Delivering Software as a Service to Manufacturing Companies (Strategic Focus)

This publication has been discontinued on July 19, 2011.

Introduction

Abstract

Overview

Introduction

This report looks at the market for SaaS within the manufacturing industry. It considers the market opportunity, key applications of the delivery model, and go-to-market strategy.

Scope

• This report considers SaaS as a technology delivery model independant of specific software.
• Considers the manufacturing industy as a whole, with some discussion of batch, process and discrete sectors.

Report Highlights

Manufacturers, to an extent, still wish to engage with vendors that have a more local presence as there is a belief that these vendors better understand the discrete characteristics of the manufacturer' s market.

Reasons to Purchase

• Understand the current state of SaaS within the manufacturing industry.
• Get an insight into Datamonitor' s recommendations for go-to-market strategies.

Table of Contents

• Overview
  • Catalyst
  • Summary
• Key Messages
  • A reliance upon configuration as opposed to customizationis a defining feature of SaaS
  • Datamonitor believes the manufacturing industry is readyfor SaaS
  • The impact of SaaS on staff is hard to determine butshould be carefully considered
  • Deciding when and whether to invest in SaaS can bedifficult
  • There is not significant variation between differentmanufacturing sectors
• Table of Contents
• Table of figures
• Market Opportunity
  • SaaS delivery models are defined by four keycharacteristics
  • A reliance upon configuration as opposed to customizationis a defining feature of SaaS
  • Understanding the difference between the SME andEnterprise markets is critical
  • There are a range of business pressures driving SaaSinvestment
    • IT departments are trying to reduce technologyimplementation times
    • Upgrades and maintenance are becoming increasingly complexand costly
    • IT budget pressures are compounding with many expected toremain flat in 2007-2008
    • Manufacturers are looking to gain access to additionalfunctionality and process support
    • Integrating processes with business partners is a trendthat continues to emerge
    • Manufacturers are asking for better service levels fromtheir IT departments
  • There still remain significant inhibitors to the SaaSmarket
    • Service levels remain the biggest concern formanufacturers looking to invest in SaaS technology
    • Manufacturers still put a large focus on the security ofSaaS solutions
    • A loss of control by the manufacturing company is stillseen as a hurdle
    • Regulatory concerns prove important for some manufacturers
    • A large portion of companies have already invested inon-site technology
    • The location of the service provider also affects a SaaSinvestment decision
    • A potential backlash from the loss of internal staff isseen as the least important issue
    • A lack of configuration options is stopping somemanufacturers from adopting SaaS
  • Datamonitor believes the manufacturing industry is readyfor SaaS
• Customer Impact: SaaS in manufacturing
  • Manufacturers believe SaaS can deliver several benefits totheir businesses
    • Upgrading and access to the latest functionality prove tobe the biggest draw card for SaaS
    • Access to expertise from the SaaS supplier is also rankedhighly as a benefit for manufacturers
    • Manufacturers believe they have a better control overservice levels via SaaS
    • A lower cost profile is one of the more common benefitsassociated with SaaS
    • Costs are spread over time as opposed to an upfrontlicense fee easing budget constraints
  • SaaS delivered technology can support a range of businessprocesses
    • Organizational units focused on customers and HRM areinvesting in SaaS
    • Plan processes provide a medium level of opportunity forSaaS vendors and manufacturers
    • There is some scope for SaaS within Source processes
    • Manufacturers and vendors will see significantly lessopportunity within Make processes
    • Datamonitor believes Deliver processes should be a lowpriority for SaaS
    • Areas such as warranty management provide some opportunityfor SaaS within Return processes
    • There is a significant opportunity for SaaS to support awider range of processes within SMEs
  • The impact of SaaS on staff is hard to determine butshould be carefully considered
  • Deciding when and whether to invest in SaaS can bedifficult
    • As always, only invest in technology when there is abusiness problem, but think outside the box
    • Manufacturers should consider non-core processes for SaaSfirst
    • SMEs should take a look at their current business andassess where they want to be
    • A lack of configuration could be a potential deal breaker
• Go to Market
  • The current competitive environment is somewhat fragmented
    • There are no clear leaders in the SaaS market
    • Different vendors carry multiple SaaS product lines
    • Vendor strategy varies heavily between differenttechnology vendor types and key markets
      • Infor
      • Oracle
      • RightNow Technologies
      • Salesforce.com
      • SAP
    • A number of factors will determine successful vendors
  • Vendors should adopt different strategies for the SME andEnterprise markets
    • SaaS solutions should lean towards the full-suite businessmodel for the SME sector
    • Vendors need to be approachable for SMEs, not a facelesscorporation
    • Targeting the right person at both Enterprise and SMEcompanies is critical
  • There is not significant variation between differentmanufacturing sectors
  • Vendors should focus on a small number of key sellingpoints
    • Lowering TCO and the idea of predictable costs willgenerate significant traction
    • Green IT credentials should be pushed by vendors more
    • Vendors should concentrate on demonstrating access tolatest software updates
  • Datamonitor believes the SaaS market will have evolvedsignificantly in 5 years
  • Recommendations
    • Provide SaaS delivery to applications in a modular,expanding fashion
    • Vendors need to continue to educate the market more aboutissues such as security
    • Configuration, configuration, configuration should be themantra of SaaS vendors
• APPENDIX
  • Definitions
    • Use Heading 3s, if required, to add structure to sectionsin the Appendix
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Figures
    • Figure 1: IT budget expectations for 2007-2008 withinmanufacturing companies
    • Figure 2: Perceived inhibitors to SaaS adoption withinmanufacturing companies
    • Figure 3: Perceived benefits to SaaS engagements withinmanufacturing companies
    • Figure 4: Relative opportunities for SaaS within SCORprocess groups
    • Figure 5: Industry variation of perceived inhibitors toSaaS engagements

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