Manufacturing Execution System • May 1, 2020

3 Reasons Why the Single Vendor Model is Losing Ground to the Digital Ecosystem

Tom Hennessey Tom Hennessey

3 Reasons Why the Single Vendor Model is Losing Ground to the Digital Ecosystem

Those who are veterans in the software industry understand the timeless growth strategy – grow by acquisition. We have seen this time and again with the big vendors, including SAP, Dassault Systèmes, and Siemens just to name a few. Marketers working at these large vendors then proceed to spread a message that customers are best served by a single vendor (their organization). The “one throat to choke” is a popular story that is then told. Today, however, with the emerging dominance of open platforms and a digital ecosystem for software deployment and management, there are signs the single-vendor model is starting to fall out of favor.

We all know that just because a vendor has multiple offerings, it does not mean that they all seamlessly interoperate (unless all applications have been built and maintained organically). Different programming languages, integration protocols, and product capabilities can cause considerable challenges. These compatibility issues prevent world-class performance of the entire solution out-of-the-box. Instead, integration services work must be completed. This includes the use of expensive resources to perform the necessary updates as new product releases are made available in the future.

1. The Need for Speed

Today, the name of the game is speed. How can you get a new system installed, live, and operational in 90 days or less? And, as new updates are made available, how quickly can they be made available to the shop floor?

Read about our Fast Value program that delivers an operational MES solution in 90 days or less.

If you are depending upon a “big vendor” MES solution, then you are likely looking at months and months (up to a year or more) to design, architect, and install the initial site location (depending upon how much is being installed and the scope of work). Even once live, single-vendor products often continue to sit on different platforms. They sometimes rely on well-designed user interfaces to disguise the fact that they still harness different programming languages on the back end.

While the strategy of buying up startups by the dozen to gain the latest and greatest technologies is great for the big vendors to tout the latest and greatest innovation buzz words, this strategy isn’t always the best for their customers. Yes, acquisitions will continue. But customers can’t wait a year or more to see the fruits of such deals. They need to be able to market and sell new products and technologies rapidly, not be delayed while disparate back ends are tied together.

2. The Need for Innovation and New Technologies

Continuing the theme of the “need for speed,” startups and other smaller companies are typically the pioneers of innovation and new technologies. So too is an open-source strategy. This is a well-documented topic. One such research article worth reading was written by Dirk Riehle, The Innovations of Open Source.

The pace of innovation is only accelerating and becoming more critically necessary. The past 60 days have only further amplified the need to think outside of the box. Challenge all assumptions. You need to do whatever it takes to increase operational agility into your organization’s processes, applications, and systems.

Unfortunately, the single-vendor model has almost the exact opposite effect. In this case, innovation is just coming from one vendor. With profit maximization being a primary objective, there is no incentive to invest boldly in identifying new areas for innovation. This means being careful with new product introductions (they are costly and risky) while preserving cash flow. Given investing in new technologies is primarily through acquisition, this leads to the delays mentioned above. And, during a time of economic uncertainty or decline, these actions are only further heightened.

3. Best-of-Breed Functionality 

Big box vendors are not focused on meeting or exceeding specific manufacturing processes. This is primarily because there is no scale or volume in it. This is typical because they lack “high touch” with their client’s manufacturing business. Rather, more focus is placed on their core product offerings (Enterprise Resource Planning (ERP), Product Lifecycle Management (PLM), or Customer Relationship Management (CRM)).

As a manufacturer, you get lost in their bureaucracy. Further, you are just a number with zero influence in the future development of their manufacturing products as the bulk of development funds are spent on core product offerings (ERP, PLM, CRM). As specialized vendor offerings begin to capture market share, these software vendors are acquired to remove them as a threat/competitor, not necessarily to acquire their specialty application or technology.

Today’s digital ecosystems provide many advantages, just like an open-source environment. No longer is the single-vendor model necessary or even advantageous. A digital ecosystem can drive innovation, accelerate deployment of new technologies, and enable a truly collaborative environment that continues to unlock new capabilities and future advances in ways never thought possible.

It will be difficult for the legacy, single-vendor model business model to survive. But they will not go down without a fight! It will take time for change to happen. Time will tell how well the dinosaurs adapt!

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