Analysts say that manufacturing IT departments are feeling optimistic enough about consumer demand this year to plow serious money into newer technologies -- especially cloud computing, mobile ERP, “big data” and analytics -- that remained mostly on the drawing board until now.
IDC Manufacturing Insights, in Framingham, Mass., predicts healthy investments in foundational technologies that it says will constitute the next major IT platform: mobility, big data, cloud computing and social business. The analyst firm predicts that manufacturers will harness these “four forces” to build next-generation applications, including integrated business intelligence (BI) and corporate application stores where employees can download smartphone apps.
“The complex nature of modern manufacturing requires a new IT mindset,” said Bob Parker, IDC’s group vice president. “That will be achieved through the next generation of business intelligence, big data and analytics. Companies are building systems of engagement on top of their systems of record.”
The new systems will be dedicated to better decision making and will help IT evolve from an era of consumption to one of production, according to Parker. “The IT function is moving closer to a revenue-generating function than [it has] ever been.”
At the same time, IDC expects manufacturers to seek “clock speed alignment” in their supply chains. “There’s going to be a lot of emulation and study of what Apple does,” Parker said. The old model, exemplified by Hewlett-Packard, valued risk mitigation and backed it up with inventory. “They would spread the inventory risk across the global warehouses.”
Apple, in comparison, takes risks to gain time, Parker explained. “They buy to 110% of their proposed demand to lock up capability.” Other companies will learn to focus more on building such capability, rather than capacity, to meet demand from emerging markets, he said.
Doing so in turn will require “situational” analytics of real-time operational data. Parker says companies will invest in back-end BI infrastructure and front-end, small-screen graphical user interfaces (GUIs) that pull data from shop floors and supply chains and make it instantly available on mobile devices.
Julie Fraser, principal industry analyst and president of Boston-based Cambashi Inc., likewise expects continued interest in “operational intelligence” from manufacturing execution systems. “It’s just going to continue to pick up steam and be a more and more important part of the shop floor information environment.”
Manufacturing social media: Ready for business
Fraser says enterprisewide integration will be at the center of 2012 trends as technology silos are transformed. “Those are starting to change and shift and more look like the business processes and less like the departments,” she said. “I think some huge new capabilities are coming around that are going to begin to see some uptick.”
Social media, for one. “We actually think people are going to start figuring out that it’s not something to just keep the young people in the company happy,” Fraser said. Manufacturers will to start to leverage social media more fully by tapping ERP data.
Parker also sees manufacturing social media having a major impact in 2012. “The interaction of social business and cloud is going to bring this renewal of e-commerce,” Parker said, making it more collaborative than turn-of-the-century e-commerce. Companies will continue to struggle, though, with using social media to solve real problems and exploit new opportunities such as collaborative product design and retail promotions. “I don’t think that is something we have got our arms around completely,” Parker said.
Fraser also has her eye on another collaboration trend: increased use of enterprise content management (ECM) software for dynamic case management.
The approach is popular in fields such as health care, insurance and financial services and lets people collaborate more effectively on cases and projects by sharing documents and other communications across applications. “It also lets you go beyond just one rule set,” Fraser said, and allows multiple rule sets to be established quickly, which is especially important in global manufacturing. “Enterprise content management is sort of a critical aspect to being able to take all the information into account and make good decisions.”
Adding social media to these adaptive, ECM-based workflows will enable the ad hoc processes that are essential to managing cases, Fraser said. “It’s not just [about] phone calls. The information needs to get tagged back to the enterprise data.”
Fraser also expects new “augmented reality” technology in computer-aided design to begin affecting new product development and product lifecycle management. The technique employs virtual reality glasses, gloves and three-dimensional video walls to simulate dangerous work environments such as oil rigs. Companies are starting to use it for training, Fraser said.
Mobile ERP investments will continue to grow
Experts agree that the popularity of mobile computing devices such as smartphones and tablets will keep growing in 2012, with more manufacturers using mobile ERP to grant employees access to company data on the go. “We'll see more mobile in the workplace and on the shop floor,” said R. "Ray" Wang, CEO and principal analyst at Constellation Research Group. “It will come in more affordable devices, which will provide analytics and control on the shop floor.”
Mobile applications integrating with enterprise systems will hit the radar screen in 2012.
Steve Phillips, ERP industry expert
Steve Phillips, ERP industry expert and author of the Street Smart ERP blog, also predicts that 2012 will be a big year for mobile in manufacturing, with mobile systems integration being key. “Mobile applications integrating with enterprise systems will hit the radar screen in 2012,” he said. “As more users adopt mobile platforms into everyday life and as work life and personal life continue to become blurred, this will begin to drive vendors to develop mobile integration with their ERP systems. 2012 will be just the beginning of this next phase of ERP development.”
Cloud computing adoption will reach new heights
One of most dynamic technology areas to watch in 2012 will be cloud computing and Software as a Service (SaaS) applications, according to Phillips. As manufacturing organizations look for new ways to reduce IT costs, “many [SaaS migration] concerns from CIOs [chief information officers] will dissipate, as providers continue to address data security concerns and functionality limitations,” he said. SaaS ERP will become more common -- and less scary, said Phillips. “As more of the major ERP players move to the cloud, the long-term viability of the concept becomes less of an issue, convincing many CIOs to take the leap,” he said.
The success of cloud applications in manufacturing will hinge on their integration capabilities, according to Wang. “The new stuff will come via cloud but will have to work with the existing shop floor and manufacturing technologies,” he said. “Integration will play a key role.”
Phillips had some bad news for manufacturers eager for innovation in 2012: “Don’t expect much new software functionality [next year], given that most vendors will focus their resources on porting existing apps to the cloud and mobile platforms.”
Telematics, big data to make globalization easier
James Leibel, principal for Paris-based consulting firm Capgemini, predicts manufacturers will continue to outsource business functions to partners and suppliers in 2012, and in the process, will look to technology to manage their global business networks. “The manufacturing industry has stabilized, and manufacturers are making the sort of technology investments that they hadn’t made in 10 to 12 years,” he said. “With the use of Web 2.0 and analytics, the sharing of information throughout the enterprise, plant and corporate levels will increase.”
According to Leibel, manufacturers in industries like medical devices and aerospace will use embedded wireless chips and other telematics to track the performance of their products and provide warnings for when products should be serviced. “Larger wireless and 3G networks around the world are allowing for this,” he said.
Wang also sees potential for new big data innovations in 2012. “Manufacturers will be applying sensor data to anything from predictive maintenance to improved demand forecasting,” he said.