Alison Smith: 2008 will be the year of the perfect storm for manufacturing operations

2007 was the third year of ramped-up spending on manufacturing operations software. Based on AMR Research's annual ERP spending study, manufacturing operations today competes for first place as the most strategically important ERP investment category. This renewed investment in manufacturing isn't lost on vendors serving the space. After a decade of lean times, providers are aggressively funding product R&D, as well as acquisitions.

In 2007 the tug of war continued between dominant ERP providers Oracle and SAP, and automation providers GE Fanuc, Invensys, Rockwell Automation, and Siemens. All the big boys came out to play, and despite marketing relationships, partnerships, and joint application development, this battle will intensify as both Oracle and SAP assert themselves more deeply in manufacturing.

Automation providers are getting their assets in gear too, delivering first fruits of software strategies that had been in the WIP category the past five years. The challenge is internalizing business changes that support software company behaviors, and sorting out recent build-versus-buy decisions.

Add IBM and Microsoft and 2008 shapes up as a year of complex partnerships between (formerly) unlikely bedfellows. Buyers with hard-line positions on Microsoft versus Java and NetWeaver—or SAP versus Oracle—should reconsider, as SOA offers unparalleled opportunity to render the conversation moot.

For best-of-breed providers, there are gaps that neither automation nor ERP address. Best-of-breed software providers for MES, eBR, quality, electronic work instruction, EH&S, LIMS, EMI, and CMMS thrive based on usability, embedded domain expertise, and cost. This is particularly true when levels of automation are too low to justify an automation providers' approach, yet processes are sufficiently complex to rule out an ERP paper-on-glass solution.

This messy (or perhaps MESsy) white space is fertile ground for Manufacturing 2.0's composite application vision. Manufacturing SOA offers, for the first time, snippets of functionality orchestrated into applications easy to use, install, configure, commission, reconfigure, and maintain—without needing consultants or software gurus.

Future composite applications should be self-service endeavors, manageable by next-generation, Web-savvy plant personnel. Will critical control-user interfaces have Google tool bars? Not likely, but folks assembling applications and constructing UIs may have Google-like development tools—a manufacturing composition environment—for rapid services assembly to create core functions, business rules, processes, and workflows from a multi-vendor palette.

Moreover, proliferation of service-oriented application content, emergence of a composition environment, low-cost tags, wireless sensors, and mobile software applications—like those seen in asset management—may turn this market on its head. Software providers that incorporate innovative technologies into low-cost, easy-to-deploy applications have unparalleled opportunity to beat larger, less-agile competitors. Users will be perplexed by the array of options offered them in 2008. To that end, my next column looks at factors that inhibit new technology adoption. If you have thoughts on how today's compensation models for plant management make investments seem, well, unattractive, then drop me a line.