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

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