some strategic thinking

The chief goal at Manufacturing Business Technology is helping you understand the strategic value of information technology. But every year at this time I find myself pondering which class of technology holds the most strategic value for a manufacturing enterprise.

This introspection is inspired by our work on the annual Global 100 issue, which highlights the top 100 technology vendors, in terms of revenue, serving the manufacturing sector.

I have found, in part by observing the MBT Global 100 rankings over the years, that the relative value of various forms of technology—like technology itself—changes over time.

The first companies to install MRP systems claimed an early competitive edge. Before long, however, manufacturers were clamoring for supply chain management (SCM) applications. Then CRM vendors, the companies that promised to help you manage your most valuable assets—your customers—held the spotlight.

This year's list includes one pure CRM vendor: Salesforce.com. And its biggest selling point is not its application set, but its inexpensive, relatively pain-free software-as-a-service delivery model.

There are least a half-dozen stand-alone SCM vendors congregated near the bottom of the Global 100 list. But some industry experts would argue that the strategic value of these vendors' systems is higher than ever because they allow manufacturers to fill small, but important, functionality gaps not addressed by the larger, more generic supply chain solutions embedded in ERP suites.

Incorporating SCM and CRM applications into their suites helped ERP vendors maintain solid revenue streams. But can a class of applications commonly referred to as a “transaction backbone” or “system of record” be viewed as strategic?

Apparently, the brain trusts within most ERP companies don't think so. Why else would they have gobbled up most of the SCM and CRM companies? And why have they all developed their own versions of what I believe is now the most strategic class of technology: the application integration platform?

While some ERP vendors developed these platforms primarily as vehicles for linking all of the applications amassed in their acquisition sprees, there are legitimate reasons for users to want an integration platform.

With business conditions changing so rapidly, only those companies that can quickly adopt new business processes can maintain a competitive advantage. Thus, the need for a platform that offers the flexibility to couple and decouple applications almost at will.

The platforms that offer the most support in this regard are based on a service-oriented architecture (SOA). That's why virtually all enterprise vendors now claim to have SOA-based systems.

As is the case with any technology, however, users shouldn't rush into adopting an SOA platform. Several questions need answering first, starting with:

• How will this platform solve my most pressing business problems?; and
• How difficult, and costly, will it be to adapt this platform to address future problems?

Once you have these answers, choose the vendor—and the platform—that seems best suited for addressing your company's most pressing issues. That's always a good strategic decision.