Industrial Software: Buying Versus Building

Oct. 31, 2012
Be practical in your evaluation—although COTS MES is much further along than years past in terms of reliability and multi-functionality, products are still evolving.

In the late 1970s through early 1980s, the idea of developing software packages to address the needs of common commercial applications across industries started to take hold. Prior to that, only large-scale enterprises could afford the cost of custom developing systems to support standard business applications. In those days, small armies of computer programmers needed access to large data centers in order to deliver what are now standard business applications.

Then, software packages for accounting/financial, inventory, purchasing, sales order entry and other commercial applications were available on just about every mainframe or minicomputer out there. And the world changed—instead of custom development as the norm, the trend changed to “buy” rather than “build,” if the needs could be met. Marketplace rationalization took place and a company out of Germany founded by five former IBM engineers called Systemanalyse und Programmentwicklung (“System Analysis and Program Development”)—better known as SAP—became the market leader in enterprise software.

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Lets fast forward to today and compare/contrast the Manufacturing Execution Systems (MES) space to the Enterprise Resource Planning (ERP) space. Perhaps the best way to illustrate some of the fundamental differences and therefore the challenges businesses face in choosing between a COTS MES solution or going the custom development path is with the “As Is” manufacturing applications landscape from a large industrial organization as shown in the accompanying graphic.

I know it is an eye chart but the reason I show it is quite simple – this organization appears to have one of everything.  There is a different solution – built or bought – for just about every manufacturing function. Reality is this is the norm for most industrial organizations.  One all-encompassing automation and/or MES solution did not exist, and a colorful quilt of single-function products and/or millions of lines of custom code became the software landscape. The other reality was that unlike with SAP in the ERP space, there is no dominant player in the MES space which makes choices difficult and certainly not obvious.  (By the way, in this example the “As Is” landscape for commercial functions is mainly SAP). 

So when it comes to choosing between buying versus building an MES solution, the answer (as you would expect) is “it depends.” It comes down to how an organization would respond to the following questions:

What is your MES strategy? What is your roadmap?  What is the timing for delivery?

• Is there an enterprise standard that the organization is following?

• Is the application under consideration strategic? Unique? If so are the resources (financial and people) available to provide support/enhancements over the long term?

• Are there collaboration opportunities with existing partners/vendors? If so, do they see broader marketplace value?

• Are your requirements going to remain static or change in the future?  Scalability, standardization and roll-out requirements need to factor into the decision.

• And, I know it sounds simple but are there solutions commercially available;  better yet, are there choices?

Organizations that make their choice of suppliers/partners based on completeness of vision and overall commitment are experiencing success. They realize that COTS MES software is an evolution and is not fully baked. Influencing outcome is key. But, how should you evaluate whether to go custom or COTS?  My advice is to clearly understand what is available in the marketplace before embarking on a custom development effort.  To me it boils down to a few basic criteria:

• Is what you are doing from an MES perspective truly unique, or do you achieve value on how the system is used as opposed to how you get it?

• Are you prepared to divert resources from your core business to the development and maintenance effort (and it isn’t just technology people—the business must be fully engaged)?

• Have you analyzed the total cost of ownership of custom vs. COTS?

• Does building a custom solution give your organization a competitive advantage?

Be practical in your evaluation—although COTS MES is much further along than years past in terms of reliability and multi-functionality, products are still evolving. If COTS is the route you choose, be prepared to stay engaged with your selected partner and to drive your program toward success. MES will never be implemented by checking a tick-box or through simple configuration; your manufacturing operation will still need to be modeled against your MES requirements, and it’s important that you are committed to guiding the process with your partners.

John Southcott, [email protected], is Chairman of the MESA International Board and co-CEO of Brock Solutions, Kitchener, Ontario, Canada.